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Decoupled Single Farm Payments of the CAP and Land Rental Prices

Paul Feichtinger and Klaus Salhofer ()

No DP-65-2016, Discussion Papers from University of Natural Resources and Life Sciences, Vienna, Department of Economics and Social Sciences, Institute for Sustainable Economic Development

Abstract: This paper contributes to the discussion on the extent of the capitalization of decoupled direct payments into land rental prices. Based on a dynamic panel model and an extensive dataset for Bavaria for 2005 to 2011, we show that a significant number of Single Farm Payments (SFPs) of the European Union (EU) Common Agricultural Policy (CAP) are captured by landowners rather than by active farmers. However, the degree of capitalization varies considerably among regions, from almost 0 to 56 cents per each additional Euro paid.

Keywords: capitalization; decoupled subsidies; Common Agricultural Policy; land rental prices (search for similar items in EconPapers)
JEL-codes: H22 Q15 Q18 (search for similar items in EconPapers)
Date: 2016
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