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Transcript of Distributive Effects of the EU's New Common Agricultural Policy in German Agriculture
8/8/2019 Distributive Effects of the EU's New Common Agricultural Policy in German Agriculture
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D istributive e ffects of D irect P ayments in G erman a Griculture
unDer the n ew c ommon a Gricultural
P olicy of the e uroPean u nion
Harald von Witzke and Steffen NoleppaBerlin, Germany
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© 2006 The German Marshall Fund o the United States. All rights reserved.
No part o this publication may be reproduced or transmitted in any orm or by any means without permissionin writing rom the German Marshall Fund o the United States (GMF). Please direct inquiries to:
The German Marshall Fund o the United States1744 R Street, NWWashington, DC 20009T 1 202 745 3950F 1 202 265 1662E in o@gm us.org
This publication can be downloaded or ree at http://www.gm us.org/publications/index.c m. Limited printcopies are also available. To request a copy, send an e-mail to in o@gm us.org.
GMF Paper SeriesThe GMF Paper Series presents research on a variety o transatlantic topics by sta and ellows o the GermanMarshall Fund o the United States. The views expressed here are those o the author and do not necessarily rep-resent the view o GMF. Comments rom readers are welcome; reply to the mailing address above or by e-mailto in o@gm us.org.
About GMF
The German Marshall Fund o the United States (GMF) is a non-partisan American public policy and grant-making institution dedicated to promoting greater cooperation and understanding between the United Statesand Europe.
GMF does this by supporting individuals and institutions working on transatlantic issues, by convening leadersto discuss the most pressing transatlantic themes, and by examining ways in which transatlantic cooperation canaddress a variety o global policy challenges. In addition, GMF supports a number o initiatives to strengthendemocracies.
Founded in 1972 through a gi t rom Germany as a permanent memorial to Marshall Plan assistance, GMFmaintains a strong presence on both sides o the Atlantic. In addition to its headquarters in Washington, DC,GMF has six o fces in Europe: Berlin, Bratislava, Paris, Brussels, Belgrade, and Ankara.
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A R T G M F U SB , N 2006
A
1 A C A P (CAP) 3
2 T w k
2 1 M q
2 2 D q 8
3 E 3 1 D
3 2 R
3 2 1 R q
3 2 2 A q
4 Ex
5 P
6 I
7 S
8 R
A x
D istributive e ffects of D irect P ayments in G erman a Griculture
unDer the n ew c ommon a Gricultural P olicy of the e uroPean u nion
H W zk S NB , G
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The German Marshall Fund o the United States
Abstract
Keywords : C A P ; ; ; ;
; q
Abstract: T C A P (CAP) E U
q A , k
w x
I , w q
G F ,
w q k
K
N CAP q
75 T
E 100,000 E 300,000 w j P w ,
w , M w k
T w w , w ,
Authors:H W zk P C I A T D
H U B , G- /w / / ; w
- )
S N S F w w — w k , B , G(www )
A Report to the German Marshall Fund of theUnited States
T G M F U A
x
w U S E -w M P W
w W FF , GMF’ T D
w U S E
Berlin, November, 2006
*T w k D J HG F M F , AC k
, E BH G , J G , S P , J T
H U A
Distributive Effects of Direct Payments inGerman Agriculture under the New Common
Agricultural Policy of the European UnionH W zk , H U B , G
S N , , B , G
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Distributive E ects o Direct Payments in German Agricultureunder the New Common Agricultural Policy o the European Union
The initial fear in the EuropeanUnion of nothaving enoughfood has now been replaced by the concern about
the budgetary and third –countryconsequences of too much foodin the EuropeanUnion.
