Direct Payments in Germany –
Income and Distributional Effects of the 2013 CAP Reform

Heiko Hansen, Frank Offermann

Published: 01.06.2016  〉 Volume 65 (2016), Number 2, 77-93  〉 Resort: Articles 
Submitted: N. A.   〉 Feedback to authors after first review: N. A.   〉 Accepted: N. A.


One of the objectives of the 2013 CAP Reform was to improve the distribution of direct income support among farmers by redesigning first pillar payments. In Germany the related discussions led to the political decision to allocate a part of the respective budget to provide extra support for smaller farms. This paper analyses the impacts of the 2013 CAP reform for two scenarios of alternative direct payment schemes, with a specific focus on the distributional effects of the new components of the first pillar. Results on the basis of the farm accountancy data network indicate that overall direct payments reduce income inequality, while the effects differ significantly between the different payment schemes. The redistributive payment (support for the so-called 'first hectares') is almost equally distributed among farms, however due to the small budget allocated the impact on the distribution of income is limited. Compared to the situation before the policy change, the 2013 CAP reform and its national implementation in Germany slightly reduce the inequality of the distribution of direct payments, but do not reduce income inequality. A full utilization of the scope for the redistributive payment could have slightly reduced income inequality, but, due to the limited correlation of land endowment and income level, would not constitute an efficient distributive policy instrument either.
Thünen-Institut für Betriebswirtschaft
Bundesallee 50, 38116 Braunschweig
Download Cover

This is a free article. You can open it here.




The German Journal of Agricultural Economics (GJAE) is the leading publication in the German language area for articles in the field of agricultural economics and related disciplines.

We’re excited to announce that after months of hard work, the brand new GJAE-Website is officially up and running!


Please note: If you are already a registered user of, it is necessary to assign a new password once due to the website relaunch. Please use the "Forgot password" function.


If you have an existing campus access by IP address, logging in or re-registering is NOT necessary.


Want to get informed automatically about each new GJAE issue? Subscribe to our newsletter here and stay up to date.

 Deutscher Fachverlag
Holler Box