EXECUTIVE SUMMARY
This report analyses the variables of the next CAP reform by proposing a qualitative assessment of the current CAP, a review of the main challenges facing the European agri-food sector and a critical overview of the Strategic Dialogue. Building on the findings of the first three points, it provides an analytical framework that allows the equation of the next CAP to be discussed through five possible agricultural pathways.
Qualitative assessment of the current CAP
Less than two years after its implementation, it is difficult to provide a proper quantitative assessment of the CAP 2023-2027. Its rules have already been changed since January 2023. Data on policy impacts are lacking. Furthermore, the increased subsidiarity at Member State level offered by the new governance model further complicates any assessment of the CAP
Member States have overwhelmingly favoured economic objectives to the detriment of environmental ones, with the result that the climate and environmental ambition in their respective Strategic Plans is generally low. This is all the more true given that the policy decisions taken in response to the war in Ukraine and the farm protests have further weakened the initial climate and environmental ambition. . Despite the three ring-fenced budgets for the climate and the environment and the introduction of the new instrument of eco-schemes in Pillar 1, the new CAP does not match the ambition for the climate and the environment.
With reference to the economic specific objectives of the new CAP, the current policy tools do not provide solutions to the drawbacks raised by income support measures based on hectares (capitalisation in land prices and rents, upward pressure on farm input prices, downward pressure on farm output prices). Thanks to the redistributive payment, which is now mandatory, the CAP 2023-2027 should lead to a fairer distribution of first-pillar direct payments, the extent of which cannot be evaluated at this stage. The new CAP only marginally improves the risk and crisis management toolbox. It will not significantly strengthen the farmers’ position in the food value chain. It will not be able to significantly encourage generational renewal.
The new model of governance has increased the bureaucracy and public administrative burden at the country level and probably at the European level too. It has also increased the private administrative burden for European farmers.
Key challenges for the future CAP
The European agri-food system is facing an increasing number of challenges. Most of these challenges were already present when the current CAP was discussed. Other challenges, such as global food security on the European continent and the autonomy of European agriculture, have been put back on the agenda due to the Covid-19 crisis, the war in Ukraine, world geopolitical tensions and agricultural protests. The societal and agricultural challenges, as summarized in the table below are closely interconnected and are interacting, as society demands and farmers’ needs tend to feed the debates on the future of the EU agri-food chain in a mutually supportive way.
Societal challenges | Agricultural challenges |
– Climate change mitigation – Reversing biodiversity loss in agro-ecosystems – Management of non-renewable or slowly renewable resources in agro-ecosystems – Reduction of health and environmental impacts of harmful agricultural practices – Animal welfare improvement – Preserving, and if possible increasing, the European continent’s food security – Affordability of foods and diets, affordability of healthy foods and diets | – Viable farm incomes through income support measures – Fairer distribution and greater legitimacy of CAP support – Reduction of inter-annual variability of farm incomes – Increasing farm resilience in the face of shocks – Increasing farm competitiveness – Improving farmers’ position in the food value chain – Encouraging and supporting generational renewal |
The Strategic Dialogue
The Strategic Dialogue recognises that the current CAP would fail to achieve its objectives and that “the status quo is no longer an option”. It includes a medium-term vision for the European agri-food sector, which may legitimately appear utopian insofar as all challenges would be met, without considering the possible trade-offs between competing objectives.
The Strategic Dialogue underlines that the transition of farming and food requires private and public financial resources in addition to public resources currently allocated through the CAP. Whether this is possible remains to be seen. Furthermore, some challenges or objectives cannot be resolved just by increasing financial resources, at least in the short term (e.g “increasing European agricultural production capacity” vs“ better protecting the environment through extensive farming systems”, as the latter results in lower yields). What the European Commission will retain from the Strategic Dialogue remains to be seen.
The variables in the equation of the future CAP
The degree of prioritisation of the different challenges defines alternative long-term visions or pathways for European agriculture and the European agri-food sector in which the policy package must be embedded. The equation then involves translating the challenges considered in a given pathway into policy objectives, selecting policy instruments, assessing budgetary needs and
defining governance arrangements.
Five ways to solve the equation of the future CAP
The CAP after 2027 needs to be discussed in the light of the long-term vision for European agriculture that it is supposed to support. The analytical framework summarised above has been used to characterise five alternative visions and pathways, as summarized in the table below, which lead to different policy tools for the CAP.
A first choice contrasts the pathways motivated by maintaining and, if possible, increasing the productive capacity of EU agriculture (Pathways A and B) with the pathways aimed at protecting the environment (Pathways C, D and E).
Within the two “production” pathways (Pathways A and B), there is a second trade-off between Pathway A (Intensification and exports)based on price competitiveness and Pathway B (Support for all types of farms)which aims at maintaining productive capacity by supporting farm incomes for all types of farms
Within the three “climate and environment pathways, Pathway C (Resource use efficiency through the optimisation of current production systems), contrasts with Pathways D and E, which require much more profound changes (land-sparing for Pathway D vs land-sharing/agro-ecology for Pathway E).
These five pathways “solve” the equation for the future CAP with very different impacts on the policy toolbox and the CAP budget. These impacts are discussed in Chapters 5 and 6 of the report.
Recommendations
Discussions on the future CAP and its priorities will have to choose one or a combination of these pathways. We conclude the report with recommendations related to:
- The climate and environmental ambitions of the CAP with new climate and environmental instruments.
- Income support measures for those most in need.
- The strengthening of the CAP’s risk and crisis management tools.
- The support for sustainable investments.
- The need to reflect on the pros and cons of guaranteed minimum prices and counter-cyclical payments.
1 Comment
[Digest] The next reform of the CAP: The variables in the equation – Research4Committees · February 3, 2025 at 11:51 am
[…] Further reading: Study on The next reform of the CAP: The variables in the equation […]