Impact of direct payments convergence in Italy: a territorial and sector assessment

The CAP reform introduced a new architecture of direct payments. Within this new framework Member States can experience an extraordinary increase of flexibility: they have been called to choose on a wide menu of measures. One of the most sensitive issue concerns how to progressively achieve a more equitably distribution of direct support per hectare. These choices may likely provide different farm specific effects even between similar farms. Thus specific tools and models able to evaluate the impact on individual farms need to be developed. The paper proposes a simulation tool (CAP2020-Simulation tool) able to estimate the redistributive effect of the reform, based on data about 2 millions of farms from the Integrated Administration and Control System (IACS) and the National Farm Register in Italy. The CAP2020-Simulation tool implements the mechanism of internal convergence concerning the decoupled direct payments, over the period 2015-2019. The estimations show increasing amounts for holdings with low unit value and this transfer determines, at territorial level, a net reallocation of resources in favour of more marginal and mountain areas; at sector level, permanent crops and sheep&goat are expected to increase their amounts while the opposite trend is waited for rice, tobacco, citrus, olive and cattle fattening.