Agricultural policy, lock-in and structural change, report from the Swedish Board of Agriculture, in Swedish with an english summary.

Authors: Mark Brady  Jordan Hristov  Fredrik Wilhelmsson  Torben Söderberg  Karl-Ivar Kumm 

Ever since the decoupling of agricultural income support in 2005 EU farmers need not produce commodities to collect support, as long as they keep their land in good agricultural and environmental condition (the GAEC obligation). This change in the basis for support has had major consequences for structural change and created preconditions for the development of passive farming and land lock-in. The contention is that arable land being managed by passive landowners, i.e., those not producing any commodities, is often in demand by active farmers who would like to use it to expand their own production.

This study shows that lock-in due to decoupled payments and the possibility of passive farming is limited. The analyses show that the single farm payment scheme (SFP) slows structural change (i.e., reduces opportunities for individual farms to grow in area) because less profitable farmers choose to stay longer in the sector. However more land is kept in production with the SFP then without it (primarily in less productive regions) because continued production is often the most cost-effective way to meet the GAEC obligation.

Further the SFP ensures that the least productive agricultural land is maintained (kept open) rather than being abandoned. In the most productive agricultural regions the SFP results primarily in a transfer of wealth from taxpayers to landowners via capitalization, rather than affecting land use per se.

The report is written in Swedish but has an English summary.


Mark Brady

Jordan Hristov

Fredrik Wilhelmsson

Torben Söderberg

Karl-Ivar Kumm