Farmers Reactions To The New CAP

THE NETHERLANDS - The new Common Agricultural Policy (CAP), which will come into force in 2014, is expected in the long term to bring about marked changes in income on intensive dairy farming holdings and on arable farms in the peat colonies.
calendar icon 24 May 2011
clock icon 3 minute read

The magnitude of the change will be largely determined by the present level of the single farm payment per hectare, by farm size and the amount of any additional regional supplement for regions with limitations on agriculture. This appears from a study in which use was made, inter alia, of the LEI Spelsimulatie (Game Simulation) programme. Thirty-five dairy farmers and twelve arable farmers from four regions took part in the simulation, which is described in Wageningen UR’s report Meer groei dan vergroening (More growth than greening).

The precise content of the new European agricultural policy will not become clear until the end of 2013. The study worked with fictitious scenarios: possible future rules of the game for fixing single farm payments. The rules of the game in this study included a fixed payment of €250 per hectare - called a flat rate – and regional supplements for regions with a high social value, where dairy farmers are faced with additional limitations imposed by the environment, landscape and nature.

Change in income

The general line was that incomes fell most on farms which now receive a high single farm payment per hectare; while conversely, farms that receive a low single farm payment per hectare saw their income rise. Regional grants also had a favourable effect on incomes. One of the rules of the game was that farmers could be reimbursed for green-blue services. These are extra efforts for the management of nature, landscape and water. The farmers found in general that the proposed reimbursements for these services were too low. In addition, they found it important that such services should involve little or no extra work and that they should cause as little loss of crop yield as possible.

No new strategy

Economies of scale proved to be the most important business strategy for all the farmers, both with the present and the new CAP. Thus they hardly changed their strategy with the transition to the new CAP, although the farms with large falls in income did show a greater interest in green-blue services. This was the case with both the peat colony arable farmers and the intensive dairy farmers. With the first group it ensured that the fall in income was cushioned. With the second group the reimbursements and the extra costs of the services were more in balance with each other, so that there was almost no effect on income.

Where next?

The dairy farmers proposed that grazing should be included as a green-blue service. They would also like to see better subsidy and innovation arrangements for manure processing, production and energy saving. The arable farmers proposed including field edges in their rotation plan.

The results confirm that there are possibilities for the government to influence the development of agriculture through the rules of the CAP, e.g. by encouraging expansion of dairy farming in areas where that is desirable. Joint development would be a good way of creating greater support among farmers and the general public for payment for green-blue services, e.g. in the form of cooperation between the provinces, the water boards, farmers and social organisations.

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