Who Benefits from CAP? The Way the Direct Payments System Impacts Socioeconomic Sustainability of Small Farms

Abstract

The effects of globalization have often been adverse for the agricultural sector, especially its most vulnerable element—the small farm. The importance of the agricultural sector as a whole and small farms in the sense of ensuring food security, employment and viability of rural areas, implies a necessity to support the sector and small farms in particular. For this purpose, the Common Agricultural Policy (CAP) of the European Union (EU) seeks to boost the sustainability of agriculture in multiple dimensions. The 2013 reform of the CAP has provided a particularly strong impetus towards this direction. This paper establishes an indicator system to quantify the effects of the CAP direct payments on the socioeconomic sustainability of small farms. Expert survey and multi-criteria assessment are used to this end. The Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) method is applied for the multi-criteria analysis. Lithuania is taken as a case study. The results show that, in the case of Lithuania, the direct payment system did not contribute to the improvement in socioeconomic sustainability of small farms up until 2013 CAP reform when its impact became undeniable.

The Economic Resilience of the Austrian Agriculture since the EU Accession

“…It should be noted that it is important not to set some predetermined deadline by which the agricultural sector should have been recovered after a shock. In light of the current development, it is important to maintain the production and market position, as competition levels between agricultural producers, in particular, EU regions, may differ significantly (Volkov et al 2019b). In this context, the EU is encouraging shorter supply chains (Canfora 2016).…”

Resilience in agriculture: how can cap direct payments impact it?

“…subsidies up to half of their value are reflected in land prices (Latruffe & Le Mouël, 2009). DP, guaranteeing stable incomes, as well as additional payments specifically for young farmers (in many EU states), contributes to attracting them to agricultural business as well as to keeping them in it (Volkov et al, 2019;May et al, 2019). The system with a population with a relatively higher share of younger age individuals is usually indicated as more resilient, since younger people are usually more flexible, mobile and have more abilities to adapt to changing conditions (Martin et al, 2016).…”

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

“…This would not only prevent the overproduction, that was very common in previous direct payments schemes under the CAP [67], but would also encourage farmers to search for niche products, what can be easily introduced into the market in order to fasten the financial flows. The increasing diversification of cultivated agricultural crops would also benefit to increasing resilience [68,69] and sustainability [35] of rural regions, thus meeting yet another CAP objective.…”

“…From one hand, direct payments help farmers to modernize their farms, increases accessibility to innovations, ensures employment and viability of rural regions [33,34], on the other hand, the direct payments scheme, under which the amount of payments are directly related to the size of and owned lead to the accumulation of wealth in the hands of bigger landowners, increased their possibilities of acquiring additional land and become a small power centre in a rural areas acting as the only provider of work in particular areas. This land grab not only lowers the levels of rural sustainability [35], but also leads to higher land prices [36]. Once again, bigger lands represent a valuable asset that leads to the ability to borrow bigger amounts of money, which can be invested into productivity, thus increasing competitiveness and profitability.…”