The CAP Mid-Term Reform Impacts to French Cereal-Oriented Farms

The agricultural policy reform to be implemented by 2005, has been marked by a three-step process, a first proposition of the E.C. in July 2002, then an adaptation of that proposition in January 2003 that clearly alleviated the economic impacts and finally the Luxembourg compromise in June 2003. In order to provide insights for discussion in the French Ministry of Agriculture and the farmers’ professional organisations, cereal-oriented farms in central regions of France, which are particularly sensitive to agricultural policy, have been studied. ‘Ex ante’ simulations have been run using a regional model of sequential linear programming that optimises over the annual farmers’ incomes in the period 2002-2012 integrating as well the evolution of farm structure. Thanks to the interrogation of this tool, the impacts of the reform have been estimated on a) crop mix especially regarding cereal and crop precedent in rotation, b) on agricultural incomes per hectare and farm, c) possibilities of land left idle, and d) evolution of farm structure and number of farms. It can be concluded that the final compromise on the C.A.P. stabilises the farmers’ income in the 2012 horizon due to the size adjustment upwards of cereal farms under the condition that agro-environmental measures do not penalise them and that rapeseed prices keep increasing. Re-coupling to avoid idle land is no more necessary after the Luxembourg compromise whereas farm business disappearance does not seem to accelerate. Enlargement and mechanical equipment economies of scope may be the proper response to new conditions and in any case decoupling is not expected to enhance the extensive use of the land factor, intended by the proponents of the eco-conditionality of subsidies.