Agricultural policy and competitiveness. Effects of alternative aid schemes

Abstract

The Agenda 2000 reform of the Common Agricultural Policy (CAP) justifies public intervention in agriculture in the basis of two main objectives: increasing the competitiveness of European agriculture and its multifunctional role. This paper attends to assess the ability of the reform to address this first objective. Competitiveness is considered both as the capacity to adopt new technologies and to restructure land holdings towards those more efficient. Mathematical programming models simulating the adoption of new technologies by selected representative farms have been constructed for two Spanish agricultural areas – Tierra de Campos of Valladolid and Campiña Baja of Córdoba. The simulation has included not only Agenda 2000 and the previous intervention system, but also three alternative policy scenarios. Relative results between scenarios allow to evaluate the size of the incentive introduce by each intervention system to adopt new technologies or promote structural reforms.