Original scientific paper
DISTRIBUTIONAL EFFECTS OF REFORMED DIRECT PAYMENTS POLICY ON SLOVENIAN AGRICULTURE
2006, 7 (3) p. 579-582
The paper attempts to estimate the redistribution of direct payments under different alternatives of the 2003 reform of the EU Common Agricultural Policy (CAP) among the agricultural holdings in Slovenia. The scenario analysis is based on a static deterministic model of agricultural holdings and includes 57,204 agricultural holdings which applied for direct payments in 2004. The distribution of direct payments under different alternatives of CAP reform was compared against the distribution of standard scheme with 100 % EU level of payments. Introduction of a net regional scheme with a defined single area payment would result in a +drop in budgetary transfers to 12,425 holdings (22 %) in comparison with the standard scheme. These holdings receive a bulk of direct payments (44 %) under the current standard scheme. Estimated impacts by sectors reveal that the negative distributive effects occur mainly in the beef and milk sectors. Slovenia (and most of the old Member States) has decided not to introduce a net regional scheme, but hybrid reform scheme combined with historical payments and certain coupled payments. The policy makers were seeking for minimizing the redistribution effects of the reform. The question is, if in this case the objectives of policy changes are fulfilled and new public concerns about agriculture are met satisfactorily.