Volume 2, Issue 1 December 2017 – Part 2
The Commission Communication on “The Future of Food and Farming”
On 29 November 2017 the Commission submitted its Communication on ‘Modernising and Simplifying the Common Agricultural Policy’, which had already been announced by President Juncker in 2016. It was renamed “The Future of Food and Farming” [short link: http://bit.ly/2nf6vE5] in order to underline its policy relevance ().
The text of 26 pages kicks off the multi-stage process by which the 27 EU’s Institutions eventually have to agree on the legislative acts determining the CAP after 2020. The Communication will be followed in the spring by an impact assessment and respective legislative proposals giving effect to the new plans, which would then be tabled in the second half of 2018 ().
The original purpose of the Communication is to:
- present the main EU agricultural challenges highlighted in the public consultation of February – May 2017;
- highlight the contribution of the agriculture sector to the ten Commission’s priorities () and to the Sustainable Development Goals in synergy with other EU policies;
- specify policy priorities for the future CAP enhancing its EU added value;
- explore operational avenues on the CAP after 2020; and
- build a simpler CAP and improve governance by better reflecting the diversity existing within EU agriculture, increasing subsidiarity for Member States, limiting the EU administrative burden for the beneficiaries and strengthening the focus on results.
Unfortunately, the set of policy options / scenarios developed by the Inception Impact Assessment of February 2017 () are not included in the Communication. The paper lacks detail and it is devoid of analysis to meet the mentioned purpose. The only exception concerns the future CAP governance: the key focus of the Communication is the new ‘Delivery model’ proposed in order to build a simpler CAP (Section §2). The new model is meant to feature the following components:
- Member States (and/or Regions) designing their policy mix by means of a structured planning process against objectives and targets;
- focusing the CAP towards performance and results;
- reshaping the CAP compliance set-up by cutting the link between the EU level and individual beneficiaries; and
- developing an assurance and audit model primarily based on Member States / Regions performance and respect of basic EU requirements.
Despite its length in the Communication (2 pages), the new ‘Delivery Model’ besets with weakness and gaps, e.g. on: the basic EU framework / mandatory menu for Member States / Regions; CAP planning process (integrating Pillar 1 and 2 at internal level); common indicators for the purpose of target setting and reporting; auditing of performance outputs and results by the Commission; instruments for the Commission to react to situations of underperformance; performance incentives (as a performance reserve?); and financial clearance.
 COM (2017) 713 of 29 November 2017. Press release: The Future of Food and Farming – for a flexible, fair and sustainable Common Agricultural Policy . Memo - Fact sheet: The future of food and farming - Communication on the Common Agricultural Policy post-2020.  The Commission Work Programme 2018 mentions also a comprehensive proposal for the future Multi-annual Financial Framework with a 2025 perspective, followed by proposals for the next generation of programmes and new own-resources (page 2). It is clear that the MFF talks will shape the next CAP reform (which in turn influenced by the Brexit negotiations).  See: The European Commission at mid-term. State of play of President Juncker’s ten priorities, European Parliament, EPRS briefing, July 2017.  Inception Impact Assessment (Roadmap) on the Communication on Modernising and Simplifying the Common Agricultural Policy, DG AGRI, 2 February 2017,
The Communication of 29 November retains three dimensions of the CAP: economic, environmental, and social. This multidimensional approach reiterates the importance of the multi-functional role of farmers () and the EU family farm model ().
The paper also sets out three key objectives for agriculture ():
- Fostering a smart and resilient agricultural sector;
- Bolstering environmental care and climate action;
- Strengthening the socio-economic fabric of rural areas.
The scope of the Commission Communication is, however, very general from an instrumental point of view. The Impact Assessment that will underpin the Commission’s legislative proposal for the post-2020 CAP will certainly provide further details on the future mechanisms. At this stage, the main questions are how the CAP after 2020 will achieve the objectives proposed and how the EU will guarantee added value inside a delivery model based on the subsidiarity principle.
