Savings threat to a more sustainable agriculture

Less funding for environmental measures and increased flexibility for member states are bleak, but likely expectations of a post-2020 Common Agriculural Policy (CAP).

The EU Common Agricultural Policy (CAP) is under review. The Commission published a communication back in November in which they outlined some of their ambitions (see AN4/2017). A leaked document and the publishing of the proposed EU budget now puts some flesh on the bones to help anticipate what the post-2020 CAP proposal will look like. A document is expected to be published at the end of May.

On 2 May the European Commission presented a proposal for a Multiannual Financial Framework (MFF) 2021–2027. It sets out most of the economic prerequisites for the CAP. As a result of Brexit, cuts in CAP funding, which in the past has accounted for almost 40 per cent of the overall budget, were expected. The Commission communicated a 5 per cent decrease in the CAP budget. Agricultural Commissioner Phil Hogan described it as “a very fair outcome for our farmers, given the very challenging circumstances in which the budget has been framed”.

Alan Matthews, Professor Emeritus of European Agricultural Policy, has scrutinised the MFF figures in a blog post and gives a quite different picture. He shows that the Commission’s figure is correct if the whole budget periods are compared and nominal figures are used. But he argues that to show the general trend it is better to compare the final years of each budget period, 2020 and 2027, and to take into account an assumed inflation rate of 2 per cent. When this is done, the cuts come closer to 15 per cent. Direct payments will be maintained in nominal terms, but rural development payments, which include all targeted environmental funding, will fall by one-quarter.
The proposed MFF includes a suggested percentage of 25 per cent for climate mainstreaming across the whole budget – a figure that has been raised by 5 percentage points since the last MFF period. This is considered insufficient by environmental organisations such as WWF and the EEB. WWF is calling for a spending target of 50 per cent for climate and nature, and EEB suggests that all EU spending should be oriented towards meeting the Sustainable Development Goals.

However, a seemingly ambitious degree of environmental mainstreaming may mean little or no real-world change. The very much criticised greening mechanism, in which 30 per cent of direct payments are conditional on certain environmental practices, is a good example. Greening has failed to deliver (see AN/2018), mainly because the required practices were set at such a low ambition level that they made very little difference compared to business as usual and only added more bureaucracy to the system.

Instead of improving the greening mechanism, the Commission has decided to abolish it all together. This was stated in the communication back in November and has now been confirmed in the newly leaked document that reveals some of the policy architecture in more detail.

Direct payments have been divided in two categories: “the Basic Income Support for Sustainability (BISS)” and “the Complementary Redistributive Income Support for Sustainability (CRISS)”. The rationale of the Commission seems to be: since these income supports are subject to conditions, they are per se sustainable. The promise of enhanced environmental conditionality is not visible in the leaked document. Actually the only common ground across member states is the old structure of cross-compliance.

The leaked document also shows that the Commission wants to give more flexibility to member states in the design of the CAP. They have proposed nine objectives:

• Support viable farm income and resilience across the EU territory (to support food security);
• Increase competitiveness and enhance market orientation;
• Improve the farmers’ position in the value chain;
• Contribute to climate change mitigation and adaptation;
• Foster sustainable development and efficient management of natural resources;
• Preserve nature and landscapes;
• Attract new farmers and facilitate their business development;
• Promote employment, growth, social inclusion and local development in rural areas (including bio-economy);
• Address societal expectations on food and health.

Based on these objectives, members states will have to propose to the Commission their respective CAP plans. The plans can include fewer than the nine objectives if this can be justified by a SWOT analysis. This leaves an open door for member states to exclude one or more environmental objectives from their plans. Member states will be free to decide which type of interventions (decoupled payments, coupled payments, investment etc.) they want to use to reach their chosen objectives. Under the current proposal only the new voluntary eco-scheme could deliver for the environment, nevertheless its voluntary nature makes it unlikely to be used by member states.

Environmental organisations have previously warned about increased subsidiarity and flexibility for member states in the CAP. History has shown that member states tend to aim for lower environmental ambition levels when given the opportunity, especially when put under pressure by national agriculture lobby groups. Bérénice Dupeux, EEB Policy Officer for Agriculture, said: “Taxpayers can’t keep funding billion-euro farm budgets with no accountability. The only way to ensure that the new farm policy steers farming in Europe away from an environmentally-destructive model is to ring-fence off at least half of the next farm budget for environment and climate protection.”

However, there is one slightly positive development in the CAP. Today the largest 20 per cent of farms receive 80 per cent of the direct payments. The Commission now wants to introduce a capping system. When taxes and labour costs are subtracted from the direct payments the total should not exceed €60,000, and the excess will instead be put into a redistribution fund.

Kajsa Pira

Sources:
The leaked proposal published by Politico, 25 April 2018: https://www.politico.eu/wp-content/uploads/2018/04/SPOLITICO20-180425190...
CAP reform EU “Commission assaults rural development spending to protect direct payments” by Alan Matthews: http://capreform.eu/commission-assaults-rural-development-spending-to-pr...