The Difficult Relationship Between Agricultural Policy, Income, Labour and Sustainable Development

Abstract

This paper analyses the impact of some policy schemes, in the current framework of CAP, on returns, labour and sustainable development of typical cropping and livestock farming systems in the south of Portugal. Three scenarios have been worked out: in the first one, the current expectations will be maintained until 2006. In the second, the payments decoupled from production will give the farmer exact amount he is receiving now. Finally, the third scenario considers the decoupled payments on the basis of the labour expenditure of the farm. A mathematical programming model, combined with the Erosion Productivity Impact Calculator (EPIC) Cropping Systems model is used to determine the impact degrees according to the system and scheme scenarios evaluated. Economic results (net margin) and environmental results (nitrate leaching, soil erosion, and biodiversity changes) are obtained for each system and scenario. Results point out a significant adjustment of production plans in two systems studied, that will move towards extensification and improvement of sustainable development but subsequent reductions in farm returns in the PAC 2006 scenario. Moreover, the decouple payments seem to have a positive impact on the environmental parameters, although they affect negatively the total returns of farms.