Problem of Capitalisation of Subsidies in Agriculture

Problems of Agriculture Economics nr 1_2015

21 Pages Posted: 19 Oct 2016 Last revised: 28 Oct 2016

See all articles by Justyna Góral

Justyna Góral

National Research Institute (PIB) - Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI)

Jacek Kulawik

National Research Institute (PIB) - Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI)

Date Written: 2015

Abstract

The capitalisation of the subsidies is a process of depositing them in the rental rates, prices of farmland and values of farm’s assets. For example, the capitalisation of direct payments is the part of rent increase due to the introduction of these payments. Generally, it is evaluated as a negative impact, which may be in conflict with the improvement of competitiveness of farms. The capitalisation of support is a major source of inefficiency of direct transfers to agriculture, particularly those designed to improve the income situation of farmers. Empirical studies differ as to the level of capitalisation, its mechanisms, dynamics and conditions. To sum up the foregoing and the results of previous studies, it is clear that the capitalisation of subsidies in agriculture is a fact. Its source, nature, intensity and consequences are conditioned in many ways.

Keywords: agricultural land prices, direct payments, decoupled support, land rent, CAP reform, capitalisation of subsidies, Agriculture, rental rates

Suggested Citation

Góral, Justyna and Kulawik, Jacek, Problem of Capitalisation of Subsidies in Agriculture (2015). Problems of Agriculture Economics nr 1_2015, Available at SSRN: https://ssrn.com/abstract=2853384

Justyna Góral (Contact Author)

National Research Institute (PIB) - Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI) ( email )

ul. Świętokrzyska 20
Warszawa, 00-002
Poland

Jacek Kulawik

National Research Institute (PIB) - Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI) ( email )

ul. Świętokrzyska 20
Warszawa, 00-002
Poland

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