Structural Implications of First Hectare Payments and Young Farmer Support within the EU CAP Reform 2013: The German Case

Within the reformed CAP, Germany decided to support small and young farmers by higher hectare payments. Because of heterogeneous farm structures with smaller farms in the south and large in the east, this causes regional redistributions. Agent-based simulations show that these policies create incentives for small farms to continue production but cannot provide perspectives. As small farms compete usually with other smaller farms additional support fulminates in small farm dominated regions in higher land prices and a structural conservation. Moreover, large farms are not harmed by reduced payments as they mainly compete with other large farms which are equally affected.