T T R E
CAP I w 1957 TCAP w 1967–68 ww E E C
x T CAP
, w ( )
T CAP
j S w T R 1957; w F
CAP, w j :
• T CAP w E
w
k • I w
/ • I w G
E
T CAP w
M , w w k H w ,
j w w
M , w E U ;
, , w EU x A
CAP, j , G , w w w
w G w H , j
H w w
EU k ,
, I ,
x CAP T E
U w
– q
E U A , j
T E U EE C — A w w
w EU- ( ) w
w N ,
w
H w , E T
x 25 TE U
A ;
- E EU- k R
— x , 2005
40 EU (E C , 2006)
I , k CAP T ,
E U w
, E U
1 A short history of the CommonAgricultural Policy (CAP)
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The German Marshall Fund o the United States
k
T 1980 w z ,
, , q q EU k W
CAPw
CAP EU , j
w k 1991 w k w M Sh T w w 1999 B
A d 2000 L x b C p sf 2003 T
I k k
T x F 1 w T
, w E
EU k w x ,
q, w
F , x
w k EU w
k
1997 1998 1999 2000 2001 2002 2003 2004 2005 200690
Source: FAPRI; Toepfer International.
100
110
120
130
140
EU farm gate price
EU intervention price
Figure 1: EU market price and intervention price of wheat
P r i c e
( E U R / t )
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Distributive E ects o Direct Payments in German Agricultureunder the New Common Agricultural Policy o the European Union
W , CAP w R
,
w z EUk ‘ ’
M x
x , w , ,
( E C , 1999)
C , k B
w I ,
A
x E U , x
2006
T j CAP , w
CAP k
CAP
O k CAPw
z j
( W zk ,1979; W zk S ,1981) U
CAP, EU k T ,
, w , ,
w w M , w
w ,
z x
T N CAP k x j A ,
z x
W x , w
z H w , , , N CAP ,
A w k A
w T ,
EU ( W zk , 1983; 1984;
K , 2004; T , 2006), US ( M D , 2006) w
j T E U w
N CAP , EUC x
A , x CAP, w x
j , w j
w , q N CAP , w k
x , T x
, w , w k
Large operations,which typically
secure highincomes, arethe primary beneficiaries, andnot the smallfarmers for whom this policy was intended.
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The German Marshall Fund o the United States
CAP
w U N w CAP
CAP
I w q q
N CAP G G
, (Lä ) W z
w w E F w , w w
w k w w q
S , w w
G T , w w x
w A , w w
W w w
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The German Marshall Fund o the United States
50
A q
bs (GA) T q G w
( W zk , 1984):
(5) GA =1
n n 1). yi − y j
j=1
n
∑i=1
n
∑
GA z w G:
• I w z
• I w
• I w w ,
z• T
w GA
2.2 Decomposing inequality into itscomponents
I , w w q G
q
, w q w T w
q q q
A ( ) w (x z ) T
():
7) G = r' l' . i
W -
w w ), G w ( W zk ,
S k , 1982; P , 1980; F R , 1969):
1.0
0.8
0.6
0.4
0.2
0.0
Figure 2: An exemplary Lorenz curve
0.0 0.2 0.4 0.6 0.8 1.0
Farms, cumulative and in p.c.
F a r m
p r o
f i t , c u m u
l a t i v e a n
d i n p . c .
A
B
a
b
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Distributive E ects o Direct Payments in German Agricultureunder the New Common Agricultural Policy o the European Union
(7) G = r' l' . i
(8)
r =
r 1
…
r n
I q (8), q (3) L z
(9)
l =
2 . 1− n −1
n − 1
2 . i − n −1
n − 1
2 . n − n −1
n − 1
…
…
(10) …
i =
1
1
☐ = ‘ x’
(H w , 1971, 2, 1107); W A = B C, j= b j j
W ( ) - ,
,G, q (7),
q T ,
(11) r' l' i r x
' l' i + r z
' l' i
(12)
r x =
r x1
r xn
…
(13) r xi =x i
yii=1
n
∑
(14)
r z
r z1
r zn
…
(15) r zi =z i
yii=1
n
∑
T w q (11) k k G w
H w , G ,
- , ,
[0,1] W w p p G (PPG ) T , w :
(16) G = PPGx + PPGz
B w GA
q :
(17) GA = ' ☐ ' · · 2 · -1
(18) GA = PPGAx + PPGAz
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The German Marshall Fund o the United States10
(19) PPGAx = x' ☐ ' · · 2 · -1
(20) PPGAz = z' ☐ ' · · 2 · -1
N PPG PPGA
-
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Distributive E ects o Direct Payments in German Agricultureunder the New Common Agricultural Policy o the European Union
11
3 Empirical analysis
3.1 Data
T G F M
F , A , CP I w
G (“T ”) w EU w k (FADN) A 11,756
2005
( ) w T 250,000 I w ‘ ’
I , 2004/05 481 ,
E G T 2,876 T w
G T x W z
, w w w T w
x T A1 A x
T T k
( ) N CAP T
T
( BMVEL,2005) I ,
w w z T , wx k
I I ,
1.0
0.8
0.6
0.4
0.2
0.0
Figure 3: Lorenz curves of farm profits in German agriculture
0.0 0.2 0.4 0.6 0.8 1.0Farms, cumulative and in p.c.
