Does the CAP enslave the fittest?

The last three decades the CAP has introduced plenty of policy-created assets such as dairy quota, suckler cow quota and tradable direct payments based on historical reference. Environmental and member state specific policies have also contributed to this evolution. Numerous scientific papers highlight inefficiencies in these systems. Policy assessments have shown that reforms would improve competitiveness of the agricultural sector and increase overall welfare in the farming sector. Yet, it is clear that policy reforms move very slowly and often the most efficient policy option is not chosen. This paper shows through a political economics analysis why some reforms are heavily opposed by the farm lobby despite the fact that they would be beneficial for the viability of the farming sector in the end. The key observation in our analysis is that farmers that go to retirement benefit from supporting the value of policy-created assets while the growing and investing farmers suffer from the fact that they need to pay for these policy-created assets. The tragedy in the reform of the CAP is that growing farms are outnumbered by retiring farms. The paper illustrates this point with different cases at EU and member state level.

http://ift.tt/2oLbrN7