Political Rents of European Farmers in Different Agrarian Structures of the UE: input-output analysis for selected EU-27 countries

Abstract

It is generally believed that agricultural interventionism under the European Union’s Common Agricultural Policy represents the payment of political rents to farmers. The authors attempt to show that the concept of political rent known as the rent-seeking theory is not valid for agricultural policy. It is not justified to identify the whole of the subsidies paid to agriculture in the EU as a “political rent”, since political rents cannot be taken to include payments for the supply of public goods or those transfers which compensate for market imperfections. A methodology is proposed for valuing these items, filling a gap existing in the literature on political economy. The authors perform comparative analyses with the aim of calculating the “pure political rent”, based on input-output matrices for representative farms according to the EUFADN typology and on a decomposition of the Hicks-Moorsteen TFP index for the period 2007–2012 and all EU-27 countries. The research hypothesis is proposed that the size of the subsidies retained in agriculture is a function of the political cycle, but also of market imperfections.