The Communication retains both pillars but the final policy model will depend on the ‘national tailoring’ of interventions. In addition, the type of instruments relating to each objective remain vague. For example, the future structure of direct support is still unspecified. Generational renewal is recognised as a strategic challenge of the EU agriculture () but the current ‘young farmers’ payment’ is not mentioned. Furthermore, the Communication confirms the continuation of the decoupled area-based direct payments to provide income support to farmers (Section §3.2.1). But the framework for the new income support (‘new basic payment’?) remains confusing. In fact, the focus is on improving the ‘fairness’ of the new payments, rather than their lack of targeting.
 Section §3.1, page 12.  Section §3, page 11.  See Section §3. These objectives are subsequently developed at sub-sections §3.2, §3.3 and §3.4. It should be remarked that the three CAP objectives currently listed at Article 110(2) Regulation (EU) No 1306/2013 (Horizontal Regulation) are implicitly abandoned: ‘(a) viable food production, with a focus on agricultural income, agricultural productivity and price stability; (b) sustainable management of natural resources and climate action, with a focus on greenhouse gas emissions, biodiversity, soil and water; (c) balanced territorial development, with a focus on rural employment, growth and poverty in rural areas’.  Section §3.4.2, page 22.
The Communication explicitly mentions some ways to improve equity in the distribution of direct payments: compulsory capping and degressive payments to reduce the support of larger farms; ‘redistributive payment’ strengthening support to small-medium sized farms; review of the ‘active farmer’ definition (at national level?) (). In contrast, the ‘small farmer’s scheme’ is never mentioned.
Furthermore, the Communication confirms the movement towards greater market exposure as well as the need to promote farming resilience by addressing income volatility and reinforcing position of farmers in the food chain. A ‘permanent EU-level platform on risk management’ is suggested (). The Communication also advocates for an improved agricultural insurance scheme based on indexes (). However, the setting and configuration of the risks management tools inside the new CAP (and/or inside the ‘Delivery Model’) remain unclear.
The proposals related to the agri-food supply chain and market crisis (CMO) are very vague (Section §3.2.2). It is not a minor paradox to be noted that the European Commission requested the Agricultural Markets Task Force (AMTF) to present a report with a view to improve the position of farmers in the food markets while this Communication does not include any specific proposal in this field. It is not known in particular how the CAP will tackle unforeseeable events (catastrophic risks, major market disturbances) within a results oriented approach and once ‘financial discipline’ goes away. On this basis, the design of the ‘crisis reserve’ could be reviewed in the light of the experience gained between 2014 and 2017.
The Communication has taken the criticisms on the current ‘Green architecture’ and in particular ‘the one size fit all’ approach as well as the duplication between cross compliance, green direct payments (Pillar 1) and voluntary agri-environmental and climate measures (Pillar 2) (Section §3.3). These deficiencies should be addressed by replacing all three components with ‘a more integrated, targeted and flexible approach’ to environmental protection. Member States would have the flexibility to formulate strategic plans allowing for addressing climate and environmental needs at local level. On this basis, environmental and climate practices would be further defined by Member States. However, the Communication lacks detail concerning: instruments for the Commission to ensure that the (national) environmental practices will contribute to the objectives agreed at EU level; indicators and performance incentives to be used in this area; technological / digitalisation possibilities (and lacks) existing at local level (); and/or possible flat rate corrections for non-respect of EU basic requirements.
The CAP reform process will likely be influenced by the outcome of the Brexit negotiations and the debates of the new MFF beyond 2020. Due to these factors, budgetary issues on the CAP reform remain entirely absent (). Consequently, it is difficult to define what objectives (and instruments) will be prioritised in financial terms. In this context, the process of better targeting appears only partial, especially within the new Delivery Model. In the figurative sense, we have now some pieces of the puzzle, but we do not know the final design or its size. It should also be remarked that the co-financing of direct payments is never quoted despite the emphasis on the subsidiarity principle and the greater co-responsibility of Member States.
As a corollary, the new CAP roadmap suggested by the Commission is unrealistic. At this preliminary stage of the CAP reform process seems highly unlikely that the MFF beyond 2020, the accompanying proposal of a new own-resources system and, consequently, the new CAP, could be adopted before the EP elections of May 2019.
