We address a new agricultural policy concern following the decoupling of CAP direct payments in 2005: passive farming, whereby landowners maintain their agricultural area to collect payments without producing commodities. It is claimed that passive farming is hindering agricultural development by ‘blocking’ access to farmland for expanding farmers. We evaluate the links between the EU's Single Payment Scheme (SPS), passive farming, land use and agricultural development. Following identification of the rational landowners’ optimal land‐use choice, we evaluate the effects of the SPS using a spatial, agent‐based model that simulates farmers’ competition for land in a case‐study region of Sweden. We show that passive farming does not constrain land from being used in production; on the contrary more land is used than would be the case without the SPS. We conclude that passive farming is not a problem for agriculture, but provides public goods that would otherwise be under provided: preservation of marginal farmland and future food security. However SPS payments on highly productive land inflate land values (capitalisation) and slow structural change, which hinder agricultural development. Consequently CAP goals could be better served by targeting payments on marginal land and phasing out payments to highly productive land.
Summary
Agricultural stakeholders have concerns regarding the potential impact of the Farm‐to‐Fork and Biodiversity strategies on the agricultural sector. Several studies have been published recently trying to understand how these strategies would affect the sector, including a JRC report on modelling environmental and climate ambition in the agricultural sector written by the authors of this article. In this article, we argue that the narrow focus of the analysis undertaken is the main driver of the reported reduction in agricultural production in the EU, its deteriorating trade balance and increased prices. We highlight that the strategies include a much broader set of interventions that are not accounted for in the analysis and that the tools used have limitations preventing them from capturing the full scope of potential impacts. The evidence gained from improvements to our modelling approach further reinforce the idea that reported impacts are a higher bound of the potential impact of the input reduction targets. In addition, we signal the limited evidence available on the co‐benefits of improved environmental quality the strategies aim to attain. Both aspects lead us to conclude that we are currently far from being able to assess the impacts that a transition to more sustainable food systems will have on the agricultural sector.
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