The Degree of Decoupling of Area Payments for Arable Crops in the European Union

In 1992, the Common Agricultural Policy (CAP) of the European Union (EU) significantly changed direction in the arable crop sector, with the so-called MacSharry reform. This reform, which reduced cereal intervention prices, eliminated output payments for oilseeds, and introduced per hectare compensatory payments and a compulsory set-aside requirement attached to these payments, implied a significant change in the policy incentives to produce. In 1999, intervention prices were cut further, bringing them closer to world market levels as well as aligning payments of cereals and oilseeds. The most recent reform in

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