 Section §3.2.1, page 15.  Section §3.2.3, page 18.  Section §3.2.3, pages 17-18.  The Communication (Section §3.1, page 12) is perhaps over-optimistically on the research and innovation potentials at national/regional level.  The Communication does neither pre-empt the outcome of the debate on the future of EU finances nor the proposals for the next MFF (Section §1, page 8).
Towards the cap post 2020: a changing background
The latest reform of the CAP was decided in 2013 and implemented in 2015. Since then, the context in which the reform was adopted has shifted significantly. In particular,
- Agricultural markets uncertainty has increased, due notably to macroeconomic factors (i.e. evolution of growth and employment, inflation, energy prices, interest rates, exchange rates, etc.) and geopolitical developments (migration, refugee crisis, terrorism, emergence of populism, Trump era, etc.) making long-term planning for the sector more challenging;
- Trade impacts have increased (i.e. Russian embargo) while the emphasis of trade talks has moved from multilateral to bilateral deals and from domestic policies to market access;
- The entry into force of new international commitments especially those concerning climate change mitigation (through Paris agreement – COP 21) and broad aspects of sustainable development (through the UN’s Sustainable Development Goals – SDGs) ();
- Technological development, in particular the digital revolution, increasing connectivity, new production methods (through precision farming, automation of agricultural activity, drones, etc.), retail innovations (online shopping) and policy monitoring tools;
- The on-going institutional reflections on the future of the EU-27 (), after the Brexit ().
 The role of agriculture in the 2030 Agenda for Sustainable Development was discussed at the meeting of the Agriculture and Fisheries Council of 9 October 2017 (see Table 1).  The Bratislava Summit of 27 Member started a broad debate on the state of the EU, the common future after the Brexit and the key priorities of the UE 27. The Heads of State or Government of the Member States adopted a work programme, named ‘Bratislava roadmap’. The main texts related to this reflection of the future of Europe are: - Published by the European Commission: - White Paper on the future of Europe. COM (2017) 2025 of 1st March 2017, 31 p. - Reflection paper on the social dimension of Europe. COM (2017) 206 of 1st April 2017, 35 p. - Reflection paper on harnessing globalisation. COM (2017) 240 of 1st May 2017, 23 p. - Reflection paper on the deepening of the economic and monetary union. COM (2017) 291 of 31 May 2017, 39 p. - Reflection paper on the future of the European defence. COM (2017) 315 of 7 June 2017, 23 p. - Reflection paper on the future of EU finances. COM (2017) 358 of 28 June 2017, 39 p. - Published by the Council: - Bratislava Declaration and Roadmap. Bratislava, 16 September 2016, 6 p. - The Rome Declaration. Declaration of the leaders of 27 Member States and of the European Council, the European Parliament and the European Commission. 25 March 2017, Roma, 2 p. On 13 September 2017, European Commission President Jean-Claude Juncker delivered his annual speech on the State of the European Union proposing a ‘Roadmap for a More United, Stronger and More Democratic Union’. See the new legislative initiatives linked to this roadmap listed at the Commission Work Programme 2018.  The AGRI Committee and the EP Policy Department B organised a Workshop on 9 November 2017 on the ‘Implications of ‘Brexit’ for the EU agricultural sector and the CAP’. The purpose of this event was to examine and debate the main budgetary, trade and institutional issues related to the Brexit process at the current state of negotiations.
The Longer Road Towards a New CAP Reform: Building Blocks
3.1. Council initiatives
More and more Council initiatives have been focused on the future CAP beyond 2020 as from the beginning of 2016 (see Table 1).
The Dutch Presidency of the Council started the debates at an informal meeting in May 2016 (). An intergovernmental meeting on the CAP after 2020 was also held in September 2016 in Chambord, following an initiative by the French Government.
Subsequently, under the Slovak, Maltese and Estonian Presidencies, Council meetings were devoted to specific aspects of the new CAP: functioning of the food supply chain, water resources and climate change and risks management tools (Table 1).
Following the current 18-month programme of the Council, discussions on the next Common Agricultural Policy will also be a priority for the 2018 Presidencies (Bulgaria and Austria) ().
