Farm Level Impacts of Trade Liberalisation and CAP Removal Across EU: An Assessment using the IFM-CAP Model

Abstract

This paper assesses the farm-level impacts of trade liberalisation and CAP removal across EU using IFM-CAP (Individual Farm Model for CAP Analysis). IFM-CAP is a static positive programming model developed to capture the full heterogeneity of EU farms in terms of feedback to policy representation and impacts. Simulation results show that a small set of farm-types experience an increase in income due to the improvement in prices and yields (e.g. farms specialised in granivores, milk and horticulture), while farms that are most CAP subsidy dependent (e.g. specialist cattle, specialist COP and small farms) lose income by more than 12% at aggregate EU level. As much as 77% of all farms lose income if CAP is removed, while the proportion of most income vulnerable farms almost doubles.