Effects of direct payments on agricultural development in Bulgaria

Abstract

The CAP policy in Bulgaria during these 10 years reveals difficulties in handling the current national problems in agriculture in terms of market, production and structure. A strongly adaptive behaviour is observed among producers in making their management and production decisions stuck and oriented to the policy and the financial support. During the last years the gross agricultural production in Bulgaria amounts to threefold lower compared to the average level in the EU-27. These low values reveal the big issue in Bulgarian agriculture and raise the question about the efficiency of the policy and the benefits for the society. The goal of the paper is to analyse some of direct payments effects on agricultural output, value added, production costs, land structure and rent. It turns out that the CAP is the policy adjusted better to the old Member States, which can be explained by the historical development approach. The direct payments, based on area, distort the allocation of resources and do not generate adequate growth entailing higher productivity, bigger employment and labour remuneration, better market stability and competitiveness.