Examining Disparities in CAP Direct Payments Among Farming Systems: evidence from Portugal

Abstract

One of the stated goals of the Common Agricultural Policy reforms has been to provide a fairer distribution of payments across and within Member States, but little progress has been accomplished, with about 20% of farmers receiving 80% of the total amount of Direct Payments. The structural factors that underlie this inequity, notably the preponderance of specific types of farming systems, are investigated in this research. A logit model was developed using Agricultural Census data at the Commune level, using the evolution of the percentage of farmers receiving Direct Payments in Portugal as the dependent variable. The findings reveal that the local importance of arable crops (cereals) and cattle farming systems, as well as the existence of larger farms and younger farmers, all contributed to farmers' increasing access to DP between 2009 and 2019. In traditional Mediterranean farming systems, however, access to DP has been restricted to a smaller proportion of farmers. However, there appears to have been some redistribution in the previous two CAP programming cycles, from bigger to smaller farmers, older to younger farmers, and from olives, cereals, and cattle to other types of production, notably vineyards.