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The “Health Check” of the CAP reform: Impact Assessment

The “Health Check” of the CAP reform: Impact Assessment. DG for Agriculture and Rural Development European Commission. The content of the Impact Assessment. Main Report Three main sections, around the three policy questions of the HC Annexes

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The “Health Check” of the CAP reform: Impact Assessment

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  1. The “Health Check” of the CAP reform:Impact 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

  5. 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

  6. 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

  10. 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

  14. For further information • CAP Health Check http://ec.europa.eu/agriculture/healthcheck/index_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

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