With respect to the distribution of company-specific European subsidies to the agricultural sector, some countries chose to adopt the regional model (the ‘flat rate’ model), in contrast to the situation in the Netherlands where the subsidies are paid out on the basis of the production in the past. Together with the Ministry of Agriculture, Nature and Food Quality, the LEI Wageningen UR has carried out a study into the experiences gained with the flat rate in Germany, Denmark and the UK and has participated in discussions on this subject in these countries.
The generally accepted view is that the regional model offers the advantage that it can be more easily justified from a social perspective in the long term. Other benefits include the relatively simple implementation process, the increased transparency of the market for land, and the fact that all agricultural companies are subject to the same requirements with regard to sustainability (cross compliance). However, the regional model also has disadvantages. Sectors which previously did not receive any EU subsidies now do receive financial income support. The effort to level out the present differences in financial income support results in a - sometimes substantial - redistribution of subsidies between sectors and companies and therefore also between regions. It should be mentioned that the implementation of the system does not aim to encourage social fairness in any of the countries studied. If a decision is taken to switch to the regional model, we would recommend taking an ample transition period into account. The smaller the number of regions which are differentiated, the simpler the implementation will be.
Memorandum 09-010 Farm payments under the regional model (only in Dutch)