Assessment of Farm Support Policies and Likely Impact of CAP Implementation on Farm Structures and Sustainability in Bulgaria

18 Pages Posted: 23 May 2006  

Hrabrin Bachev

Institute of Agricultural Economics

Date Written: 2005

Abstract

This paper presents the dominating farming structure in Bulgaria on the eve of EU accession, and evaluates recent policies for farm and agricultural income support, and assesses likely consequences of Common Agricultural Policy (CAP) implementation on farming structures and sustainability.

We demonstrate that a specific farming structure dominates in the country consisting of numerous subsistence and small farms; and few large farms, cooperatives, and agro-firms; and widely used informal, vertically integrated, and mix forms. Public support to farming has been in an increase in recent years but is still far bellow the European level. Besides, only a fraction of farms benefit from some form of public support most of them being large farms, cooperatives, and tobacco producers. Farming is still an important income source for a good part of population. However, there is a significant gap in the monetary income in the large and some smaller-scale (intensive) enterprises, and the great majority of farms. Besides, development programs contribute less to agrarian and rural sustainability, and to decreasing divergence between richer and poor regions of the country.

Assessment of likely short-term impact of the CAP implementation in Bulgaria shows that it will increase sustainability of farms bringing net financial benefits, enhancing competitiveness, and improving environmental performance. However, the chief beneficiary from the direct payments and other support measures will be the biggest farms in the most developed regions of the country. CAP programs will also give new possibility for extending activities of existing forms and bring to a life new organizational arrangements. All that will create more employment and income opportunities, and revitalize agrarian and rural economy. On the other hand, some effective smaller-size and family structure and livestock farms will have no or limited access to EU funding. Consequently, income and performance gap between farms of different types, sub-sectors and regions will widened unless special supplementary measures ("coupled" with production and regions) are taken. Besides, CAP will likely support "ineffective" and non-market modes (such as part-time and subsistence farming, production cooperatives), and therefore raise their sustainability and delay further restructuring.

Last but not least important, there will be significant difficulties for introducing CAP and EU standards which will require more costs than in other countries, and will be associated with some time lag until "full" implementation, and would not involve less commercialized and subsistent farming.

Keywords: farms structures, support to farms, impact of CAP implementation on farm structures and sustainability, Bulgarian farming

JEL Classification: E24, F13, F15, J21, L23, O13, Q13, Q18, Q28

Suggested Citation

Bachev, Hrabrin, Assessment of Farm Support Policies and Likely Impact of CAP Implementation on Farm Structures and Sustainability in Bulgaria (2005). Available at SSRN: https://ssrn.com/abstract=903525 or http://dx.doi.org/10.2139/ssrn.903525

Hrabrin Bachev (Contact Author)

Institute of Agricultural Economics ( email )

125 Tzarigradsko shosee Blvd. Blok 1
Sofia, 1113
Bulgaria

HOME PAGE: http://hbachev.my.contact.bg/

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