3.2. EP initiatives
Regarding the European Parliament, the 2013 reform of the CAP was the first in which the MEPs were involved as co-legislators. Building on this initial experience, Parliament will make sure that it plays a central role in the forthcoming reform.
The EP has already adopted a large number of own-initiative reports on specific topics related to the CAP, including: land concentration (), women in rural areas (), price volatility (), jobs in rural areas (), unfair trading practices (), and farming innovation (). Other EP resolutions will soon be adopted on: the prospects for the sheep and goats sectors; the promotion of protein crops; and the CAP’s young farmers’ schemes.
 The Dutch Agriculture Minister presented a background paper promoting the idea of a ‘Common Food Policy’ (‘Food of the Future - The Future of the Food’, Discussion paper of the Netherlands Presidency).  Estonian Presidency, Tamm press release, February 2017. Member States holding the Council’s Presidency work together closely in groups of three, called 'trios'. The current trio is made up of the presidencies of the Estonia, Bulgaria and Austria. The trio sets long-term goals and prepares a common agenda determining the topics and major issues that will be addressed by the Council over an 18 month period. The latest trio’s 18-month agenda was adopted in July 2017 (see Table 1).  European Parliament Resolution of 27 April 2017 on ‘the state of play of farmland concentration in the EU: how to facilitate the access to land for farmers’.  European Parliament Resolution of 4 April 2017 on ‘Women and their roles in rural areas’.  European Parliament Resolution of 14 December 2016 on ‘CAP tools to reduce price volatility in agricultural markets’.  European Parliament Resolution of 27 October 2016 on ‘How the CAP can improve job creation in rural areas’.  European Parliament Resolution of 7 June 2016 on ‘unfair trading practices in the EU food supply chain’.  European Parliament Resolution of 7 June 2016 on ‘Enhancing innovation and economic development in future European farm management’.
The AGRI Committee also organised a specific workshop on the next CAP reform in October 2016 () and commissioned studies on the state of play of 2013 CAP instruments implemented by Member States () as well as on different policy issues in order to facilitate the future legislative work of the MEPs ().
3.3. Commission works
The Commission has launched several measures in order to adjust the current CAP basic acts to reflect the changing background since the 2013 reform.
A milk package was adopted in 2016 with the aim of reducing supply and helping Europe’s dairy farmers cope with the price crash that followed the abolition of quotas in 2015 ().
Furthermore, In the context of deep and recurring crises of livestock markets, the European Commission set up an expert group in January 2016 (Agricultural Markets Task Force – AMTF) with a view to improve the position of farmers in the food chain. Its final report was presented in November 2016 () making suggestions on how to strengthen market transparency, to incentivise access for farmers to financial instruments and risk management tools to hedge price volatility, to improve contractual relations within the chain and to develop legal possibilities for organising farmers’ collective actions ().
 Research for AGRI Committee – CAP Reform post-2020 – Challenges in Agriculture, European Parliament, Policy Department B, October 2016.  European Parliament carried out a whole package of studies analysing the implementation of the CAP 2014-2020: - Young farmers - Policy implementation after the 2013 CAP reform, October 2017; - Programmes Implementing the 2015-2020 Rural Development Policy, May 2016; - State of Play of Risk Management Tools Implemented by Member States during the Period 2014-2020: National and European Framework, March 2016; - Implementation of the First Pillar of the CAP 2014–2020 in the EU Member States, Annexes, July 2015; - Precision Agriculture: An Opportunity for EU-Farmers – Potential Support with the CAP 2014-2020, March 2014.  - The Consequences of Climate Change for EU Agriculture: Follow-Up to the COP21 UN Paris Climate Change Conference, February 2017; - The EU cattle sector: challenges and opportunities – meat and milk, Annexes, February 2017; - Policy support for productivity vs. in EU agriculture: towards viable farming and green growth, January 2017; - The Consequences of Climate Change for EU Agriculture: Follow-Up to the COP21 UN Paris Climate Change Conference, February 2017; - The Role of the EU’S Common Agricultural Policy in Creating Rural Jobs, April 2016; - Structural Change in EU Farming: How Can the CAP Support a 21st Century European Model of Agriculture? March 2016; - Overview of the Agricultural Inputs Sector in the EU, July 2015; - Comparison of Farmers’ Incomes in the EU Member States, June 2015, - The First CAP Reform under the Ordinary Legislative Procedure: A Political Economy Perspective, December 2014; - Comparative Analysis of Risk Management Tools Supported by the 2014 US Farm Bill and the CAP 2014-2020, December 2014; - Family Farming in Europe: Challenges and Prospects, April 2014; - CAP 2014-2020 Tools to Enhance Family Farming: Opportunities and Limits, April 2014.  Commission delegated and implementing regulations published on 9 September 2016 (OJ L 242, pages 1 to 23).  Final report ‘Improving Market Outcomes. Enhancing the position of farmers in the supply chain’, November 2016.  Building on the recommendations set out in the final AMTF report, in 2017 the European Commission launched an inception impact assessment (IIA) and a public consultation on the improvement of the food supply chain (from 16 August 2017 until 17 November 2017).
