The Market for Payment Entitlements in Germany

In 2005, Germany implemented CAP decoupled payments. Direct payments were convertedinto tradable, production decoupled, single farm payments (SFP) by a hybrid model. From2010 - 2013, there will be a gradual transition to a regional model. The following papershows the results of an analysis of the market for payment entitlements in Germany between2005 and June 2007. Data are derived from the German Central IACS database (ZID). In thisperiod 1.2 of the 17 million payment entitlements changed their owner. A closer look at thefigures reveals that despite a large difference in the face value of the entitlements, theentitlements are rarely traded in order to optimize farm budget. In most cases, trade ofentitlements is directly linked to farm or land transfer. As a consequence, the overwhelmingmajority of trade takes place on the local level with very little redistribution of directpayments on a regional level being observed. Differences between the thirteen Germantrading regions with respect to observed trade patterns are quite small.