To which extent are counter-cyclical payments more distorting than single farm payments? Evidence from a farm household model

MARY Sébastien

To which extent are counter-cyclical payments more distorting than single farm payments? Evidence from a farm household model

2012 | 2013 | 2014

MARY Sébastien

The distinction between Single Farm Payments (SFP) and Counter-cyclical Payments (CCP) is mainly based on theory. Due to a lack of empirical comparative studies between these types of farm payments, it is difficult to confirm the claim that Counter-cyclical Payments are more distorting. This paper provides a comparative analysis of these payments using a dynamic stochastic farm household model and quantifies the impact of such payments in the presence of debt constraints. The main findings are that CCP are more distorting than SFP. However, the magnitude of the impact estimates is not as large as suggested by the different treatment received by both support programmes in WTO negotiations.

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JRC.J.4 - Agriculture and Life Sciences in the Economy

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