Une analyse économique de la réforme de la PAC de juin 2003

Abstract

An Economic Assessment of the June 2003 Common Agricultural Policy Reform. The main innovation of the June 2003 Common Agricultural Policy (CAP) reform is to replace most market aids by a single direct payment per farm disconnected from production choices and levels (decoupling process), conditional on the respect of statutory environmental, food safety, animal health and animal welfare standards as well as good agronomic and environmental practices (cross-compliance process). This decoupled payment will be progressively reduced up to a maximum of 5 % and funds saved through this modulation mechanism will be switched from the first pillar of the CAP to a consolidated and strengthened rural development regulation confirmed as the second pillar of the CAP. In application of the subsidiary principle, important degrees of freedom are given to Member States in terms of market aids which would remained coupled and in defining cross-compliance national criteria. The objectives of this paper are the following. In a first stage, it presents the reform and proposes a qualitative analysis of measures adopted in June 2003. In a second stage, it provides a quantitative assessment of the reform for the European agricultural sector: impacts on supply, demand, exports and imports, prices, agricultural incomes, budget costs and welfare. In a third stage, the same exercise performed at the French scale allows us to give first responses to some interrogations raised by the decoupling of the income support policy. Attention is focused on three issues, i.e., land abandonment, extensification and the process of specialisation of farms and regions. We conclude by presenting our point of view on necessary evolutions of the CAP.