Greenwashing of farm payments

The EU spends 12 billion euro a year on “greening” – a reform that is intended to mainstream environmental practices in agriculture but delivers close to nothing.

It is difficult to overlook the main conclusion of a new report from the European Court of Auditors, since it is clearly stated in the title: “Greening: a more complex income support scheme, not yet environmentally effective”.

The EU body, whose role includes checking that EU funds have achieved value for money, is not gracious in its criticism of new greening payments under the Common Agricultural Policy (CAP). The main question they examined was whether greening has been capable of enhancing the policy’s environmental and climate performance.

It should be noted that the review is not looking at small change. The EU spends a massive amount on green payments: 12 billion euro per year, representing 30 percent of all CAP direct payments and almost 8 percent of the entire EU budget.

One of the first things they criticise is that greening lacks a fully developed intervention logic. Although the purpose of greening is said to be for environmental and climate reasons, there is no assessment of what it is expected to achieve, or links to relevant EU strategies, such as the EU Thematic Strategy for Soil Protection, the EU 2020 climate and energy package and the EU biodiversity strategy.

It is a basic principle, they note, that subsidies should be proportional to the costs of the beneficiary. The cost of greening measures was estimated at 30 euro/ha. It was found that the majority of farmers, 71 per cent, do not need to comply with any of the greening requirements because of the various exemptions. Among those who do have to comply, two-thirds had costs below 25 euro/ha and 40 percent even less than 10 euro/ha.

It is also difficult to assess what greening achieves, since there are no baseline parameters to compare with. The Commission have in their own communications misled comparisons. Among other things, it is said that 73 percent of EU agricultural land is affected by greening. This is actually the total area of agricultural land that is not exempt from the greening requirements. But because they are so basic, most farms complied with them even before the reform. The share of agricultural land where there has been a change in practice as a result of greening is closer to 5 per cent, according to more detailed studies carried out by the Joint Research Centre and the auditors themselves.

The auditors introduce the term “deadweight”, which they aptly describe as “situations where public money (here: the green payment) is paid to a beneficiary (here: a farmer) for public goods (here: farming practices beneficial for the environment) that would have been provided anyway, even without public support, because they are either part of the beneficiary’s normal activity or required by law (here: cross-compliance)”.

The origin of the greening mechanism can partly be traced back to 2013, when the European Council reached an agreement on the current EU financial framework (2014–2020) and committed to spend 20 per cent of the EU’s total budget on climate change. Since the CAP is a very large chunk of the EU budget it was necessary to increase the part of the CAP spent on climate. At the same time, member states were not prepared to allocate more money to the CAP or reduce direct payments. The limited scope of action that was left led the Commission to come up with greening, in which 30 per cent of direct payments are conditional on some baseline measures that are supposed to benefit the climate. This may sound quite sensible.

The auditors also recognise that greening in the initial proposal from the Commission was “a more ambitious, environmentally-focused measure” than the final outcome. They show that the changes made during the legislative process led to watering down of the environmental ambition, by dropping one practice and adding exemptions and flexibility to the other three. Ironically the Commission, in their impact assessment, actually warn of a so-called menu approach, meaning that member states can pick and choose from a list of measures, since this could water down the legislation and make it more complicated. This was what was later introduced in the Ecological Focus Areas, and they were proven right.

In a recent communication the Commission suggested that they want to abolish greening for the next post-2020 CAP period. Unfortunately, a majority of member states want to keep direct payments to farmers, while maintaining the CAP budget at present levels or even reducing it. This leaves little space for reforms that would actually make a difference to the climate or other aspects of the environment.

Kajsa Pira

Source: “Greening the CAP: income support more complex and not yet environmentally effective” published by the European Court of Auditors, 12 December 2017, https://www.eca.europa.eu/en/Pages/NewsItem.aspx?nid=9338