Effects of Agricultural Policy Measures on Gross Transfers to Farmers: Intertemporal and Interregional Evidence from the CAP

This paper analyses the effects of the Common Agricultural Policy (CAP) on gross transfers over time and across regions. Depending on the type of instrumentation to support agriculture, the volatility of gross transfers differs. While assistance arising from market price supports, regarded as independent from the world market levels, fluctuates intertemporally, direct payments are constant. Empirical findings for the CAP show a reduction of the transfer volatility on grain markets. For beef and veal this effect is not significant, because price support is still large in these markets. If agricultural support is biased in favour of specific commodities, territorial heterogeneity leads to an uneven distribution. By applying a regionalised concept of producer support estimates (PSEs) for the German Federal States, results indicate significant interregional variation of CAP support.