Potential impact of the EU Single Area Payment on farm restructuring and efficiency in Lithuania

Abstract

This article investigates the potential impact of post EU-accession public support, namely the introduction of the decoupled Single Area Payment (SAP), in Lithuania on its farming sector's restructuring and future efficiency. Analyses are based on efficiency calculations with 2001–02 FADN data for fieldcrop farms, and on the same sample's farmers’ intentions to remain in the sector and to expand their area after EU accession under two scenarios: a hypothetical scenario of continuing pre-accession national policies, and a realistic scenario of fully decoupled SAP introduction with coupled national top-ups. Our results suggest that, before accession to the EU, the smallest inefficient farms remained in the sector thanks to policy support. However, the SAP introduction could potentially give the right incentives to Lithuanian farmers for quicker restructuring and an increase in farm efficiency, although such change may be impeded by the lack of available agricultural land.