Using administrative data to model CAP reform
Sinéad McPhillips Economics & Planning DivisionDepartment of Agriculture, Food & the MarineKevin Hanrahan Agricultural Economics and Farm Surveys Department Teagasc
OverviewCommission proposals on SFPDAFM analysis Irish “internal convergence” proposalComparisons with other proposalsModelling by Teagasc on farm typesConclusions
COMMISSION PROPOSALS ON SFP
Distribution of Direct Payments within Member States (‘internal convergence’):
Progressive movement to uniform national or regional payment rates per hectare by 2019
Entitlements based on eligible hectares declared in 2014 by active farmers with at least one entitlement in 2011
DAFM analysisModelling based on DAFM administrative dataObjective: To quantify effects of Commission proposals, &
to develop and propose alternativesAdministrative data collected by DAFM (such as
contained in the SPS application form) provides a wealth of useful data eligible areapayment amountstocking density
2010 SPS databaseAverage payment
per hectare category, 2010 No of farmers Total Area 2010 SPS Payment
AverageArea (ha)
Average payment per ha (2010)
0 payment, some area 7,955 144,159 0 18.1 0.00
0 to 20 1,963 67,579 771,200 34.4 11.41
20 to 50 4,176 179,217 6,512,194 42.9 36.34
50 to 100 10,482 397,131 29,951,263 37.9 75.42
100 to 150 13,135 423,446 53,110,201 32.2 125.42
150 to 200 15,462 493,919 86,753,342 31.9 175.64
200 to 250 16,953 571,978 128,911,363 33.7 225.38
250 to 300 16,709 603,410 165,984,643 36.1 275.08
300 to 400 25,936 1,025,283 354,750,285 39.5 346.00
400 to 500 11,084 473,984 209,656,007 42.8 442.33
500 to 600 4,446 197,559 107,207,633 44.4 542.66
600 to 700 1,815 80,239 51,594,069 44.2 643.01
700 to 800 803 33,006 24,678,914 41.1 747.71
800 to 900 378 16,388 13,801,287 43.4 842.13
900 to 1,000 167 5,947 5,648,677 35.6 949.88
1,000+ 338 7,726 9,182,251 22.9 1,188.44
All 131,802 4,720,971 1,248,513,329 35.8 264.46
2010 SPS payment distribution
6%1%
3%8%
10%12%
13%13%
20%8%
3%1%
1%
0% 5% 10% 15% 20% 25% 30%
0 payment, some …0 to 20
20 to 5050 to 100
100 to 150150 to 200200 to 250250 to 300300 to 400400 to 500500 to 600600 to 700700 to 800800 to 900
900 to 1,0001,000+
2010 SPS Payment No of farmers
Models analysedFlat rate nationalFlat rate at NUTS 2 & NUTS 3 levelRegions based on stocking densityAll resulted in large transfers within
regions/local area as well as between regions
Example: Average payment per ha by NUTS III region, 2010
216
310
207
258
300283
337
264
0
50
100
150
200
250
300
350
Border Midlands West Dublin Mid East Mid West South East South West
IRISH PROPOSAL ON INTERNAL CONVERGENCE
“Approximation” - move towards the averageApplies to the whole payment (green and basic)Based on commission’s proposals for external
convergenceResults; average gains of 29% for 65,000 farmers,
average losses of 9% for 56,000. Those with highest payments lose most.
5 Member States supportive (Spain, Portugal, Italy, Denmark and Luxembourg)
Note: All figures are estimates only, based on modelling exercises carried out by DAFM, using eligible area and actual payments to farmers in 2010, in order to analyse the overall impact of alternative proposals on Irish farmers.
Payment category (SPS euro per ha 2010) No of farmers % change compared to 20100 to 20 1,939 +662%20 to 50 4,129 +185%50 to 100 10,350 +72%100 to 150 12,998 +30%150 to 200* 15,300 +12%200 to 238.01 12,712 +3%GAIN 65,052 +29%
NO CHANGE: 238.02 TO 264.46 (90% to 100%) 8,943 -264.47 to 300 11,717 -2%300 to 400 25,658 -6%400 to 500 10,919 -11%500 to 600 4,368 -14%600 to 700 1,763 -16%700 to 800 769 -17%800 to 900 348 -18%900 to 1,000 153 -19%1,000+ 221 -21%LOSS 55,916 -9%TOTAL 129,911 +0%
Irish Proposal – Internal Convergence Breakdown
OTHER PROPOSALS EMERGING
However, other Member States have other ideas
In addition, other proposals are coming from the European Parliament all the time – this is a moveable feast CAP reform now s.t. “ordinary legislative
procedure”, i.e. co-decision of Council and Parliament
Note: All figures are estimates only, based on modelling exercises carried out by DAFM, using eligible area and actual payments to farmers in 2010, in order to analyse the overall impact of alternative proposals on Irish farmers.
