Economist calls for Policy Shift to Facilitate Expansion in Agriculture
Reform of the Common Agriculture Policy (CAP) is urgently required to facilitate growth in farm size and improved farm profitability in the EU. This was a key message from leading UK economist Prof. David Harvey, who was speaking at the Agricultural Economics Society of Ireland (AESI) Conference in Dublin recently.
Prof. Harvey argued that inflated prices for land and other farm assets are a consequence of the current CAP. He called for a radical switch in the mechanism by which the EU provides support to farmers and advocated the introduction of a Bond Scheme to replace the current Single Farm Payment system. Under the Bond Scheme proposal existing farmers would be issued with a lump sum, once-and-for-all payment, equivalent to perhaps a decade of payments under the existing system and in return farmers would sign away all rights to future direct income support payments.
He pointed to the policy uncertainly inherent in the current system of support as a major challenge for farm planning and access to capital. He argued that the Bond Scheme would provide farmers with a guaranteed level of future support and would lead to a significant lowering of farm expansion costs.
He noted that the current system of support was not truly decoupled from production and as a result it hindered the transfer of land to more productive farmers.
EU Member States are now engaged in what is expected to be a protracted negotiation to reformulate the CAP over the next two years, which will govern the operation of the CAP up to 2020. A number of EU Member States, including Ireland, are opposed to any move away from the current system of support which provides payments to farmers based on their historical production.