The Single Farm Payment is an

agricultural subsidy An agricultural subsidy (also called an agricultural incentive) is a government incentive paid to agribusinesses, agricultural organizations and farms to supplement their income, manage the supply of agricultural products, and influence the ...

paid to farmers in the EU.

History

Historically, the EU's

Common Agricultural Policy The Common Agricultural Policy (CAP) is the agricultural policy of the European Commission. It implements a system of agricultural subsidies and other programmes. It was introduced in 1962 and has since then undergone several changes to reduce ...

(CAP) emphasised direct subsidies for agricultural produce. To reduce price distortion, the connection between payments and specific crops was removed; instead, a "Single Farm Payment", which subsidised farmers on a per-hectare basis, was introduced in June 2003; although farmers may now attempt to claim subsidies for more land than they actually have. This "decoupling" of subsidies means they are accepted in the "

Blue box A blue box is an Electronics, electronic device that produces tones used to generate the in-band signaling tones formerly used within the North American long-distance telephone network to send line status and called number information over voi ...

" category of subsidies in the WTO

Agreement on Agriculture The Agreement on Agriculture (AoA) is an international treaty of the World Trade Organization. It was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade, and entered into force with the establishment of the WTO on Ja ...

negotiated at the

Uruguay Round The Uruguay Round was the 8th round of multilateral trade negotiations (MTN) conducted within the framework of the General Agreement on Tariffs and Trade (GATT), spanning from 1986 to 1993 and embracing 123 countries as "contracting parties". The ...

, in line with international agreements to reduce market-distorting subsidies and price controls.

Payments to farmers

National governments within the EU make their own arrangements for implementation and for paying subsidies to farmers. When the UK was a part of the EU, this was done by the Rural Payments Agency, an executive agency of Defra. Some British farmers experienced problems due to delays in verifying how much land they have which is eligible for subsidy. The Scottish government offered farmers an online system to claim subsidies, which reduces the burden of paperwork. In non-Euro countries, payments to farmers may be made in local currency at an exchange rate set by the

European Central Bank The European Central Bank (ECB) is the central component of the Eurosystem and the European System of Central Banks (ESCB) as well as one of seven institutions of the European Union. It is one of the world's Big Four (banking)#International ...

Trading

Some farmers trade their subsidy entitlements.

Economics

The Single Farm Payment is a large proportion of income for many farmers, who say they could not profit without subsidies. However, farm subsidies in developed countries push down

food prices Food prices refer to the average price level for food across countries, regions and on a global scale. Food prices affect producers and consumers of food. Price levels depend on the food production process, including food marketing and food di ...

and impoverish third-world farmers. Taxpayers in the EU get more than most in return for their money. In 2010, the EU spent €57 billion on agricultural development, of which €39 billion was spent on direct subsidies.

References

Economy of the European Union European Union and agriculture Agricultural subsidies {{EU-stub

History

Payments to farmers

Trading

Economics

See also

References