This research was supported by EU FP6 research funding, contract. SSPE-CT-2005-
021543.Using a dynamic multi-product partial equilibrium model, this paper firstly examines the potential impact of recent policy changes accruing from the mid term review of
the Common Agricultural Policy (CAP) in 2003 on the cattle and sheep sectors in
Ireland. Secondly, this paper evaluates the potential impact of the implementation of
a CAP budget neutral, common EU flat area payment across all Member States. The
European Commission has signalled that it will be evaluating current differences in
the level of support between Member States as, for example, in the explanatory
memorandum accompanying the Commission’s Health Check proposals the
Commission argues that it is “increasingly harder to justify the legitimacy of
significant individual differences in the support level which are only based on past
support” (CEC, 2008; p.18). This paper demonstrates how there are significant
differences in the level of CAP payments per hectare across Member States, as
generally farmers in more prosperous Western and Nordic countries receive a much
higher level of payment per hectare than farmers in relatively poorer Central and
Eastern European countries. In relation to Ireland, similar to most other EU-15
countries, farmers benefit from the current inequitable distribution of payments and
the results indicate that any move towards equalising the level of payments per
hectare will have a significant negative impact on agricultural production and net
trade.This research was supported by EU FP6 research funding, contract. SSPE-CT-2005-
021543
