SLI-Paper 2002:1

An analysis of decoupled EU support to agriculture

Authors: Torbjörn Jansson 

On July 1, 2002 the Commission presented a proposal concerning a uniform per hectare aid to the agriculture instead of the present direct supports.  The level of support per farm was not to be changed, but the support should be decoupled, i.e no production was required in exchange for the support.

The aim of the paper is to clarify the consequences of the proposal for farmers, tax payers and consumers. The main findings are a decreased production, mainly of beef, but also of grain and oil seed. Production which is profitable only because of the existing support will be discontinued. Because of a decreased supply, farm gate prices will increase, and so will farmers’ income. Consumers will be affected negatively from higher prices, but the consumer loss will be outbalanced by the increased income levels in agriculture.

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