socioeconomic structure of analysed farms. These aspects will be analized in the second part of
this work: the simulation process.
Simulation is a method very usefull in agriculture sector to measure the impact of a new
agriculture policy or new agriculture changes in the foreign market. Some works were made in
the CMO reform olive oil from 1998 in olive oil farming (P.P. Pérez et al., 1997 and F. Fuentes,
1999).
For the second part it has been considered first of all the latest CMO reform to the olive
oil. It is proposed that the existing production-linked payments in the olive oil sector be
converted into direct income support, through the creation of new entitlements to the single
farm payment for farmers (also named decoupling of the aids), in addition to those arising from
the June 2003 CAP reform. It means that 93.60% of the production-linked payments in the olive
oil sector (for the reference period, 1999 to 2003 crop years), should be converted into
entitlements to the single farm payment for farms larger than 0.3 ha. Member States would
retain the 6.70% of the payments in the olive oil sector, for the reference period, as national
envelopes, for the granting to producers of an additional olive grove payment.. This payment is
not linked to production but it is intended for keeping the olive trees, preserving the soil and the
environment while taking into consideration the local traditions and culture. The purpose of this
additional payment would be to ensure the permanence of olive trees in marginal areas or low-
output olive groves by contributing significantly to the maintenance cost of olive groves in those
areas. Member States will identify those zones according to objective sustainable development
criteria, within a common EU framework. This should include landscape preservation,
environmental, social and cultural concerns.
We have considered that farmers will perceive the average aids in the reference period
(from 1999 to 2003 crop years). The average aid in those four years for Spain was 0.9785
euros∕kilo and in every crop year has been the follow: 1.304 euros∕kilo in 1999-2000, 0.939
euros∕kilo in 2000-2001, 0.637 euros∕kilo in 2001-2002 and 1.0343 euros∕kilo in 2002-2003.
Spanish Goverment has situated single payment aid in 93.6% of the average, which means that
from 2005-2006 until 2012-2013 the aid will be 0.916 euros∕kilo.