Impacts of CAP Instruments on the Distribution of Farm Incomes

The Common Agricultural Policy (CAP) has evolved from an allocative towards a distributive policy, according to the Sapir-report. Using two data-sets we take a closer view at the distributional consequences of CAP instruments. Data on direct payments of several EU Member States are used to show how the distribution among farm holdings and countries differs. We find that in Austria most direct payments go to smaller units compared to other EU Member States, in which large beneficiaries are represented over-proportionally. Data from the Austrian Farm Accountancy Data Network (FADN) are used to investigate the effect of direct payments on farm income distribution. Moreover, we show that other CAP instruments, ie less favoured area and agri-environmental payments, also alter the distribution of farm incomes, but in a different manner.