In a Search for Equity: Do Direct Payments under the Common Agricultural Policy Induce Convergence in the European Union?

Abstract

The European Union (EU) is an integrated alliance of equally treated Member States sharing mutual values, legal principles and markets. Close cooperation, deep integration and convergence are the major priorities for the EU. Anyway, these principles are not always reflected in the EU-wide policies which are implemented through financial support mechanisms. The direct payments financial support mechanism under the Common Agricultural Policy, the main instrument for promoting convergence in development of Member States’ agricultural sectors and rural sustainability, faces critique for failing to meet its objectives. One of the major deficiencies of the direct payments scheme is that it allocates more resources to already developed agricultural sectors of the older Member States and less resources to developing ones thus increasing the divergence among the Member States. The aim of this paper is to suggest new mechanisms for direct payment funds redistribution across the EU Member States which are based on the methodological principles that would more precisely correspond to the aims of convergence, transparency and fair redistribution. The results show that, regardless of the method chosen (to support more or less effective agricultural sectors of EU Member States), the proposed methodology lowers differences in direct payment rates among the EU Member States by two-fold. This ensures correspondence to the goal of convergence within the EU.

Modelling the Common Agricultural Policy Impact over the EU Agricultural and Rural Environment through a Machine Learning Predictive Framework

“…According to [78,79], over 80% of farms in the EU are represented by family farms; therefore, DP are being infused into local economies on a much higher scale, compared to the financial support received by industrial corporations, which in a form of dividends may be allocated out of EU. Therefore, DP can be considered as tools of fostering the national economic growth and can accentuate the differences between the EU member states.…”

economic impacts of direct payments on agricultural income – A Literature Review

“…To alleviate this situation, a so-called external convergence procedure needs to be put in place, whereby support intensity differences are eliminated or reduced. Volkov et al (2019) state that the unit value of direct payments (i.e., As evident from Figure 4, most articles were written on the income-related impacts of direct payments, so we focus on this angle in the rest of the article.…”

A longitudinal and cross-sectional analysis of the distribution of Common Agricultural Policy aids in European countries

“…The second group includes studies on the distribution of aid among recipients on the basis of comparing different geographical areas (Bonfiglio et al 2016;Volkov et al 2019); distribution within specific geographical areas, such as Schmid et al (2006) for Austria, Allanson (2006) for Scotland, El Benni and Finger (2013) for Switzerland, Beluhova-Uzunova et al (2017) for Bulgaria, and Ciliberti and Frascarelli (2018b) for Italy; or the distribution of different types of aid. Examples of the latter include Balezentis et al (2020) for young farmers, Gocht et al (2017), Louhichi et al (2018) and Hristov et al (2020) for greening, Keeney (2000), Severini and Tantari (2015b) and Sinabell et al (2013) for direct payments, and Galluzo (2016) for rural development -that is, Pillar 2 aid.…”