The Common Agricultural Policy (CAP) of the European Union (EU) is characterized by a wide array of individual policy measures, which differ by the category of instruments, across commodities and over time. Consequently, the net impact of the policy mix on price incentives for producers and consumers had been intransparent for years. This study utilizes a regionalized concept of producer support estimates (PSEs) to elaborate the primary effects of the CAP on producers at a disaggregate level of NUTS III regions. 26 regions in the federal state of Hesse, Germany, in the years 1986-1999 are utilized as a case study. One important result is that a uniform CAP does affect the regions very differently. Recent reforms of the CAP have not reduced significantly the average level of agricultural support in the region studied. Statistically significant downward trends in absolute producer support due to price support were associated with significant upward trends due to direct payments. Interestingly, absolute and relative PSE measures due to the CAP and price support are fully uncorrelated with each other. If transfers under the CAP are targeted in terms of absolute support, e.g., this may induce an arbitrary interregional distribution of PSEs in relation to farm revenues.


Downloads Statistics

Download Full History