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.