Impact analysis of EU and national agricultural policies

Background and Objective

We provide a scientific basis for the development of efficient policies. We evaluate existing regulations, for example the Renewable Energies Directive (EEG), as well as potential options for future policy making.

Approach

At the Institute of Farm Economics, we concentrate on assessing how policy changes impact the farms, and how farmers can adjust. Our activities are closely integrated with those of the two other economic Thünen Institutes as well as the „Thünen Model Network“ and the working group „Evaluation“.

Data and Methods

We use a wide range of different data sources and analytical methods. On the one hand, we can draw on extensive existing data bases, like the German Farm Accountancy Data Network, which comprises annual accounts of more than 10,000 farms. On the other hand we also collect data, often in co-operation with partners - e.g. within the agri benchmark network – to look at specific issues. For the analysis we use farm economic calculations, statistical methods and farm level optimisation and simulation models.

Preliminary Results

In recent years we have analysed a wide range of both policy proposals and concrete changes to regulations. The analyses focus on reforms of the EU Common Agricultural Policy (CAP), like the decoupling of direct payments and its national implementation, the design and abolishment of the milk quota scheme, and policies supporting bio-energy.

We highlighted already at an early stage of the political process that the EU Commissions proposals for the CAP in the period 2014-2020 were ill suited to tackle the big challenges facing agriculture and rural areas. The proposed policy changes have little steering effects while increasing the administrative burden for both the administration as well as farmers. The analyses also show that the national regulations for redistributing the direct payments depending on farm size contribute little to a more equal payment distribution, and do not fulfill policy goals for income distribution. A comprehensive evaluation of farm and production structures highlights that the so-called “Greening” of the direct payments, which aims at improving the environmental effects of agriculture, will have little impact. The requirements for crop diversification will reduce monocultures on not more than approximately 125,000 ha. Few additional Ecological Focus Areas will be established, as existing landscape structures, fallows and eligible crops will suffice to comply with the new requirements in almost all regions.