The cost of farmers’ administrative burdens due to cross-compliance obligations

Abstract

Administrative burdens are transaction costs due to administrative activities conducted solely because of regulation requirements. Since the shift from market support to cross-compliance-based direct payments, farmers increasingly complain about substantial administrative burdens related to the direct payment scheme. Using data from a survey among 100 Swiss farmers, group comparisons and regression analyses revealed significant differences in working time requirements to meet cross-compliance information obligations across farm types. Dairy producers need significantly more working time than crop producers. The age and education of farmers were not found to affect time requirements. Applying the standard cost model, administrative burdens for all Swiss farmers were estimated to be 136 Mio CHF in 2018 and about 5% of the budget spent on direct payments was needed to cover these costs. Policy measures to reduce administrative burdens should focus on specialized dairy producers, which contribute 37% to the sectoral costs.