Modulation of direct payments within Agenda 2000 - A comparative analysis between France and Germany

Article 4 of the horizontal measures of Agenda 2000 opens the possibility to the member states in modifying direct payments with regard to the volume of premia, labour input and the size of farms. In France, a scheme of modulation was implemented this year. Model calculations on the base of farm accounting data are realised to assess the impacts of this scheme for French and German agriculture under conditions of the year 2004. In France about 59,000 farms would be affected by modulation and direct payments of farms concerned would be reduced by 4,9 %. From the total savings of 160 Mio. epsilon about 80 % are allotted to arable farms. In Germany about 16,000 farms would be concerned; their premia would be shortened by 5,3 % and the total savings amounted to 100 million epsilon. The modulation scheme would affect only 4 % of individual firms, 30 % of partnerships but almost all legal entities. 90 % of the premium shortening would be allotted to the new Laender.