The 2003 CAP reform: Do decoupled payments affect agricultural production?

Peter Howley (), Trevor Donnellan and Kevin Hanrahan
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Peter Howley: Rural Economy and Development Programme, Teagasc, Athenry, Co. Galway, Ireland
Trevor Donnellan: Rural Economy and Development Programme, Teagasc, Athenry, Co. Galway, Ireland
Kevin Hanrahan: Rural Economy and Development Programme, Teagasc, Athenry, Co. Galway, Ireland

No 901, Working Papers from Rural Economy and Development Programme,Teagasc

Abstract: The move from coupled payment policy instruments to payments that are decoupled from production have made estimating future trends in agricultural output much more challenging. Using a dynamic multi product partial equilibrium model, the overall aim of this paper is to examine the potential supply inducing effect of decoupled payments. This issue is important in the context of WTO negotiations, and, in particular, in discussions surrounding the appropriateness of decoupled payments being included as a ‘green box’ policy. The results suggest that farm operators, to a large extent, do not treat these payments as fully decoupled and they do in fact maintain a strong supply inducing effect on agricultural production. Findings suggest, however, that this trade distorting effect is less than previously coupled payments.

Keywords: decoupled payments; WTO green box; agricultural production (search for similar items in EconPapers)
Pages: 30 pages
Date: 2009
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Citations: View citations in EconPapers (1)

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