Commission proposals -
national flat rate
Capoulas Santos proposals on internal
convergence
Ireland's proposal - External
convergence approach
No. of farmers gaining 73,995 73,995 65,052
Average % loss +85% +56% +29%
- - 8,943
No. of farmers losing 55,916 55,916 55,916
Average % loss -33% -23% -9%
Total transfers €m €297m €197m €79m
Comparative Analysis: Commission, Capoulas Santos (EP)and Irish Minister’s Proposals
MODELLING BY TEAGASCAdding data from the AIM and other DAFM
databases (animal numbers and type) So as to allow farms to be categorised
according to the FADN farm typologySimilar approach to that used in Census of
Agriculture typing of farmsUseful for CAP negotiations Database could be adapted for a variety of
analytical purposes
SPS Payment Share of FFI by Farm System (NFS 2010)
0%
20%
40%
60%
80%
100%
120%
Dairying CattleRearing
CattleOther
Sheep Tillage MixedLivestock
All Farms
impact on income of a euro change in subsidy depends on the farming system’s subsidy dependence
Teagasc 2010 NFS (Hennessy et al. 2011)
Farms by Farm System and Economic Size
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
DY ML CR CO SH P151 NP151
num
ber o
f far
ms
S M L1 ESU = €1,200 SO
S ≤ 8 ESU; 8<M≤40 ESU; L>40 ESU
Flat Rate Payment Model (EC proposal)Winners and Losers by systemW= 75,011 & L = 56,764
0
5,000
10,000
15,000
20,000
25,000
Dairying MixedLivestock
CattleRearing
CattleOther
Sheep P151 NP151
Num
bers
of f
arm
s
Results from Teagasc analysisReform is a zero-sum game
If there are losers there are winners/If there are winners there are losers
Specialist dairying and tillage, which are more intensive systems, have more losers than winners, but still a substantial number of winners.
Drystock farms, by contrast, have more winners than losers, but still have a surprising number of losers.
Largest absolute gains/losses on those farms that are larger recipients of DP
Larger relative gains on farms with smaller DP receiptsDoesn’t make sense to talk about “cattle men winning” and “dairy
men losing” – there are winners and losers in all farm types
Cattle Rearing: SPS subsidy/haEC proposals
0
100
200
300
400
500
600
700
800
0-1000 1000-2000
2000-5000
5000-10000
10000-15000
15000-20000
20000-25000
25000-30000
30000-40000
40000-50000
>50000
SPS
euro
/ha
0
2000
4000
6000
8000
10000
12000
14000
farm
s
Winners Losers n
Cattle Rearing Farm System: SO/haEC proposals
0
100
200
300
400
500
600
700
800
900
0-1000 1000-2000
2000-5000
5000-10000
10000-15000
15000-20000
20000-25000
25000-30000
30000-40000
40000-50000
>50000
euro
SO
/ha
0
2000
4000
6000
8000
10000
12000
14000
farm
s
Winners Losers n
Dairy: SPS subsidy/haEC proposals
0
100
200
300
400
500
600
700
0-1000 1000-2000
2000-5000
5000-10000
10000-15000
15000-20000
20000-25000
25000-30000
30000-40000
40000-50000
>50000
SPS
euro
/ha
0
1000
2000
3000
4000
5000
6000
farm
s
Winners Losers n
Dairy Farm System: SO/haEC proposals
0
500
1,000
1,500
2,000
2,500
3,000
0-1000 1000-2000
2000-5000
5000-10000
10000-15000
15000-20000
20000-25000
25000-30000
30000-40000
40000-50000
>50000
euro
SO
/ha
0
1000
2000
3000
4000
5000
6000
farm
s
Winners Losers n
CONCLUSIONS
Detailed administrative data allows more precise modelling of the effects of policy changeCan provide insights not provided by other data
Particularly useful when comparing one proposal against another
Still have to bear in mind that they are just models Not predictive of what will happen in the real world
Cannot provide information on income or production effects