Introducing flat rate direct payments taking into account social concerns and ecological non-commodities

Direct payments to producers were decoupled since the June 2003 reform of the European Common Agricultural Policy (CAP). Farmers get a single farm payment by activating payment entitlements with eligible area. In Flanders the single farm payment is calculated according the historical model (based on individual entitlements in the reference period 2000–2002). Nowadays the European Commission wants to fine tune the modernized CAP, well known as ‘Health Check’. One of the proposals of the European Commission proposes is moving away from historical payments. The effects of a flat rate introduction (equal payments per hectare of cultivated land) on shifts in farm activity and impacts on farmers’ income of arable, dairy and cattle farms were investigated by Marchand et al. (2008). The impact analysis of direct payments’ reallocation was merely financially oriented. The aim of current
research is to make the direct payments more goal-orientated and more acceptable to the public by taking into account also social concerns and ecological non-commodities of agriculture. We examine how flat rate payments are distributed in relation to some social an ecological aspects and which effects this redistribution may cause. How many payments do retiring farmers receive at the expense of the active farmers? When retiring farmers are excluded, does redistribution have an effect according to farm size, region and farm type? Are ecological non-commodities rewarded at this time? With respect to this question, we analyse
if areas where agriculture is important to policy purposes in the scope of biodiversity and valuable areas favored or not? Depending on the results of this more sustainable-oriented analysis, suggestions to redistribute direct payments will be discussed.