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Stakeholder reactions to the new CAP proposals for 2021-27

IEG Policy speaks with Birdlife Europe's Ariel Brunner, Jannes Maes from the European Council of Young Farmers, Yves Le Morgan of thinktank AgrIDées and agricultural economist Stefan Tangermann to gauge views on the plans

One of the few things that can be guaranteed about any proposal for reforming the Common Agricultural Policy is that it will attract a wide spectrum of reactions from stakeholders. 

The European Commission’s proposals for the CAP in 2021-27 are no exception, attracting praise, criticism, hope and disappointment in (not necessary equal) measure.

The proposals’ aims are ambitious and wide-ranging, setting targets to promote greater resilience for the agriculture community, to make agricultural activity in Europe more environmentally sustainable, and to make agricultural regulation more efficient and coherent – all against the backdrop of a significantly reduced budget.

The proposals will be chewed over and amended by the co-legislators in the Council and Parliament, but the Commission’s proposals will inevitably create at least a template for the eventual deal.

To gauge reaction to the plans. IEG Policy conducted short interviews with four different stakeholders, each with a very different perspective on the proposals, and with contrasting views on the positives and negatives of the plans on the table.

This article features in a new Special Report for IEG Policy titled: ‘Reform of the Common Agricultural Policy: Proposals & Prospects for 2021-27’. IEG Policy subscribers can download a pdf copy; select Resources > Reports in the menu to the left (where you will also find our previous special reports) or direct via this link.

Non-subscribers can download a copy by following this link

IEG Policy: The Commission says that its proposals for the 2021-27 CAP will create a more “resilient, sustainable and competitive” agricultural sector. Would you agree with that assessment?

Ariel Brunner, Senior Head of Policy, BirdLife Europe and Central AsiaNo. The proposal completely fails to shift the CAP from perverse subsidies locking farmers into the status quo to a new policy that rewards biodiversity conservation and helps farmers face the necessary ecological transition.

By vastly increasing member states freedom to choose whom and what to subsidise, while failing to build strong accountability mechanisms, the proposal opens the door to a race to the bottom that can send us back to the butter mountains and wine lakes of a generation ago. The active removal of safeguards against perverse subsidies (e.g. in irrigation expansion) shows that the message on resilience and sustainability is just empty words, while competitiveness is pursued in a 20th century logic instead of a 21st century one.

Jannes Maes, President of the European Council of Young Farmers (CEJA)While there are undoubtedly some positive developments in the Commission’s CAP proposals, there is a lot that is disappointing. First and foremost, the reduced budget put forward in the MFF proposals will affect all farmers and perhaps most significantly those who are young and wish to enter or remain in the sector.

Agriculture will become less resilient, sustainable and competitive if less money is available to help farmers produce food to the highest standards. As a farmer, receiving a decent income is the precondition for so many of my activities. It is only through financial stability that I can innovate, improve professionally and go the extra mile in my efforts to preserve the environment I farm in.

Yves Le Morvan, agricultural policy expert at AgrIDées (a French think-tank working in the agricultural, agri-food and agro-industrial sectors)It is difficult to be so optimistic. The Commission’s proposals on sustainable development and climate measures could be interesting, as long as there is a significant simplification in the way they are applied. There is nothing new on competitiveness, on risk management, on economic resilience. Has the Omnibus [a mini-package of reforms agreed in 2017] already integrated everything in this area? No.

Stefan Tangermann, agricultural economist and former OECD Director for Trade and AgricultureThere are individual elements in the proposals that have the potential to make EU agriculture somewhat more resilient, sustainable and competitive – compared with the current CAP. More attractive options for risk management can improve resilience, more emphasis on the environment and climate can enhance sustainability, and more resources for innovation can contribute to strengthening competitiveness.

But this is only in comparison with the current CAP. There are alternative policies that the Commission could have proposed which would have been much more effective in all three dimensions. In particular, moving from direct payments per hectare to more targeted measures could have opened up entirely new horizons towards improving resilience, sustainability and competitiveness.

It can be argued that the CAP’s biggest challenge in 2021-27 is coping with a reduced budget after Brexit. Do you think the Commission’s proposed budget allocation solution is the best one available under the circumstances?

Ariel Brunner: No. The Commission is concentrating the cut on rural development, the more progressive part of the CAP, while going out of its way to safeguard direct payments which are widely proven to be ineffective and highly biased towards environmentally and socially harmful types of farming. Tight budget should call for targeting, accountability and ferocious quality control. Instead, the proposal favours protection on vested interests and allowing Member States to cater for powerful domestic lobbies.

Jannes Maes: I don’t. While it’s undeniable that Brexit will negatively affect the EU’s overall budget, diminishing the funds allocated to the CAP is not the way forward. The CAP is socially and historically significant,  and it has provided the EU’s Member States with high-quality, traceable food to consume. With a reduced budget, farmers and particularly young farmers, will struggle to make their activities viable.

