Targeting “Real Farmers” With Reformed Cap Payments: An Analysis For Italy

A multi-sector model is used to assess the targeting of CAP payments in Italy, according with alternative definitions of the “real farmers” institutional sector. The model is based on a Social Accounting Matrix of the Italian economy, properly adapted to represent the process of income formation and distribution in agriculture. The accounting framework has been integrated with a set of microeconomic information from the Farm Business Survey, a sample of agricultural holdings representative of the whole industry in Italy. The effects of changes in CAP payments have been assessed through a process in which impacts moves from the micro to the macro module of the model and return, in an iterative way. A vector of final income increase for each household included in the survey is obtained and used to reclassify impacts according to alternative definition of the real farmer sector. Results show that the distributive structure of the Italian agriculture as well as the way the policy is implemented are likely to affect the targeting of payments under alternative definitions of the beneficiary group.