Why cannot direct payments be capped in Slovakia? A political economy perspective

Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F49777513%3A23510%2F20%3A43961421" target="_blank" >RIV/49777513:23510/20:43961421 - isvavai.cz</a>
Result on the web
<a href="https://pep.vse.cz/pdfs/pep/2020/06/01.pdf" target="_blank" >https://pep.vse.cz/pdfs/pep/2020/06/01.pdf</a>
DOI - Digital Object Identifier
<a href="http://dx.doi.org/10.18267/j.pep.753" target="_blank" >10.18267/j.pep.753</a>

Result language
angličtina
Original language name
Why cannot direct payments be capped in Slovakia? A political economy perspective
Original language description
Annually the Common Agricultural Policy (CAP) provides support to the farming sector amounting to more than EUR 50 billion in the EU, of which direct payments (DPs) take around 70%. DPs are often argued to be granted unfairly to large farms. In this paper we analyse implications and the political economy of DP capping in Slovakia in the context of the ongoing negations about the future CAP reform. The simulation results for Slovakia show that if the 2018 Commission proposal was approved it would lead to losses of EUR 190.1 million (68% of total DPs) to large farms when labour costs are not subtracted. These losses would decrease to only EUR 12.2 million (4.4% of total DPs) when the labour costs are subtracted. Further, the results show that potentially affected large farms in Slovakia show lower performance and lower compliance with the agricultural policy objectives than farms unaffected by the DP capping. Similar to the past CAP reforms, the position of Slovakia against DP capping is expected to be maintained also in future, which could be explained by three main factors: the productivity argument, the political economy argument linked to the lobby pressure from large farms and low economic distortions caused by DPs.
Czech name
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Czech description
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Type
J<sub>imp</sub> - Article in a specialist periodical, which is included in the Web of Science database
CEP classification
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OECD FORD branch
50202 - Applied Economics, Econometrics

Project
<a href="/en/project/GA19-18080S" target="_blank" >GA19-18080S: Food supply chains: impact of concentration, unfair trade practices, regulations and changing consumer preferences</a><br>
Continuities
P - Projekt vyzkumu a vyvoje financovany z verejnych zdroju (s odkazem do CEP)

Publication year
2020
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

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