Volume 44, Number 173,
April-June 2013
Common Agricultural and Cohesion Policy
in the Europe 2020 Strategy
Antonio González Temprano
cap SPENDING AS AN INSTRUMENT OF HARMONIZATION ( ...continuation )

The spending structure of the cap in these budgets is still marked by the enormous hegemony of Market Spending and Direct Aid . But there is a new factor at play: the decision to contain direct aid and drive rural development caused Pillar 1 to grow by 3.4% while Pillar ii grew by 16.1%. Even so, 74% of cap resources are destined for Market Spending and Direct Aid and only 24.6% to Rural Development . Logically, the other two items, Animal Health and Phytosanitary Issues and Environment are minimal.

Before going into the distribution of direct cap payments by country, it is useful to recall that the 178,443 thousand hectares cultivated in 2009 were very unequally distributed among the twenty-seven member States, which sets the stage for an equally disparate distribution of payments (Table 7). On the other hand, the community subsidy for cultivated hectare of land grew to 313.1 euros in 2009, and to 4,673.7 euros per aul in 2007.

Germany, Greece, Spain, France, Italy, Poland and the United Kingdom accounted for 67.2% of all cultivated land in 2009, which explains, in large part, why these countries received 65.7% of cap payments in this fiscal year. Besides a high personal concentration of payments (approximately 20% of landowners receive 80% of the payments, because they own 80% of the land), there is also significant national concentration.

In 2009, France had the greatest area of cultivated land (16.5% of the eu27), and as such, was the main nation receiving payments (18.6%). However, it cannot be said that France is the country that most benefits from the cap if we take into account the number of euros received per cultivated hectare of land. Taking into account this figure, Malta receives the highest benefits with 810 euros. Out of the top seven positions, Greece has 774.2 euros, while France, with only 353.7, is far below these nations.

Poland and the United Kingdom receive rather low payments per hectare. The difference between these nations is that the United Kingdom receives the so-called “British check”10 as compensation, a questionable agreement when considering that the cap is supposedly based on financial solidarity. When looking at payments per aul, French agriculture receives the most benefits, followed closely by British agriculture. However, this indicator is not as insightful when making comparisons.

Besides Bulgaria and Romania, payments to cohesion-countries can be separated into two different groups. The first is made up by Greece, Cyprus, Malta, Portugal, Slovenia and Slovakia, with similar payments per hectare to the European average. The second group is made up of the Czech Republic, Estonia, Latvia, Lithuania, Hungary and Poland, whose payments are substantially below the community average. This shows that there is no correlation between direct payments and per capita income, a phenomenon that also occurs in advanced economies. If we add the fact that the majority of cultivated land from the members incorporated in 2004 receives lower payments per hectare than the eu27 average, it is indeed understandable that the Commission has formulated a reform proposal for the 2014-2020 cycle, striving for equality and territorial convergence.

In summary, direct cap payments show sharp national differences both in the amount per hectare as well as the amount per aul. The fact that many of these inequalities are hard to justify and a source of strife has driven the Commission to recognize, in its Budget proposal for 2014-2020 [com (2011) 500 final part ii] disconcerting deficiencies in the payment system laid out in the 2007-2013 Financial Framework and to propose a new reform, in the hopes that it will include “a convergence system to reduce these disparities and promote more equitable distribution of financial aid. Redistributing aid will be an important factor in reform in order to make more efficient use of budgetary resources through more equitable and better-oriented direct payments.”11

10 This is a rebate negotiated in 1984 that applies to United Kingdom contributions to the eu Budget to compensate for the reduced benefits this country receives from the cap.

11 In the same Communication, the Commission indicates that the most fair and efficient distribution of aid “will be achieved in the following manner: for all member States with direct payments below 90% of the eu27 average, one third of the difference between their current levels and 90% of the average of direct eu payments will be eliminated. Aid allocations for rural development will also be updated, with figures determined using a series of objective economic and territorial criteria that reflect future social, economic, environmental and territorial policy objectives.”

Published in Mexico, 2012-2017 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 192, January-March is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
CP 04510, México, D.F. Tel (52 55) 56 23 01 05 and (52 55) 56 24 23 39, fax (52 55) 56 23 00 97, www.probdes.iiec.unam.mx, revprode@unam.mx. Journal Editor: Alicia Girón González. Reservation of rights to exclusive use of the title: 04-2012-070613560300-203, ISSN: pending. Person responsible for the latest update of this issue: Minerva García, Circuito Maestro Mario de la Cueva s/n, Ciudad Universitaria, Coyoacán, CP 04510, México D.F., latest update: Feb 23th, 2018.
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