Is Passive Farming A Problem for Agriculture in the EU?

• Published in: Journal of agricultural economics 2017-09, Vol.68 (3), p.632-650
• Main Authors: Brady, Mark V., Hristov, Jordan, Sahrbacher, Christoph, Söderberg, Torben, Wilhelmsson, Fredrik
• Format: Article
• Language: English
• Subjects: Agricultural development; Agricultural land; Agricultural policy; Agricultural Science; Agricultural Sciences; Agriculture; Annan lantbruksvetenskap; Blocking; CAP; Commodities; Competition; Computer simulation; Decoupling; Development; Direct payments; Economic Geography; Ekonomisk geografi; Fallow; Farmers; Farming; Food; Food security; Jordbruksvetenskap; Land appraisals; Land use; Landowners; Lantbruksvetenskap och veterinärmedicin; Other Agricultural Sciences; Other Agricultural Sciences not elsewhere specified; Payments; Policy; Preservation; Public goods; Samhällsvetenskap; Single Payment Scheme; Social and Economic Geography; Social och ekonomisk geografi; Social Sciences; Structural change; Övrig annan lantbruksvetenskap
• ISSN: 0021-857X; 1477-9552; 1477-9552
• DOI: 10.1111/1477-9552.12224

We address a new agricultural policy concern following the decoupling of CAP direct payments in 2005: passive farming, whereby landowners maintain their agricultural area to collect payments without producing commodities. It is claimed that passive farming is hindering agricultural development by ‘blocking’ access to farmland for expanding farmers. We evaluate the links between the EU's Single Payment Scheme (SPS), passive farming, land use and agricultural development. Following identification of the rational landowners’ optimal land‐use choice, we evaluate the effects of the SPS using a spatial, agent‐based model that simulates farmers’ competition for land in a case‐study region of Sweden. We show that passive farming does not constrain land from being used in production; on the contrary more land is used than would be the case without the SPS. We conclude that passive farming is not a problem for agriculture, but provides public goods that would otherwise be under provided: preservation of marginal farmland and future food security. However SPS payments on highly productive land inflate land values (capitalisation) and slow structural change, which hinder agricultural development. Consequently CAP goals could be better served by targeting payments on marginal land and phasing out payments to highly productive land.