Can Community-Based Payments Contribute to a More Equitable Distribution of Farm Income?

Abstract

This study assesses the impact of community-based payments on farm income inequality and the distribution of these across farm sizes, compared to individual-based payments, using Gini decomposition by income source and the pseudo-Gini coefficient. It uses a sample of Japanese paddy farms, which is suitable for an empirical comparison of the distribution and the distributional impact of community-based and individual-based payments. The empirical results show that the community-based payments do not favour farms with higher farm incomes compared to individual-based payments and are equally distributed across farm sizes. The findings suggest that the community-based payment scheme can contribute to a more equitable distribution of farm income by ensuring a more equitable distribution of direct payments across farm sizes.