F a r m
p r o
f i t , c u m u
l a t i v e a n
d i n p . c . FAMILY FARMS
1.0
0.8
0.6
0.4
0.2
0.00.0 0.2 0.4 0.6 0.8 1.0
Farms, cumulative and in p.c.
F a r m
p r o
f i t , c u m u
l a t i v e a n
d i n p . c . INCORPORATED FARMS
Source: Own computations based on BMELV.
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The German Marshall Fund o the United States1
‘ k ’ N – k ,
k
, , q /
T G () T , w
w ,
x w , A ,
q F
, q
N ,
q T
q k k T ,
q ( W zk , 1983) H ,
q k w k w
3.2 Results
3.2.1 Relative inequality
F 3 L z , q N
w q z T G
, G w [0,1] T
N
, w , , W zk (1983)
A , L z w
T , w q w
w T G
( 1)
T G
, T 1 w
T ( ), ,
I w w
Table 1: Relative inequality o arm profts, direct payments, and market profts in Germany
1 1 F (2005)
q ……
G
… PPG
… k PPG -
50271 17154 33117
1 2 I (2004/05)
q ……
G
… PPG
… k PPG -
64853 47053 17800S : Ow BMELV
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Distributive E ects o Direct Payments in German Agricultureunder the New Common Agricultural Policy o the European Union
1
I q
H w , k PPG w O T
A x A w q € 100
T , , w q H w , w
, q
w E , , k
3.2.2 Absolute inequality
T q q T 2 M q
w q A €,
, w , w
W € 40,000 w € 14,000 W
, kT
q T € 134,000 w
€ 100,000
Table 2: Absolute inequality o arm profts (€),direct payments and arm profts without direct payments
2 1 S (2005)
q ……
(GA )…
(PPGA )… w
(PPGA -)
40,313 13,756 26,557
2 2 I (2004/05)
q ……
(GA )…
(PPGA )… w
(PPGA -)
134,432 97,535 36,897
S : Ow BMELV
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T 3 x F w
w–, –, – A ,
w w T ,
I , – € 400,000,
w
T – 14
T H ,
w
– T
4 Exemplifications
Table 3: Proft and direct payments in selected German arms
3 1 F (2005)
w …
( )
w k (FTE)
(€)(€)
k (
…1,117 37,659 29 — –9,626 11,397 –21,023
…1 1,058 17,752 63 — 44,802 25,830 18,972
…2 41 453 403 — 404,499 150,207 254,292
3 2 I (2004/05)
w …
( )
w k (FTE)
(€)(€)
k (
…94 519 1,442 26 8 –65,162 517,678 –582,840
…1 22 118 1,574 23 1 44,506 623,304 –578,798
…3 6 24 2,451 57 1 1,271,034 1,068,636 202,398
S : BMELV w BMELV1P € 40,000 € 50,000;2P > € 300,000;3P > € 500, 000
The high–profitfarm receives
almost 14 timesthe amount of
payments of thelow–profit farm…
The typical largeincorporated farm
receives morethan € 1 million
in payments.
