Investment Behavior of Agricultural Producers in the Single Area Payment Scheme

The financing of farms by the Common Agricultural Policy (CAP) creates prerequisites for their renovation by restructuring the production in conformity with the market conditions and by new investments for achieving competitiveness on the international markets. In the present study two aims are set: first, to analyze the investments made up to 2007 and the investment intentions of the interviewed producers for the period 2008-2013, and second, to analyze to what extent the financing through CAP measures can influence the investment behavior of the producers. The study covers a group of farms from six municipalities falling into less favored regions in the districts of Bourgas, Vidin, Montana, Pazardjik, Sliven and Yambol. The farms from the first five districts are situated in mountain regions and the ones in the Yambol district - in a less favored region different from the mountain ones. The study of the investment intentions of the producers in based on the survey data, and the possibilities for investment realization have been investigated by three scenarios of the agrarian policy. The first scenario is basic, without CAP subsidies and it reveals to what extent the farms can realize their investment intentions using the farm profit or by means of borrowed resources. In the second scenario the value of the investments is juxtaposed with the farm"s own resources, by adding the expected investments respectively for 2008 and 2013 to the profit. The subsidies by the Single Area Payment Scheme (SAPS) are determined in two versions of direct payments - with and without national additional payments. A third version is being developed which foresees an increase of the profit by 20%, as a result of the increase of the costs of the resources and foods of agricultural origin. The third scenario was developed for a policy applying the Single Farm Payment Scheme (SFPS), which assumes that part of the subsidies of the financial package determined for the country for 2013 is paid per head in livestock (outside SFPS), and the remaining part is distributed per hа according to the rules of SFPS. The following results have been obtained in the study: in the basic scenario, without subsidies, only the farms with perennial plants can provide financially for their investment intentions and the rest have deficiency of resources; in the second scenario, as early as in 2008 all groups of farms with the exception of the ones with ruminants will be given the possibility to finance the planned investments. In vegetable farms this is mainly due to the subsidies that they will obtain from the transitory measure "Young farmers". For this reason in 2013 there will be no transitory measures, the vegetable farms will have difficulties in the realization of the investments, and ruminant farms still cannot cover their average annual investment needs. The tendency is identical when national additional payments are received and without them, but in the first case more resources remain for the producers. In the third scenario, the ruminant farms and the mixed farms with animals receive a higher share of the subsidies. In regions like the investigated ones where the size of the land adjoining to the animal farms is substantial and they receive subsidies and in the less favored regions the transition to SFPS with separate payment per head can lead to over-financing. For this reason this scheme should be applied after detailed investigation of the effect in all regions.