Description

These subsidies for farmers are coupled to the production levels (coupled direct payments) or to the field size or livestock numbers (decoupled direct payments). Every farm is legally entitled to receive such payments providing it meets certain regulatory conditions.

Direct payments are usually only made to those applicants who meet certain criteria, such as the farm size exceeding a certain minimum size, providing evidence that farming is their principle business, and demonstrating compliance with certain environmental requirements. In this context it is seen as more efficient if these payments are tailored to the individual needs of the respective regions.

Requirements

• A properly functioning country-wide administration and monitoring system with access to the relevant information and sufficient technical and human capacities for its design, implementation and monitoring
• Clear and coherent political strategy and targets for policy-makers and public authorities
• Clear development prospects for agriculture, the agri-food sector and participation of farms
• Clear responsibilities in public authorities
• Close cooperation and knowledge sharing with farmers' organisations
• Close cooperation and knowledge sharing with research institutions
• Compatible regional and world trade law (WTO conformity)
• Constant market surveying and forecasting
• Country-wide register of farms and / or enterprises involved in the agri-food sector
• Property / land register / formal land rights
• Regulated and legally protected payment structures

Possible Negative Effects

• Heavy burden on the state budget
• Risk of abuse through nepotism, personal gain and corruption
• Free rider effects in agriculture with no promotional effect (e. g. when land owners are receiving payments who are based in cities while farmers renting their land do not benefit)
• Coupled direct payments are market- and trade-distorting