The mid-term CAP reform (June 2003) and French cereal farms in the intermediate regions

Using a regional model optimizing farmers’ agricultural income subject to a set of constraints, while also simulating the evolution of farming structures in the period 2002-2012, the impacts of the Luxembourg compromise on farm incomes and agricultural structures, the cropping pattern and agricultural decline (idle land) are here analysed with regard to cereal production in intermediate regions. Simulations show little risk of agriculture decline: a loss of 8% farms if cereal prices drop considerably, to 81€ by 2012. A recoupling of 25% of the aids makes this decline disappear in this price scenario, which supposes a drop in the intervention price. Following the Luxembourg compromise, the maintenance of the intervention price should impede such a fall in prices and so naturally slow down the decline. While the final “Fischler” proposals (scenario 1) would have entailed major drops in farm incomes per hectare and farm, the Luxembourg compromise (scenario 2) should allow for the levelling off of farm income (inflation rate of 1.4%), bearing in mind that according to the model 12% of farms closed down by 2012. Decoupling evens up cereals and oleaginous production, which is not surprising since aids coupled by crop have been identical since the Agenda 2000 implementation.