It must be acknowledged that the EU has changed and is faced with other concerns related to migration and defence. These should be taken into account, but not at the expense of agriculture.

Six Member States recently signed a memorandum that communicates the need for the CAP budget to be increased to its current EU-27 level. Others have expressed their support for this document vocally. It is clear that Member States recognise the vital importance of maintaining the CAP budget and the negative effects a reduced budget could have on the agricultural sector and consumers.

Yves Le Morvan: One compromise solution could be to ensure that the CAP budget was impacted solely by the agricultural consequences of Brexit, and not by the development of new policies [on defence, border protection, etc].

Stefan Tangermann: I don't agree that the biggest challenge for the CAP in 2021-27 is coping with a reduced budget. The biggest challenge is to change the mindset of EU agricultural policy makers at all levels, away from the perception that the most important objective of the CAP is to provide farm income support, towards a much clearer understanding that public money under the CAP should be spent only on providing public goods. If that perspective were to gain more ground, then even a significantly reduced budget could achieve a lot.

The new ‘CAP Delivery Model’ puts a heavy emphasis on national Strategic Plans. Are you concerned that the policy may lose coherence or transparency as a result of this move towards subsidiarity?

Ariel Brunner: Yes. Moving to a planning logic with more freedom to member states on the “how” in exchange for more accountability on the “what” would have been a great idea. Sadly the new delivery model is so weak that it is almost guaranteed to trigger a race to the bottom. Member States won’t really be accountable for achieving objectives but only for rolling out schemes that won’t be assessed for their quality. There will be almost no safeguards against perverse subsidies and no requirement to seriously invest in addressing the biodiversity crisis. The most likely outcome is a wide range of unrelated policies with a few Member States going ahead and many going backwards.

Jannes Maes: There are significant differences between the EU’s regions and the Strategic Plans are a way of taking this into account and tailoring specific measures to different farming realities. However, binding measures at EU level need to be put in place in order to ensure that the sector progresses. CEJA is firmly against any moves that imply a renationalisation of the CAP because it is only through having strong measures at EU level that young farmers will be able to thrive in the agricultural sector.

Member States may set themselves lower targets in the Strategic Plans in order to be sure of reaching them and not incurring penalties. The New Delivery Model therefore does not encourage ambition at Member State level. Take the ring fencing of at least 2% of national direct payments envelopes for young farmers, for example. While the intention is positive, Member States will have little incentive to ring fence more than this amount.

The CAP must remain a European policy. Giving Member States free rein in many areas may lead to an increased disparity between countries.

Yves Le Morvan: Subsidiarity is a cause for concern. It poses the risk of distorting competition and jeopardising the integrity of the single market. One is put in mind of Non-Tariff Barriers which affect international trade negotiations.

Stefan Tangermann: No, I am not concerned – as long as the development and assessment of the national strategic plans is taken sufficiently seriously. In the CAP (and in other domains of EU policy) the principle of subsidiarity has far too long been neglected.

There are policy objectives that can and should only be pursued at the Union level. The optimal allocation of productive resources through market forces, for example, is clearly a matter for the Union. But there are also many other policy issues where member countries and even regions should have more flexibility. Many environmental matters belong in that category. What is important, though, is that member states should not only have a say in how such more differentiated policies should be designed – they should also bear more financial responsibility for them. This is, unfortunately, not part of the package now proposed by the Commission.

The Commission says that 40% of the CAP's overall budget should contribute to environment and climate action objectives. Is that percentage about right, too little, or too much?

Ariel Brunner: The problem is not the percentage, it is the frankly fraudulent way in which the Commission proposes to achieve it. The Proposal would not actually force Member States to allocate 40% of their spending to measures addressing climate change. They will simply count 40% of what they spend, regardless of what it achieves as “climate spending” using the “Rio markers” trick already slammed by the Court of Auditors. Incredibly, even perverse subsidies such as payments for maize on drained peatlands or factory farms would count as “climate funding”.

Jannes Maes: This percentage respects the EU’s commitment under the Paris Agreement to reduce its emissions by 40% by 2030. We don’t question this commitment or the ambition it reflects. Very often we tend to forget that farmers (especially in the south) are the first victims of further climate change. What we do ask is that positive farm practices, also current ones, are taken into account when calculating the contribution of the agricultural sector.

Yves Le Morvan: That 40% figure is more about public relations than it is about economic reality. It is legitimate to set a figure and is a matter of interest to society. But any calculation of this type runs the risks of being vague and becoming a topic for debate, and as such it will always tend to put more pressure on the agriculture sector.

Stefan Tangermann: Too little. And some of the measures counted among the 40% are not as effective as they should be. This is particularly true for the environmental and climate conditionality of the direct payments. Unfortunately the proposals even foresee a greater financial weight for direct payments as opposed to rural development and environmental/climate action.

In what ways (if any) will the new CAP make European agriculture better able to compete internationally, in light of the pending new trade agreements with the likes of Mercosur, Australia and New Zealand?

