SET‐ASIDE PREMIUMS AND THE MAY 1992 CAP REFORMS

Robert Fraser

Journal of Agricultural Economics, 1993, vol. 44, issue 3, 410-417

Abstract: This paper considers the linking of participation in the set‐aside programme to the receipt of a compensatory payment for proposed reductions in European Community price support announced in May 1992. It is shown that in this situation set‐aside premiums should lie between a lower bound sufficient to deter opting‐out in favour of full cropping, and an upper bound approximately equal to a level sufficient to induce voluntary participation in the programme. The initial level of Community price support and the extent of reductions from this level are shown to be the main factors determining the gap between the upper‐ and lower‐bound premiums. The impact of removing the compensatory payment system is also examined.

Date: 1993
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