The Bond Scheme

A succession of agricultural economists, way back to the 1960s, had advocated the use of decoupled compensation payments to facilitate reform of farm policies. In particular, in 1991, a report commissioned by the Land Use and Food Policy Inter-Group (LUFPIG) of the European Parliament proposed a significant development of the concept of decoupled payments: a bond scheme in which the rights to future compensation payments would be vested in a paper asset –the bond– that could then be retained by the original recipient or sold on the stock exchange (see, in particular, Tangermann, 1991). Although the European Commission did propose a transferable bond as part of its reform proposals for milk in 1991, and the Danish Government pressed for a bond scheme rather than arable area payments in the debate over the 1992 CAP reforms, the bond scheme was not adopted at that time.

This research project funded by the European Commission under Framework 5 (QLRT-1999-01510) set out to re-articulate the Bond Scheme proposal, and to assess its feasibility and acceptability. The project involved research teams from the University of Reading (UK), the Georg-August Universität, Göttingen (Germany), and The Portuguese Catholic University (Portugal). We are grateful to the European Commission for its financial support, our desk officer Dr. Hans-Joerg Lutzeyer for his forbearance, the farmers who willingly responded to our survey, and to the many other individuals who directly or indirectly contributed to our project.

The Research Team was:

University of Reading
Alan Swinbank, Jonathan Little and Richard Tranter
Georg-August Universität Göttingen
Stefan Tangermann, until 31 January 2002, and Thomas Knapp
The Portuguese Catholic University
Américo Carvalho Mendes, Leonardo Costa and Miguel Sottomayor

with, as associates:
Arlindo Cunha, a Member of the European Parliament (MEP) until October 2003
Carsten Daugbjerg, University of Aarhus

In addition to farmers’ responses to our survey and interviews, the project was informed by a seminar in Porto, Portugal, consultations and workshops in Germany, Portugal and the UK, and responses to our first EuroChoices article and discussion paper. There were two main pan-European dissemination events: First an organized session at the Xth European Congress of Agricultural Economists, in Zaragoza, Spain, in August 2002; and second a workshop in the European Parliament in September 2002 kindly hosted by Arlindo Cunha, MEP.

In an evaluation of EU research in the period 1998-2004, under Key Action 5, the Bond Scheme was one of 13 projects judged by an independent group of experts to be the ‘most relevant policy support projects of the 400-plus projects funded’ (European Commission, Directorate-General for Research, Support to Agricultural Policy: The impact of EU Research (1998-2004), Office for Official Publications of the European Communities: Luxembourg, 2005).


Alan Swinbank & Richard Tranter (eds.) (2004), A Bond Scheme for Common Agricultural Policy Reform, (Wallingford: CABI Publishing).


Chapter 1: Decoupled Payments and a Triad of Policy Objectives: Compensation, Farm Income Support and Multifunctionality, Alan Swinbank
Chapter 2: Direct Payments in the EU and their Treatment in the WTO, Alan Swinbank
Chapter 3: Compensation Proposals for EU Farm Policy Reform, Jonathan Little, Thomas Knapp, Miguel Sottomayor & Alan Swinbank
Chapter 4: A Bond Scheme to Facilitate CAP Reform, Alan Swinbank & Stefan Tangermann
Chapter 5: From CAP to CARPE: Embedding the Bond Scheme Proposal in a Comprehensive Reform, Leonardo Costa, Arlindo Cunha, Américo Mendes & Miguel Sottomayor
Chapter 6: Why a Bond Scheme was not Adopted in 1992-93, Carsten Daugbjerg
Chapter 7: Implementing a Bond Scheme, Alan Swinbank, Jonathan Little, Thomas Knapp & Miguel Sottomayor
Chapter 8: Asking Farmers about their Response to the Proposed Bond Scheme, Richard Tranter, Leonardo Costa, Thomas Knapp, Jonathan Little & Miguel Sottomayor
Chapter 9: A Role for Direct Payments? The Doha Round, EU Enlargement and Prospects for CAP Reform, Arlindo Cunha
Chapter 10: Concluding Comments, Alan Swinbank & Richard Tranter

Other Articles:

Alan Swinbank & Stefan Tangermann (2001), ‘The Future of Direct Payments under the CAP: A Proposal’, EuroChoices, Premier Issue, Spring 2001: 28-29, 32-34. Republished as: ‘Przylosc platnosci bezposrednich w ramach Wspolnej Polityki Rolnej: propozycja’, Wies i Rolnictwo, nr 1 (114), 2002: 97-105 (by Polska Akademia Nauk)

Alan Swinbank & Stefan Tangermann (2002), ‘CAP Bonds: A Sceptical View. Reply’, EuroChoices, 1(2): 33-34

Alan Swinbank & Richard Tranter (2005), ‘Decoupling EU Farm Support: Does the New Single Payment Scheme Fit within the Green Box?’, The Estey Centre Journal of International Law and Trade Policy, 6(1): 47-61

Carsten Daugbjerg, Richard Tranter, Philip Jones, Jonathan Little, Leonardo Costa, Thomas Knapp, Miguel Sottomayor & Alan Swinbank (2005), ‘The visibility of agricultural subsidies and market illusions in the Common Agricultural Policy: Some evidence from farmers’ views in Germany, Portugal and the United Kingdom’, European Journal of Political Research, 44(6): 749-766

R.B. Tranter, A. Swinbank, M.J. Wooldridge, L. Costa, T. Knapp, G.P.J. Little & M.L. Sottomayor (2007), ‘Implications for food production, land use and rural development of the European Union’s Single Farm Payment: Indications from a survey of farmers’ intentions in Germany, Portugal and the UK’, Food Policy, 32(4/5): 656–671

Alan Swinbank & Richard Tranter (2010), ‘The bond scheme’, in A. Oskam, G. Meester & H. Silvis (eds.), EU policy for agriculture, food and rural areas, (Wageningen: Wageningen Academic Publishers): 207-212.

Miguel Sottomayor, Richard Tranter and Leonardo Costa (2011), ‘Likelihood of Succession and Farmers’ Attitudes towards their Future Behaviour: Evidence from a Survey in Germany, the United Kingdom and Portugal’, International Journal of Sociology of Agriculture and Food, 18(2): 121-33

Associated Publications:

Nick Beard & Alan Swinbank (2001), ‘Decoupled Payments to Facilitate CAP Reform’, Food Policy, 26(2): 121-145

Carsten Daugbjerg (2003), ‘Policy Feedback and Paradigm Shift in EU Agricultural Policy: the Effects of the MacSharry Reform on Future Reform’, Journal of European Public Policy, 10(3): 421-437

Carsten Daugbjerg & Alan Swinbank (2004), ‘The CAP and EU Enlargement: Prospects for an Alternative Strategy to Avoid the Lock-in of CAP Support’, Journal of Common Market Studies, 42(1): 99-119

Stefan Tangermann (1991), ‘A bond scheme for supporting farm incomes’, In: John Marsh, Bryn Green, Brendan Kearney, Louis Mahé, Stefan Tangermann & Secondo Tarditi, The Changing Role of the Common Agricultural Policy: the Future of Farming in Europe, Belhaven: London


Alan Swinbank at
Richard Tranter at