Abstract
The effects of globalization have often been adverse for the agricultural sector, especially its most vulnerable element—the small farm. The importance of the agricultural sector as a whole and small farms in the sense of ensuring food security, employment and viability of rural areas, implies a necessity to support the sector and small farms in particular. For this purpose, the Common Agricultural Policy (CAP) of the European Union (EU) seeks to boost the sustainability of agriculture in multiple dimensions. The 2013 reform of the CAP has provided a particularly strong impetus towards this direction. This paper establishes an indicator system to quantify the effects of the CAP direct payments on the socioeconomic sustainability of small farms. Expert survey and multi-criteria assessment are used to this end. The Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) method is applied for the multi-criteria analysis. Lithuania is taken as a case study. The results show that, in the case of Lithuania, the direct payment system did not contribute to the improvement in socioeconomic sustainability of small farms up until 2013 CAP reform when its impact became undeniable.
Highlights
The agricultural sector has been generously supported from the European Union (EU) budget
It always enjoyed the biggest part of EU budget pie, and though its part has shrunk from 70% in the beginning of 1960s to about 40% in 2010s, agriculture is still the biggest receiver of transfer payments from the EU budget [1]
According to the definition of small farms provided in the EU regulation and income level of Lithuanian farms (Figure 2 suggests 31.8 ha), we look at the performance of farms with less than 30 ha UAA when evaluating the impacts of the direct payments (DP) system on the social sustainability of small farm in Lithuania
Summary
The agricultural sector has been generously supported from the EU budget. It always enjoyed the biggest part of EU budget pie, and though its part has shrunk from 70% in the beginning of 1960s to about 40% in 2010s, agriculture is still the biggest receiver of transfer payments from the EU budget [1]. Such generous financial support stresses the importance of agriculture to the whole of the EU, and indicates its vulnerability and inability to operate relying only on laissez-faire style economists’ free markets supply–demand principle These classical economical rules cannot be applied to agriculture and production of food, as lowering the price only insignificantly increases the demand, there is a huge time gap till supply can adopt to the demand changes, the preferences of demand can be met only partially (because of climate factor), unfavorable weather conditions can significantly affect harvest and etc. Funding for direct payments represents 71% of the total CAP funding, which reflects the particular importance of the system of direct payments for EU agriculture [2]
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