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Distributive E ects o Direct Payments in German Agricultureunder the New Common Agricultural Policy o the European Union
1
€ 1 T w
–
T 3
H w ,
I , w x
– ,
(
A1 A x) E , z
w W ,
j w
N
N w CAP T w j
T , w , w
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C , ,
I w , w w w
,
A , w q x
, w I , x
,
A ,
w
H w , w z T
w z
O z W
x
W w w
, w
w T
5 Predicting individual payments
Table 4: Explaining direct payments received per arm by acreage armed (WLS regression)
4 1 R WLS (2005) (€)
(€)1 1250 021 (2 509)
1 372 946 (112 336)j R2 999
F 12619 378
4 2 R WLS (2004/05)
(€)
(€)1 6971 894 ( 200)
1 404 815 (16 782)j R2 949
F 281 644S : Ow BMELV1 -
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Distributive E ects o Direct Payments in German Agricultureunder the New Common Agricultural Policy o the European Union
1
I 4 x
F
x - T , ,
k w w j
z N
x
A w , w T T
T ,
w w w x
T 5 x w
4 A ,
T
T 6 x x zT
4 A , ,
Table 5: Total direct payments (€) received and predicted in exemplary arms
5 1 F (2005)
w … w
( )… 11,397 12,066 –5 9
… 1 25,838 24,746 4 2
… 2 150,319 151,547 0 2
5 2 I (2004/05)
w …f w
( )… 517,678 590,715 14 1… 1 623,304 644,151 3 3… 3 1,068,636 999,175 –6 5S : Ow BMELV1 € 40,000 € 50,000;2 > € 300,000;3 > € 500,000
It is, in fact,possible to predictthe unknown sumof total directpayments with theinformation about
just one variableand that is farm
size in terms of area farmed.
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The German Marshall Fund o the United States1
Table 6: Predicted direct payments per arm by arm size
6 1 F (2005)
( ) (€)25 10,574
50 19,897
100 38,545
500 187,7321,000 374,2152,000 747,142
6 2 I (2004/05)
( ) x (€)500 209,380
1,000 411,7871,500 614,1942,500 1,019,0105,000 2,031,0477,500 3,043,085
S : Ow 4
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Distributive E ects o Direct Payments in German Agricultureunder the New Common Agricultural Policy o the European Union
1
A E U , w z w
w G W z
€ 100,000 € 300,000 T
7 8 A , € 100,000 w
, w € 300,000 w
T w w x€ 100,000 w
x € 300,000 N w w
, w , A 6
, w , , z
N
I , w x
T , T 7, 8 A1
6 Implications of payment limitations
Table 7: Farm proft, direct payments and market proft with payment limitations (€ 100,000)
7 1 F (2005)
( €)
k (€)
(€)
k (w
) (€)≤ 0 37,659 –21,023 11,397 –9,626
0–5 23,692 –8,606 11,179 2,5735–10 21,711 –5,056 12,636 7,58010–15 22,680 –1,491 13,944 12,45315–20 22,112 1,889 15,539 17,42820–30 37,193 7,728 17,220 24,94830–40 27,687 13,347 21,234 34,58140–50 17,752 18,972 25,830 44,80250–75 25,651 28,922 31,840 60,76275–100 10,890 47,458 37,939 85,397100–125 4,827 63,502 47,174 110,676125–150 2,294 88,503 47,263 135,766150–200 1,907 95,895 74,870 170,765200–300 826 132,018 100,000 232,018> 300 453 254,292 100,000 354,292
7 2 I (2004/05)
( €)
k w
(€)
(€)
(w
) (€)≤ 0 519 –582,732 100,000 –482,7320–5 202 –413,734 100,000 –313,734
A payment limitof € 100,000 per farm would haveonly very limitedeffects in family farms, while apayment cap of € 300,000 wouldhave no effect atall in these farms.
