The CAP direct payments reform 2023–2027 in Italy: A path to fairer redistribution?

Abstract

The distribution and concentration of Common Agricultural Policy (CAP) support and its impact on farm income have gained increasing attention in public debate and scientific literature. Previous studies highlighted the highly concentrated nature of direct payments, which represent the bulk of CAP support. Despite this, direct payments have shown mixed effects on income inequality, yielding unclear results. CAP 2023–2027 aims to address this issue by redistributive payments designed to increase support for small farms. This paper assesses the reform’s redistributive effects in Italy by comparing the status quo (2020) with a post-reform scenario (2026). Using a composite dataset integrating FADN and National Entitlements Register data, we estimate inequality indexes (Gini index, Herfindahl–Hirschman index, and 80/20 quintile share ratio). Results show improved equity in decoupled direct payments distribution: the Gini index decreases from 0.626 (2020) to 0.530 (2026), while the Herfindahl–Hirschman index drops from 4.65 to 3.27. The 80/20 quintile share ratio also improves significantly, reducing from 8.4 to 5.2. However, the reform’s impact on farm income concentration remains marginal, with only slight reductions observed across all inequality indexes.