CAP 2023-2027: effects of direct payments internal convergence in Italy

Abstract

The 2023-2027 CAP reform strongly emphasises Specific Objective 1, targeted to support viable farm income and resilience of the agricultural sector. The new CAP aims to achieve a fairer distribution of income support, in particular for small and medium-sized farms. This does not affect all Member States in the same way, depending on the choices made in previous programming periods. Italy has maintained the allocation of income support based on payment entitlements. Despite the internal convergence process that started in 2015, there are still important differences among farms in the level of unit support. This paper aims to analyse the effects of internal convergence of the Basic income support for sustainability (BISS), according to the Italian decisions established in the CAP Strategic Plan 2023-2027. It exploits administrative micro-data containing the value of each of the 10.5 million payment entitlements stored in Italy in the Entitlement Register of the Integrated Administrative and Control System (IACS). The analyses are based on the development of an original simulation tool replicating the actual implementation methods adopted by Italy for the 2023-2027 period. The results highlight that the internal convergence determines a significant modification to the financial allocation at both farm and territorial levels. Indeed, the internal convergence transfers support from very small and large farms towards small- and medium-sized ones. At the territorial level, the areas with a specialized agricultural sector experience a reduction of support to the benefit of more marginal and rural areas.