Original publication: May 2018
Authors: IEEP: David Mottershead, Kaley Hart, Anne Maréchal, Stephen Meredith, Anna Lorant, Faustine BasDefossez and David Baldock
Jean-Christophe Bureau, Alan Matthews
Short link to this post: http://bit.ly/2rLQAvU
This study was commissioned by the Policy Department of the European Parliament. It examines the CAP Communication The future of food and farming published by the European Commission on 29 November 2017, and makes recommendations as to how the Parliament could develop its position on the Commission’s legislative proposals when they appear. The main focus of our analysis, is the extent to which theCommunication engages with the issues facing EU agriculture in a consistent way, whether there are any gaps, and how the Commission’s plans match the views and ideas contributed by others. After the introduction, chapter two examines the performance of the current CAP against its stated objectives of viable food production, sustainable management of environmental resources and climate action, and territorial balance.
Using data from the CAP’s Common Monitoring and Evaluation Framework we show that productivity in agriculture remains low in many areas. The impact of CAP instruments on productivity growth is poorly understood. Serious environmental problems remain especially in the case of biodiversity and greenhouse gas emissions from agriculture which havestarted to rise. CAP instruments to tackle them have been rather ineffective, in the case of greening, or underfunded in the case of Pillar 2 measures. Although payments under the CAP have had an impact, rural poverty remains greater than in urban areas and GDP per head lower. Chapter 3 examines the economic and institutional background to the Communication and its drivers. The legislative proposals will be tabled during a period of strong EU economic performance. However, total EU agricultural income is expected to decrease in real terms up to 2030. The Commission’s spending plans for the period 2021-2020 include a reduction in CAP spending, with greater cuts targeted on rural development spending. There are strong demands from within the EU for policysimplification andclear demonstration of EU added value.
The public are increasingly demanding that the CAP responds to wider societal needs.In particular, the public now regards the environment as the most important single justification for CAP spending, just ahead of food supply and investment. Other factors which the coming CAP reform must take into account include technological innovation–which can be either beneficial or disruptive. Further bilateral trade agreements can benefit the agri-food sector as a whole but increase competition for vulnerable sectors. Finally the lack of clarity around the future relationship between the UK and the EU27 after Brexit creates significant uncertaintyfor agriculturalpolicy.
Chapter 4 analyses the extent to which the Communication addresses the challenges identified in the previous sections. As a response to the concerns on the CAP’s performance and results, the Communication proposes a new delivery mechanism which would require Member States to plan all CAP spending against EU objectives, including the details of measure design and spending control at farm level.
For the Commission to manage Member States’ plans will require a different sort of engagement with them, for which both parties will need to develop their capacity significantly. The Commission will need to ask Member States to put EU objectives ahead of national priorities when appropriate. The time pressure under which plans will need to be agreed will make this challenging to achieve.
A variety of issues will impinge on the efficacyof strategicplans and the results obtained.There is a risk that expenditure will be dominated by direct payments and that targets for improved economic performance will not be set. EU objectives need to be specific and clear enough, with suitable quantifiable indicators available at the start of the planning process. The existence of co-financing for some measures but not others will make it difficult for Member States to choose objectively between them.
Concerns have beenexpressed that the new plans offer Member States too much choice and threaten the integrity of the internal market. These concerns could be partially allayed by a requirement for a minimum environmental spend in Pillar 1 and by the right level of governance. Reversing the recent relaxation of restrictions on coupled payments (Omnibus regulation) would also strengthen the internal market.
In Chapter 5 the correspondence between the views of stakeholders and experts and the proposals themselves is summarised. A wide range of stakeholders has commented on the Communication. The new delivery model has attracted the most attention, with Member States and environmental NGOs especially anxious to know how it will work in practice. Many commentators are sceptical of Member States’ willingness to deliver EU objectives at the expense of national priorities,and ofthe Commission’s ability to hold underperformance to account. Stakeholders particularly seek more clarity on the proposed targeting methods for direct payments; the details of the new greening architecture; and procedural elements of the proposed CAP plans.
Improvements in human capital through education, research and extension services areneededbut the Commission makes few specific proposals. Generational renewal will help but is not enough by itself. Publicly funded research needs to concentrate on areas the private sector will not fund, with the EIPAGRI becoming more targeted towards work on public goods and with improved knowledge transfer between Member States. More impartial farm advice is needed but the Commission does not say how this might be achieved.Farm advisory servicescould be expanded to this end.Member States need to tackle poor connectivity in rural areas and devote a larger share of their Pillar 2 funding to research and knowledge sharing.
The recent dairy crisis has shown the inadequacy of the CAP’s crisis instrument but the Commission’s interest in measures which could reduce vulnerability to risk is welcome.
The proposed use of capping to target direct payments will have little effect if labour costs must be deducted before applying the cap. It is important that the economic objective for CAP planning is not simply defined as a “fairer” distribution of directpayments.Targets are needed for underlying strength and resilience and they need to reflect the risk inherent in continuing dependence on income support. Member States should be leftflexibilityin how they design the redistributive payment. On simplification grounds, the option to use the SAPS scheme should be continued and offered to the older Member States that currently make use of entitlements.
The Commission has repeatedly said that the new CAP needs to show a higher level of environmental ambition. It regards direct payments as an environmental as well as an economic measure but has provided no detail of the environmental rules which will be attached to them. The future enhanced conditionality needs to deliver a higher level of protection than current greeningand cross compliance combined.The 30% greening payment should be replaced by a minimum spend requirement of at least 30% for the proposed new Pillar 1 eco scheme.
The Commission is right to identify Member State policies as the key to generational renewal. The Pillar 1 top-up payment to young farmers is not an effective measure and more emphasis should be put on encouraging the take-up of installation aid in RDPs. Early retirement schemes have had limited effect in the past.Reducing the incentive provided by direct payments to hang onto land could be more effective.
Finally we conclude that genuine strategic planning which focussed all of the CAP’s resources on EU level objectiveswould be a considerable prize.Its realisation will requirethe Commission to address the incentives facing Member States.For the new system to work, the Commission needs the power to insist that Member States temper national needs to EU priorities in appropriate cases. Peer pressure alongside financial incentives may help to achieve this. It will be important that Member States’ plans reflect the strengthof the EU’s climate ambitions.
As well as political will, urgent capacity building measures such as data gathering, workshops, simulation exercises and guidance are needed.Developing suitable impact indicators is crucial.Indicators for both direct payments and environmental performance will need careful design. We recommend that the Commission should convene a conference with Member States to discuss a new suite of indicators. Discussions between the Commission and Member States’ Paying Agencies are also needed to establish how financial assurance will work and the extent to which real simplification for Member States and farmers will be possible.
We make this report to Parliament in the hope that it will contribute to a successful reform.
Link to the full study: http://bit.ly/617-476
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