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The German Marshall Fund o the United States0
( €)
k w
(€)
(€)
(w
) (€5–10 94 –274,214 100,000 –174,21410–15 75 –595,832 100,000 –495,83215–20 104 –341,835 100,000 –241,83520–30 184 –310,802 100,000 –210,80230– 40 151 –439,092 100,000 –339,09240–50 118 –578,640 100,000 –478,64050– 75 205 –418,559 100,000 –318,55975–100 259 –365,899 100,000 –265,899100–125 141 –567,068 100,000 –467,068125–150 194 –482,976 100,000 –382,976150– 200 189 –438,312 100,000 –338,312200–300 265 –336,022 100,000 –236,022300–500 152 –484,768 100,000 –384,768> 500 24 202,442 100,000 302,442S : BMELV w BMELV
Table 8: Farm proft, direct payments and market proft withpayment limitations (€ 300,000); incorporated arms (2004/05) 1
( €)
k
(€)
(€)
w (
)≤ 0 519 –582,732 300,000 –282,7320–5 202 –413,734 300,000 –113,7345–10 94 –274,214 281,623 7,40910–15 75 –595,832 300,000 –295,83215–20 104 –341,835 300,000 –41,83520–30 184 –310,802 300,000 –10,80230–40 151 –439,092 300,000 –139,09240–50 118 –578,640 300,000 –278,64050–75 205 –418,559 300,000 –118,55975–100 259 –365,899 300,000 –65,899
100–125 141 –567,068 300,000 –267,068125–150 194 –482,976 300,000 –182,976150–200 189 –438,312 300,000 –138,312200–300 265 –336,022 300,000 –36,022300 –500 152 –484,768 300,000 –184,768> 500 24 202,442 300,000 502,442S : BMELV w BMELV1N , w f
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Distributive E ects o Direct Payments in German Agricultureunder the New Common Agricultural Policy o the European Union
1
x w wk
T :
( ) T
, , w T
q w
q
, w k k x , w x
, w
T w
US x 1996 US F B
( ) A , k w
W EU’ N CAP w
w w T j w
w z
( ) I w ,
w
( ) E , x
j
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The German Marshall Fund o the United States
T w k
q I q
E U ’NCAP q w G
T q
G A q w
, w 75 q w A
€ 25,000 w € 17,000
T
E q € 500,000 T
x € 1,000,000 H w ,
j w k
U , k w T , w k w
W w w z
T , ,
w
T EU
I , w
z T € 100,000 € 300,000
T w
x
H w ,
w x T j k
, w
I x , q w TN CAP
M k ,
z T , , k
q T , N CAP
q w k
x , j
7 Summary and conclusions
The New CAP
contributes significantly to
inequality withinagriculture. It
keeps inefficientoperations aliveat the expense
of taxpayersand society at
large, and itdelays structural
adjustment inagriculture toward
farms that areeconomically
inefficient.
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Distributive E ects o Direct Payments in German Agricultureunder the New Common Agricultural Policy o the European Union
BMELV (G F M F , A -, C P ), S
, 2004/05 2005
BMVEL (G F M CP , F , A ), M
A k, 2005
E C , “C E - C M C
A ” I P , B , O 1999
E C , www / /_ / _ _ J 23, 2006
FAPRI, “FAPRI S O k D ” A ,IA: I w S U , 2006
J C H F , “G w F D I ”Q. J. E .92 (1978): 17–53
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8 References
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The German Marshall Fund o the United States
Table A 1: Farm proft class, profts and number o observations per proft class
A 1 1 F (2005)
( €)
(€)
(€
≤ 0 1,117 37,659 –9,626 11,3970–5 672 23,692 2,573 11,1795–10 724 21,711 7,580 12,63610–15 842 22,680 12,453 13,94415–20 910 22,112 17,428 15,53920–30 1,696 37,193 24,948 17,220
30–40 1,473 27,687 34,581 21,23440–50 1,058 17,752 44,802 25,83050–75 1,630 25,651 60,762 31,84075–100 785 10,890 85,397 37,939100–125 377 4,827 110,676 47,174125–150 179 2,294 135,766 47,263150–200 171 1,907 170,765 74,870200–300 81 826 237,862 105,844> 300 41 453 404,499 150,207
A 1 2 I (2004/05)
( €)
(€)
(€
≤ 0 94 519 –65,162 517,5700–5 34 202 2,710 416,4445–10 17 94 7,409 281,62310–15 16 75 12,766 608,59815–20 12 104 17,129 358,96420–30 27 184 24,398 335,20030–40 23 151 35,152 474,24440–50 22 118 44,506 623,14650–75 31 205 61,602 480,16175–100 37 259 86,326 452,225100–125 26 141 115,600 682,668125–150 29 194 139,218 622,194150–200 37 189 174,345 612,657200–300 44 265 249,202 585,224300–500 26 152 368,832 853,600> 500 6 24 1,271,034 1,068,592S : BMELV w BMELV
Appendix
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