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Simulation of the impacts of the proposed direct payment scheme - The case of the Czech Republic

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  • Jana Lososová
  • Radek Zdeněk

    (Department of Accounting and Finance, Faculty of Economics, University of South Bohemia, České Budějovice, Czech Republic)

Abstract

The draft Strategic plan of the Common Agricultural Policy (CAP) for the Czech Republic has provoked the displeasure of many entrepreneurs in agriculture due to the redistributive payments, to which 23% of the total volume of direct payments will be directed instead of the originally planned 10%. According to the creators of the Strategic plan, this should support the fairer distribution of payments, respecting the benefits arising from the scale of production of large companies. Critics of the plan claim that operating subsidies are already degressive and fear an adverse impact on medium-sized companies, which, given the structure of the companies in the Czech Republic, will affect a large part of agriculture. This article aims to identify the farm size for which direct payments will be reduced and the likely degree of the impact on the farm economy. Our results suggest that the new payment system will lead to a reduction in direct payments for farms larger than 313 ha and, from a farm size of 873 ha, direct payments will fall below 85% of the average, which may cover around 50% of the agricultural land in the Czech Republic.

Suggested Citation

  • Jana Lososová & Radek Zdeněk, 2023. "Simulation of the impacts of the proposed direct payment scheme - The case of the Czech Republic," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 69(1), pages 13-24.
    • Handle: RePEc:caa:jnlage:v:69:y:2023:i:1:id:328-2022-agricecon
    DOI: 10.17221/328/2022-AGRICECON
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    References listed on IDEAS

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    1. Tamara Rudinskaya & Tomas Hlavsa & Martin Hruska, 2019. "Estimation of technical efficiency of Czech farms operating in less favoured areas," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 65(10), pages 445-453.
    2. Beckman, Jayson & Ivanic, Maros & Jelliffe, Jeremy L & Baquedano, Felix G & Scott, Sara G, 2020. "Economic and Food Security Impacts of Agricultural Input Reduction Under the European Union Green Deal’s Farm to Fork and Biodiversity Strategies," Economic Brief 327231, United States Department of Agriculture, Economic Research Service.
    3. Schmidt, Alena & Mack, Gabriele & Möhring, Anke & Mann, Stefan & El Benni, Nadja, 2019. "Stricter cross-compliance standards in Switzerland: Economic and environmental impacts at farm- and sector-level," Agricultural Systems, Elsevier, vol. 176(C).
    4. Artiom Volkov & Tomas Balezentis & Mangirdas Morkunas & Dalia Streimikiene, 2019. "Who Benefits from CAP? The Way the Direct Payments System Impacts Socioeconomic Sustainability of Small Farms," Sustainability, MDPI, vol. 11(7), pages 1-17, April.
    5. Dimitrios Kremmydas & Konstantinos Tsiboukas, 2022. "Redistribution and the Abolishment of Historical Entitlements in the CAP Strategic Plans: The Case of Greece," Sustainability, MDPI, vol. 14(2), pages 1-14, January.
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