The optimal allocation of land between alternative support schemes: An exploration of claims for arable area payments

Arable producers in the UK often do not claim arable area payments (AAPs) on all the land planted to crops eligible for such payments. This paper provides a theoretical framework which identifies five possible reasons for this behaviour. Empirical evidence, using data from the UK's Farm Business Survey, is presented to quantify the extent of this behaviour. One of the reasons for not claiming the AAP for each eligible hectare planted relates to the interactions between the arable and livestock subsidy schemes of the CAP. This, and other complexities, highlights the problems of arable supply response with current CAP instruments in place.