Facing decoupling: use of payments and investment reaction to decoupling in the EU

The main objective of this paper is to evaluate ex post the effects of 2003 reform (in particular decoupling) of the Common agricultural policy (CAP) in the European Union (EU), with a specific focus on farm investment behaviour. In the past years a number of studies have addressed the issue of the impact of EU policy reforms. However, long term effects of policy changes and related impacts on structural and investment behaviour received relatively little attention. This study is based on a survey of about 180 farm households in Italy, Germany and Poland. In the majority of cases, farmers stated they were indifferent to decoupling. Where any change occurred, the impact of decoupling was highly differentiated. Differences in reaction are better explained by different individual household/farm characteristics, rather than by association with a specific agricultural system.