Cross Compliance of CAP First Pillar Measures: A Transaction Costs Assessment

The 2003 review of the Common Agricultural Policy (CAP) has introduced several new policy tools, among which cross-compliance. The introduction of this new policy entails production costs, along with other types of costs arising at the farm level: administrative, information, organisational costs, called transaction costs. The purpose of this paper is to determine the nature of transaction costs and to assess them. The literature on transaction costs in agriculture has, until now, mainly been devoted to the voluntary measures implemented within the framework of the European agri-environmental policy. The first part of the paper intends to use this literature to apply the private transaction costs analysis to the issue of cross compliance. The second part attempts to assess these costs. On the basis of a survey conducted in 2006 among a sample of 39 farmers from the Midi Pyrenees French region, a descriptive statistical analysis (Multiple Classification Analysis - MCA) permits to associate farmer profiles with different levels of incurred transaction costs. These profiles reveal the impact which the farmers’ responsibilities (professional networks) and the role of voluntary commitments previously undertaken may have on the nature and importance of transaction costs. This paper opens up new perspectives on the adoption criteria that should be taken into account in the evolution of agri-environmental regulations. It appears that growing administrative requirements could prompt farmers to outsource tasks which most of them carry out on their own today.