Improved targeting of CAP funding for Europe’s small farms is required to counter the loss of these holdings, according to a European Parliamentary report.

The EU’s Policy Department for Structural and Cohesion Policies reported that direct payments under the CAP are directed towards larger farms, which acts to increase the number of such operations at the expense of smaller holdings.

Redistributive farm payments have a “symbolic political significance” but do not prevent a decline in the number of small farms.

The short-term positive effect of such payments are limited in the long-run, the report found.

It was reported that the beneficial effects to farm incomes represented by Areas of Natural Constraint (ANC) payments was “indisputable”.

Larger farms were also deemed to benefit from higher direct payments through better economies of scale and improved ability to compete for farm inputs in the marketplace.

In the long-run, it is “probably true” that direct payments contribute to structural changes within EU agriculture, such as the “abandonment of production” by smaller holdings and the consolidation of resources by larger ones, the researchers concluded.