The objective of of Genedec is to develop methods and tools in order to provide
a comprehensive assessment of the socio-economic impact of decoupling on the
EU farm sector.
Among others, the call explicitly explains that the approach
should assess the impact of integrating existing direct payments into a decoupled
income support scheme, in particular to quantify the impact on:
- supply, demand,
stocks, trade and prices for the main commodities. The assessment has to take
into account adjustment processes, in particular on the supply side
- localisation of production
- land use, land market and prices
- farm income, structural adjustment of holdings
- entries and exits from the agricultural sector.
At the time of the call for proposal, the European Commission expected that the majority of direct payments would be decoupled with the
Mid-Term Review of the CAP. This reform had the following background:
- World Trade Organization (WTO) negotiations
Existing direct payments in the EU are classified as blue box payments, a special regulation based on the Blair-house agreement, established
for an interim period. However, decoupled payments are classified as green box payments, therefore decoupling is necessary to maintain a
certain level of income support.
- Avoiding the production linkages of direct payments
Existing direct payments in the market regimes influence both the level and the orientation of production. Market impacts of price
liberalisation can therefore be distorted by commodity based direct payments.
- Increasing the efficiency of income transfers
With regard to the efficiency of subsidisation, direct payments are more efficient than price protection measures.
- Lowering the administrative burden of direct payments
In principle, decoupled payments must be defined on the basis of a (historical) reference period. They might be adjusted to yield or price
changes to a certain degree. In 2001, the EU introduced a so-called simplified payment scheme for farms with direct payment of less than 1250