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How Decoupled Is the European Union's Single Farm Payment?

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  • Halmai, Peter
  • Elekes, Andrea
  • Velikovszky, Laszlo

Abstract

Our paper focuses on the key element of the 2003 CAP reform: on the single farm payment (SFP). The basic aim was to decouple direct payment from production decisions. Because of the widespread agricultural policy reforms (support producers with the least possible distortions) and of the on-going WTO negotiations, this is an issue attracting significant attention on behalf of agricultural economists. Different tools and different methodologies have been employed in the effort to better understand and rank policy measures in terms of their production and trade effects. Most of the literature classifies measures based on implementation criteria. Our paper assesses the decoupled nature of the single farm payment (SFP) based on WTO and OECD criteria. The EU argues that the payments do not distort trade and therefore should be placed in the WTO green box as a decoupled income support. Based on our analysis, this seems to be possible, as the SFP meets not only the current WTO (design based) criteria of decoupling, but can also be qualified as effective fully decoupled system using the OECD terminology.

Suggested Citation

  • Halmai, Peter & Elekes, Andrea & Velikovszky, Laszlo, 2006. "How Decoupled Is the European Union's Single Farm Payment?," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25339, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae06:25339
    DOI: 10.22004/ag.econ.25339
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    References listed on IDEAS

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    Cited by:

    1. Renwick, Alan W. & Jansson, Torbjorn & Thomson, Steven & Revoredo-Giha, Cesar & Barnes, Andrew Peter, 2011. "The Economic Impact of allowing Partial Decoupling under the 2003 Common Agricultural Policy reforms on Scottish agriculture," Working Papers 131461, Scotland's Rural College (formerly Scottish Agricultural College), Land Economy & Environment Research Group.
    2. Sahrbacher, Christoph, 2011. "Regional structural change in European agriculture: Effects of decoupling and EU accession," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 60, number 60.

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