Temporal instability and redistributive dynamics of gross transfers arising from EU s common agricultural policy

Abstract

Depending on the type of policy measure to assist agriculture, support levels can differ over time and across regions. This paper assesses the effects of the Common Agricultural Policy (CAP) reforms during the 1990s on the fluctuation and distribution of gross transfers to producers. The empirical analysis of instability is based on the index proposed by Cuddy and Della Valle, which corrects for underlying trends in the time series. Results indicate that CAP transfers have be-come more stable by moving from market price support to direct area and head-age payments. To reveal territorial impacts of the adjustments in EU agricultural policy a regionalised concept of producer support estimates (PSEs) is adopted. For the German federal states, significant differences in CAP support levels are observed. Exploring the distributional dynamics, the findings show that those disparities across regions have increased throughout the period under study.