Direct payments of the CAP – distribution across farm holdings in the EU and effects on farm household incomes in Austria

In 1992, the EU initiated the process of decoupling income transfers from agricultural production which has culminated in the 2003 reform of the common agricultural policy (CAP). In this reform 'single farm payments' have been introduced which are based on direct payments during the reference period 2000-2002. We use statistics of such payments to explore the distribution patterns across farm holdings in EU member states. The results show, that direct payments are skewed towards a small number of very large holdings in a few member states. To show their distributional consequences on farm household incomes, we use data from the Farm Accountancy Data network in Austria. The analysis shows that direct payments do not contribute towards a more equal income distribution of farm households.