Ariel Brunner: The proposal essentially seeks a business as usual scenario, while allowing Member States to compete with each other on production subsidies (both declared and disguised). Many Governments will jump on it as a way to shield farmers, particularly the livestock sector, from the impact of falling prices. In reality this will spell disaster for EU farmers.

Ever growing intensification means lower prices and continued loss of farmers and ever growing debt burden on the surviving ones. Runaway climate change and depletion of biodiversity, water and soil will sooner or later trigger a major crisis in EU farming. And locking EU producers into chasing the bulk commodities market is a suicidal strategy even in purely commercial terms, as the EU competitive advantage is in quality - and its biggest potential advantage could be in sustainability.

Jannes Maes: Due to its reduced budget, the CAP may be detrimental to European agriculture’s ability to compete internationally. European farmers produce food to a very high standard, but reduced funds could negatively affect this. The CAP, combined with some other key policies such as the Unfair Trading Practices regulation and the ambition on market transparency, should be capable of helping farmers to become more market-orientated.

Whether that market is in my village or the other side of the world, I should be able to be competitive. But it is clear that a strong CAP is worthless if not combined with the same attention for agriculture in trade agreements or negotiations at the WTO.

Yves Le Morvan: There is nothing new in [this version of] the CAP. The international competitiveness of European agriculture depends rather more on possible changes to the Common Commercial Policy, and on the health and food safety regulations which apply on the internal market.

Stefan Tangermann: More emphasis on, and greater financial resources devoted to, innovation through research, and measures bringing its results to the farmer's fields, have the potential to improve competitiveness as they can enhance the productivity of EU agriculture. Unfortunately there are, though, also elements in the proposed package that can work in the opposite direction. Support for young farmers can, if it attracts operators into agriculture who would have worked in other sectors if it were not for these subsidies in the farming industry, reduce productivity. Coupled payments distort the allocation of resources and reduce market orientation.

In your view, what is the most positive innovation or change within the Commission’s latest CAP proposals?

Ariel Brunner: The proposal includes a few potential improvements. Excluding the support to “areas of natural constraint” from environmental spending might release some badly needed money for genuine environmental schemes. Some improvements are being introduced to conditionality, notably on water and pesticides, but much depends on how this is enforced (in the past Member States have been allowed to cut cross compliance both on paper and through poor controls and sanctions). 

The move to programming and requiring Member States to justify payments against explicit objectives could be a positive revolution, but it would require a much more coherent set of indicators and objectives, and a much tighter accountability system then the one on the table.

Jannes Maes: The Commission’s inclusion of a definition of a “genuine farmer” is a positive development. Having this definition in place will enable supports to be better targeted. While the specificities are left up to the Member States, Article 4.d of the proposals says that “genuine farmers shall be defined in a way to ensure that no support is granted to those whose agricultural activity forms only an insignificant part of their overall economic activities or whose principal business activity is not agricultural, while not precluding from support pluri-active farmers.”

Yves Le Morvan: Support for generational renewal; and the specific budget of €10 billion (in the Horizon Europe Programme) to support innovation in food, agriculture, rural development and the bioeconomy.

Stefan Tangermann: The emphasis on performance of policy instruments pursued under the CAP, as opposed to administrative compliance, is a helpful innovation of the policy regime. If taken seriously it has the potential to create more transparency and raise awareness regarding what the policy is expected to achieve.

…and which would you say was the most unhelpful or unwelcome change?

Ariel Brunner: The combination of massive budget cut to Pillar 2 and the de facto scrapping of environmental earmarking in Pillar I risks stopping in its tracks the reorientation of the CAP towards dealing with environmental crisis. The complete lack of any ring-fencing of money for biodiversity almost guarantees that the EU will fail to even try to stem the ongoing collapse of nature.

The huge expansion of flexibility to support pet sectors and well connected farmers, combined with weakening of safeguards against environmentally perverse subsidies and coupled support for biofuels is extremely worrying. On the environmental side we are likely to see more support for irrigation expansion, drainage, monocultures and factory farming. In terms of farm policy we are likely to see more trade distortion and unfair treatment of farmers, more political corruption and a serious erosion of the legitimacy of the common market.

Jannes Maes: Though it is a matter that has come about because of the MFF proposals, the reduction in the CAP budget is the most unwelcome change.

Yves Le Morvan: Is subsidiarity compatible with simplification? You cannot have an effective policy with an overly weak budget.

Stefan Tangermann: What is most unwelcome is the lack of change. In most of its central features the CAP will remain what it is now, rather than being fundamentally reformed. The most obvious and disappointing lack of change is the continued existence of coupled payments. It is so evident that coupled payments run entirely against the spirit of more market orientation that was central to past CAP reforms and is still so frequently invoked. And how can the proposal to maintain outdated coupled payments, running against all principles of effectiveness and efficiency, co-exist with an emphasis on assessing the performance of policy measures?

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