The IDEMA project analysed impacts of decoupling EU agricultural support from production. The central element of the 2003 CAP reform is the introduction of the Single Payment Scheme (SPS) which is linked to land but decoupled from production. Both the 2003 reform and a hypothetical bond scheme were analysed compared to continuation of the previous Agenda 2000 framework to the end of the current programme period, 2013. The more radical bond scheme was designed to test the implication of the link to land, i.e. the obligation to keep land in Good Agricultural and Environmental Condition (GAEC). The bond scheme effectively breaks this link, as farmers still receive the decoupled payment even if they leave the sector.
Survey results revealed that most farmers do not accept the idea that they could survive or be competitive without policy support. There is, however, no strong evidence that farmers would drastically change their strategic decisions to exit agriculture in response to the reform (with some exceptions in Sweden depending on the policy in place). The strongest opposition to policy liberalisation comes from farmers in the NMS. There is also pessimism surrounding the opportunities for diversification. More than 40% of respondents do not think that they can “easily” find a job off-farm or increase the number of hours devoted to off-farm work. The majority of respondents agree with the need for farmers to produce attractive landscapes and positive environmental externalities, and to be paid for it.
The main conclusions regarding the NMS are that the introduction of the new CAP payments provides greater incentive for farmers to remain in agriculture and to grow, but makes them less interested in diversification.