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Is this a CAP reform to tackle the ‘three Bs’: Bureaucracy, Budget and Brexit?

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The EU is poised to take a historic and decisive step away from an agriculture policy which is ‘common’ - at least in the way that this term has been understood since the Common Agricultural Policy’s inception in the 1960s.

The ‘Communication on the Future of Food and Farming’ which was unveiled by Agriculture Commissioner Phil Hogan yesterday (November 29), shows that the EU is turning its back on the kind of common policy instruments, applicable in all member states, which have been the bedrock of the CAP since pre-reform days when heavy market intervention throughout the Union was the norm.

Instead, the CAP of the 2020s will be about common policy objectives, agreed centrally and monitored by the Commission – but with responsibility for achieving those objectives, and implementing the resulting national or regional policies, firmly in the hands of member states.

This is the most striking aspect of an initial reform plan which has surprised many by the boldness of its conception. Even in its preliminary pre-legislative shape, the ‘Hogan Reform’, as the Commissioner no doubt hopes that this initiative will be referred to by posterity, looks set to be a milestone in the CAP’s evolution.

The Commission has clearly taken the view that the confusing mess that was the 2013 CAP reform plan is no longer fit for purpose (if indeed it ever was).

‘Greening’ RIP

The attempt to blend environmental policy obligations with a broadly unchanged direct aid scheme, the so-called Greening’ initiative, has been a failure.

Farmers and administrators have fulminated over the bureaucracy that it has created, academics and analysts have been puzzled by the confusion of market support and ‘green’ objectives, and environmentalists have lamented the ‘lowest common denominator’ approach to implementation which has led to little appreciable gain for the European environment.

Instead, under the new policy, every member state will be required to establish a “CAP strategic plan” which will cover interventions in both Pillar 1 and Pillar 2. Member states will, to a large extent, choose their own agricultural policy instruments from a Commission-approved menu.

This approach is not new – it has been the norm for rural development policy in Pillar 2 for almost two decades – but the introduction of Pillar 1 into this devolutionary mix is raising eyebrows.

In the absence of actual legislative proposals it is unwise to make too many predictions at this stage about how this will work in practice. It seems likely, however, that the end-result will take the flexibilities already existing in the CAP to a much higher level, with member states perhaps able to move a much greater proportion of their overall budgetary allocation between Pillars 1 and 2 than is possible at present.

And although the Commission is adamant that the two Pillars will remain a feature of the policy, the distinctions between the two may become blurred if there is any kind of wholesale realignment of allocated funds at national level. The surprisingly high take-up of Pillar fund transfers after 2014 (see chart at bottom of this article) shows the appetite in national capitals for taking advantage of any policy flexibilities which are passed their way.

Don’t mention ‘Brexit’…

However, in the course of a 26-page document, the Commission has conspicuously avoided any mentions of two of the future CAP’s biggest challenges – Brexit, or the budget.

The Commission is unable to say anything at all about CAP funding until such time as it has put forward its proposals for the next Multiannual Financial Framework for the period after 2020.

These proposals will not be forthcoming until May 2018, with legislative proposals for the new CAP following soon thereafter. It will be at this point that the Commission’s strategy for bridging the funding gap created by the UK’s departure from the EU will become evident.

And this is where the Commission’s unwritten agenda with this CAP reform may become clearer. It will aim to save money by capping payments to the largest farmers – an objective which was reiterated by Hogan at his press conference yesterday, even though the specific reference in earlier drafts to a cap per farm in the range of €60,000 to €100,000 was deleted from the final version.

But in addition, the CAP Strategic Plans to be created in each member state will involve a mix of P1 and P2 policies. Payments under the latter (unlike the former) are co-financed by national contributions.

If there was to be a greater emphasis on P2 funding within this rather more fluid policy architecture, then it may be possible to engineer the kind of increased reversion to increased overall levels of co-financing which would help to offset the ‘Brexit gap’ in CAP funding.

Allegations of ‘CAP renationalisation’ have been vigorously rejected by Hogan, who is anxious to dispel any impression that the integrity of the Single Market might be compromised by what is on the table.

But it is certainly possible that greater national co-financing of farm support measures will be the price that national capitals pay for greater national control over the shape of policy. Not until the MFF proposals are submitted next May, however, will this point be addressed in any detail.

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