The Health Check of the CAP reform: Impact Assessment

1
The Health Check of the CAP reformImpact
Assessment

• DG for Agriculture and Rural Development
• European Commission

2
The content of the Impact Assessment

• Main Report
• Three main sections, around the three policy
  questions of the HC
• Annexes
• A. Summary of stakeholder positions from public
  consultation
• B. Economic background of EU agriculture
• C. Background notes on the Single Payment Scheme
• flatter rate, decoupling, cross-compliance,
  payment limitations
• D. Background notes on market issues
• cereals, dairy quotas, other support schemes,
  risk management
• E. Background notes on new challenges
• RD measures, modulation impact
• F. Background notes from microeconomic analysis
  (FADN)
• G. List of relevant external studies and
  evaluations

3
The methodology of the Impact Assessment

• Background
• Description of existing policies and situation
• Identification of issue to be addressed in the HC
• Options
• Status-quo used as reference scenario
  (baseline)
• Analysis assesses impact of changes with respect
  to baseline
• Impact analysis and results
• Main results presented in IA Report and
  summarised in tables
• Background and more detailed information
  presented in the various Annexes

4
The analytical tools of the Impact Assessment

• Quantitative analysis
• Econometric models to assess impact on markets
  from
• changes in cereal intervention and set-aside
  abolition
• phasing-out of dairy quotas
• Microeconomic static analysis to assess impact on
  farm margins from
• further decoupling
• impact from market measures (cereals, dairy)
• flatter rates and payment limitations
• Statistical analysis to assess impact from
• payment limitations and modulation
• risk management tools
• Qualitative analysis
• To assess changes in the scope of
  cross-compliance
• To assess suitability of RD measures related to
  new challenges

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Main conclusions - Direct support

• Flat versus flatter rate
• Move to EU-wide flat rate results in major
  redistribution across MS
• Move to flatter rate results in targeted
  redistribution within a MS (or region of a MS)
• Further decoupling
• At farm level, impact of decoupling from neutral
  to positive on farm income
• In some sectors, adjustment may be needed for
  industry
• For extensive livestock, continuation of support
  provides environmental benefits
• Payment distribution
• Main issue in the extreme ends of the
  distribution of payments (0.3-13 13-0.3)
• Distribution of payments affected globally by
  shift from farm to area
• Flatter rate affects (to different degrees)
  distribution of payments within MS or regions
• Lower payment limitations linked to SPS
  implementation

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Redistribution between MS with an EU-wide flat
rate
7
Redistribution between MS with an EU-wide flat
rate
8
Potential impact of decoupling beef breeders
9
Distribution of EU CAP payments
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Main conclusions Market issues

• Cereal intervention-set aside
• Wheat intervention allows other cereal prices to
  find their proper balance
• Set-aside abolition brings supply response, but
  implies limited environmental losses
• Dairy quotas
• Main aim is smooth price adjustment
  (soft-landing) for the quota phasing-out
• Some regions would face challenges with lower
  prices, require targeted support
• Other support schemes
• Income impact neutral to farmers
• Differential impact implies need for transition
  for some supported industries
• Risk management
• Cost of EU-wide revenue scheme prohibitive
  targeted measures preferred option

11
Potential impact of 1 increase in milk quota
12
Potential impact of an EU-wide revenue scheme
13
Main conclusions New challenges

• RD measures
• Existing RD measures sufficient to address new
  challenges
• Existing funds insufficient to meet additional
  needs
• Modulation
• Existing modulation mechanism tailored to EU-15
  needs
• Additional modulation only affects NMS in 2012
• Progressive modulation results in balanced
  contribution of large farms

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For further information

• CAP Health Check
• http//ec.europa.eu/agriculture/healthcheck/i
  ndex_en.htm
• EU agriculture and CAP reform
• http//ec.europa.eu/agriculture/index_en.htm
• Economic Analysis and Evaluation
• http//ec.europa.eu/agriculture/analysis/index_en
  .htm
• Agricultural Policy Analysis and Perspectives
• http//ec.europa.eu/agriculture/analysis/perspec/
  index_en.htm