The role of CAP in enhancing farm incomes: the redistributive effect of direct payments in Italy

The CAP has traditionally provided support to European farms by means of f direct payments (DPs), in order to achieve the objective of redistribution of farm incomes (FIs). In Italy, this issue is particularly intricate for the national government, since it has to manage carefully the effects of the overall reduction of ceilings for DPs as well as those due to the process of internal convergence of payment entitlements. The present article aims to analyse whether the last CAP reform decreases DPs concentration and which is the potential effect of the new DPs scheme on the redistribution of FIs in Italy. The decomposition of the Gini coefficient allows to analyze the evolution of incomes and DPs distributions over the period 2013-2020. Empirical results based on Italian FADN database show that FI concentration in 2013 is high but DPs contribute to reduce inequality. Moreover, the CAP reform in 2020 is expected on the one hand to decrease DPs concentration, but on the other hand it limits the ability of such a policy tool to reduce FIs inequality due to the cut in DPs budget.