Targeting disadvantage in agriculture

The effectiveness of the main policy instrument targeting support at farmers in disadvantaged areas of the UK from 1976 to 2000 (the Hill Livestock Compensatory Allowance Scheme) is evaluated for Northern Ireland, using recursive linear programming models and input–output analysis. Capital, income and employment effects of the Scheme in its latter years are estimated and assessed against declared policy objectives. It is estimated that average farm cash incomes would have been between 17 and 31 per cent lower in the absence of HLCA payments, while farmer net worth would have fallen by approximately 1 per cent annually. In aggregate, some 1000 jobs were sustained by the Scheme and incomes and profits in the region were boosted by £9 million each year. The main economic effect arising from the introduction of a successor area-based subsidy, will be a redistribution of payments from farms with relatively high stocking rates (predominantly larger units) to those operating more extensively (mostly smaller, part-time farms).