Output Impacts of the Single Payment Scheme in Portugal

The Common Agricultural Policy (CAP) for the European Union agricultural sector is subject to much discussion and controversy, justifying the need for research to clarify disputed topics. This study analyses the impact of the Single Payment Scheme (one of the the most recent instruments of the CAP) on the performance of the Portuguese agricultural sector (output, employment and productivity), using a model with spatial effects based on the Cobb and Douglas (1928) concepts. Data for 2010 concerning Portuguese municipalities were used, taking into account information from the Institute of Finance of Agriculture and Fisheries (IFAP) and Statistics Portugal (INE, 2013). The analyses show that the Single Payment Scheme could be better adjusted to the Portuguese situation, considering that it does not clearly promote agricultural activity outside the traditional zones and does not explicitly improve farming output. For the variables considered, the spatial autocorrelation also provides insights into the support of future agricultural policy development.