CAP has significant impacts on cow-calf and beef finishing

Changes of payments in selected cow-calf farms 2020 (Own calculations)

Changes of payments in selected beef finishing farms 2020 (Own calculations)

The present CAP-reform lasts from 2014 to 2020. Up to now many farms with suckler-cows and finishing cattle enjoyed relatively high levels of coupled (linked to the number of animals) and/or decoupled payments (per farm, independent of the number of animals).

Mainly, payments exist in two different forms:

• Suckler-cow: coupled suckler-cow payments of different levels were common in several member states: Austria, Belgium, Czech Republic (national component), France, Portugal and Spain.
• Beef finishing: finishing cattle were basically decoupled in all member states. Most of these are characterised by relatively high stocking rates in the historic reference (2000 to 2002). As a consequence, after conversion of slaughter premiums and special premiums into Single Farm Payments (SFP), they received relatively high hectare equivalent payments.

For the analysis we used constant prices from 2014 to illustrate the policy impact and not a mix of policy and price effects. Together with our agri benchmark partners we have analysed the two main relevant changes of the latest CAP-reform:

1. suckler-cow payments were either removed or modified and
2. the SFP were converted into hectare payments within multi-annual transition periods (labelled as ‘Other payments 1st pillar (coupled)’ in the figures).

The latter changes result in payment losses mainly in finishing farms in those countries which made the payments as SFPs (Austria, Belgium, France, Greece, Ireland, Italy, Netherlands, Portugal, Spain, Scotland and Wales). 

Contrary to those countries which have already completed the conversion of SFPs into hectare payments (Germany, England, and Finland), we cannot expect a compensation of possible payment losses through increasing beef prices. This is one of the reasons why some member states decided to re-introduce coupled payments for beef finishing cattle and/or cattle in general (labelled as ‘Other cattle payments (coupled)’ in the figures).

We can summarise that

• the changes in the payment systems mainly benefit extensive farms – those with high pro-portions of grassland and low stocking rates,
• more intensive farms – those with a high proportion of cropland and high stocking rates – suffer from the changes in payment systems,
• the newly introduced coupled payments for suckler-cows and other cattle cannot compen-sate the loss of the SFP,
• the regulation of the ‘first hectares’ in France constitute a significant contribution to stabi-lise the income of farms with less than 100 hectares,
• the above mentioned circumstances are also reflected in farm incomes: mainly positive in the suckler-cow farms, mainly negative in the beef finishing farms.

A working paper is in preparation and will be available in the working paper section of the Beef and Sheep website.