The Economic Impact of Public Support to Agriculture

The recent reforms of the Common Agricultural Policy (CAP) of the European Union extend in a significant way the decoupling process started some ten years earlier. By adopting the Single Farm Payment (SFP) scheme only limited support for agriculture is tied to current production decisions. This is also true of U.S. farm policy. The reform act of 1996 introduced greater planting flexibility, shifted some support to direct payments, and eliminated the authority for acreage reduction programs. The 2002 and 2008 Acts retained these features. However, they added countercyclical components to direct payments based on market prices and historic production, and allowed for updating of base acreage underlying direct payments. These steps arguably reintroduced ties between support and production decisions. This volume explores the economic implications of these recent changes in the design of agricultural policies for the economic performance of the sector in the European Union and the United States.The book is organized around five themes: (1) New Directions in Agricultural Policy: U.S. and EU Perspectives; (2) Agricultural Policy and Economic performance; (3) Energy and Agricultural Policy; (4) International Trade and Agricultural Policy; and (5) Commodity Programs and Risk Management. The authors apply rigorous tools to analyze the impact and implications of current agricultural policies on efficiency, productivity, and competitiveness in the sector, and consider opportunities for improvement in policymaking and practice.