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Abstract
The form and scope of direct payments under the Common Agricultural
Policy are controversial for several reasons: high budgetary costs, unfair
distribution between old and new Member States and weak argumentation of
payments; consequently, they will have to be redefined for the period 2013-2020
and this calls for a need for policy impact assessment. The paper presents an
analysis of the impact of different direct payments policy scenarios on the
agricultural markets of the ten new EU Member States (NMS). The study is based
on the AGMEMOD (AGricultural MEmber states MODelling) EU-27 dynamic
econometric partial equilibrium models. The Baseline Scenario assumes that from
2013 on, the Single Area Payment Scheme would continue, dairy quotas would be
abolished and some other policy instrument changes would take place as agreed in
the 2008 Health Check policy conclusions. Preservation of the current policy
would lead to further growth in production of most agricultural markets, resulting
from accelerated technological development and the opportunities provided by the
EU common market. The only exceptions are dairy and beef sectors, where NMS
would face a drop in competitiveness. The Scenario Abolish implies total
abolishment of the Pillar I direct supports and according to the Reduced EU-Wide
Flat Rate Payments Scenario, payments at the entire EU area would be made more
uniform, but would be – owing to the expected overall reduction of budgetary
funds for Pillar I of CAP – at a substantially lower level. According to the model
simulations, reducing the level of payments or their abolishing would not result in
any dramatic medium-term changes on agricultural markets in NMS by 2020,
which could serve as an argument for the future CAP reforms.