In the light of those recommendations, the Parliament made a number of specific amendments to the legislative proposal commonly referred to as ‘Omnibus Regulation’ (), which was part of the mid-term review of the current multiannual financial framework (MFF) for 2014-2020. In the context of this horizontal legislative proposal, covering a large number of EU policies, the Commission brought forward measures aimed at adjusting the four basic acts of the CAP (direct payments, rural development, CMO and horizontal rules). The Estonian Presidency of the Council reached a provisional agreement on the AGRI component of the ‘Omnibus package’ with the European Parliament on 12 October 2017. Both legislative authorities approved splitting agreed rules on the CAP in November 2017 to have them enter into force in January 2018. All the other aspects of the draft financial regulation are still being negotiated by the relevant Committees at the Council and at the European Parliament.
The agreed rules aim at simplifying the CAP, improving young farmers’ support, boosting farmers’ bargaining power and developing better tools to face market and production risks. EP AGRI Committee played a very active role and drew on the recommendations of the Agricultural Markets Task Force to table supplementary amendments aimed at strengthening the CMO mechanisms.
On this basis, some prerogatives of farmer’s organisations () already existing in some sectors (such as olive oil, beef and arable crops) would be extended to all sectors with a view to improving the position of farmers in the food supply chain. The Omnibus Regulation would also introduce a sector specific Income Stabilisation Tool (IST), which compensates farmers for losses incurred in specific types of production, even if their other productions did not suffer. Insurance contracts, covering among others losses caused by adverse climatic events, will become available when more than 20% of the average annual farm’s production is destroyed.
In addition, under the new rules, Member States will be able to reduce direct support on an annual basis if they so wish and increase young farmers’ payments under Pillar 1 up to 50% within the existing ceiling. Greening rules will be extended as new types of plant varieties (such as silvergrass and silphion), as well as land left fallow for melliferous plants, would become eligible as Ecological Focus Areas (EFAs). Finally, the new rules would grant Member States more leeway in defining the ‘active farmers’ eligible for direct payments.
Regarding the Pillar 2, 20 years after the initial rural conference in the city of Cork (Ireland), the Commission held the ‘Cork 2.0’ Conference in September 2016 (). This event re-opened the debate on the future of rural areas and led to the adoption of a declaration highlighting ten key policy orientations for the rural development policy post 2020 ().
Lastly, President Juncker announced in a letter of intent to the Presidents of Parliament and the Council on the State of the Union in 2016 that a Communication would be published on modernisation and simplification of the CAP. In preparation, the Commission launched an Inception Impact Assessment and a public consultation on the future of the CAP in February 2017 (concluded in May 2017) ().
 Legislative proposal COM (2016) 605 of 14 September 2016.  Such as planning production, optimising production costs, placing on the market and negotiating contracts for the supply of agricultural products on behalf of their members.  Cork 2.0: European Conference on Rural Development, 5-6 September 2016 (Web page).  Cork 2.0 Declaration, ‘A Better Life in Rural Areas’  - Inception Impact Assessment (Roadmap) on the Communication on Modernising and Simplifying the Common Agricultural Policy, DG AGRI, 2 February 2017, 4 p. - The CAP: Have your say, Conference of 7 July 2017.