CAP reform debate hijacked by new priorities

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While the future budget of the Common Agricultural Policy (CAP) is still unclear, growing rhetoric around the concepts of "public goods" and "green growth" suggest that at least some of the money could be shifted to protecting the environment and boosting rural economies.

The ongoing debate over the CAP's future is taking place in a broader context than previous reforms.

First, as farm policy still eats up the largest share of the EU budget – at around 40% – the upcoming overhaul is closely linked to the revision of the bloc's financial perspectives for the 2014-2021 period.

The reform is also taking place amid discussions over how to recover from the economic crisis and deal with climate change and the increasing volatility of world commodity markets, some of which are being tackled in the bloc's 'Europe 2020' strategy for growth and jobs.

According to the European Commission, the CAP is likely to be adjusted to 'Europe 2020' goals on promoting a more competitive economy that fosters higher employment, social and territorial cohesion.

In addition, the CAP's contribution to environmental challenges, in particular the fight against climate change and biodiversity loss, as well as boosting resource efficiency, water management and bio energy, "are expected to be reinforced," the Commission says.

While talks on the size of the CAP's budget will inevitably tend to dominate negotiations, EU Farm Commissioner Dacian Cioloş has repeatedly underlined the need to figure out the new policy's priorities first before talking about money.

The floor is thus open for all parties to argue their case in a drive to grab some of the EU money that is potentially going to be freed up by shifting priorities.

Farming for the environment

One of the most popular new concepts for EU farm reform is the provision of so-called "public goods" with agriculture.

A recent study commissioned by the Commission identified ten of these: agricultural landscapes, farmland biodiversity, water quality, water availability, soil functionality, carbon storage and climate stability, greenhouse gas emissions, air quality and resilience to fire and flooding (EurActiv 26/01/10).

The study stressed that the provision of public goods would vary from one farm to another and between regions and climatic zones, with some goods being cross-border in character and others defined as local or regional.

Past CAP reforms have already introduced a certain number of environmental requirements which farmers are supposed to respect in order to get financial support. EU member states, meanwhile, must spend at least 25% of their rural development budget on improving the countryside.

But some are proposing to take the idea a step further and have suggested linking direct payments to farmers to the delivery of green public goods.

What are public goods?

One difficulty, however, is that public goods mean different things to different stakeholders. While farmers may simply want a more stable income for themselves and reasonable food prices for consumers, supporters of "greening" the CAP are calling for better biodiversity protection and for the long-term productive capacity of European land to be maintained.

EU Environment Commissioner Janez Potočnik has even suggested that "somewhere in the future" there could be an EU policy called the 'Common Agricultural and Environmental Policy' (EurActiv 17/03/10).

Members of the European Parliament also believe that the future EU farm policy should be used to make the transition to more "sustainable farming" by creating synergies between agriculture and environmental policies (EurActiv 28/01/10).

Their reasons are mainly motivated by budgetary concerns. While farming represents 40% of the EU budget at around €53 billion a year, the EU's budget for environmental policies is a mere €300 million, most of which goes to the Life+ programme.

The Commission's upcoming proposals on the future CAP – as well as the Parliament and member states' responses to them – will therefore show whether Europe is ready to put its money where its mouth is.

Supporting the 'economic renaissance' of rural areas

Earlier this spring, the Commission argued that the CAP should be reformed in a way that unlocks the potential of rural areas to contribute to the bloc's economic growth strategy for 2020 (EurActiv 27/04/10).

The Commission believes that a revamped rural development policy can contribute to the strategy by fostering innovative 'green' technologies and improving competitiveness by promoting farming that manages resources in a sustainable manner.

However, it stressed that modernising agriculture cannot be done "through a single one-size-fits all model" and that member states and local authorities should be given more freedom to arrange this.

While CAP money comes from the EU's general budget, spending on rural development is already jointly financed by the member states.

In the consultative conference on EU farm policy in July, agriculture stakeholders from across Europe argued for moving away from intensive farming to a more sustainable model that supports "the economic renaissance" of rural areas and promotes the diversity of local products and cultural identities as a source of wealth (EurActiv 23/07/10).

Ideas for diversifying economic activity in rural areas included supporting farmers in processing their own raw materials, renewable energies as well as initiatives to promote tourism.

But if rural development is to become more important in the future CAP, stakeholders stressed that it is necessary to increase the attractiveness of rural areas by ensuring access to different public services and infrastructure, such as education, health, broadband Internet, transport or postal services.

An increased focus on overall rural development, coupled with more freedom for member states to decide on their local and regional funding priorities, could therefore be one of the ways to make CAP money deliver "a policy for all".

Positions: 

Pekka Pesonen, secretary-general of EU farmers' lobby Copa-Cogeca, said that talks about "empowering farmers" to process their raw materials and sell them locally are disconnected from reality. 

"The reality is more or less to the opposite," he said. "In most European rural areas farmers just don't have direct access to consumer markets. In addition, the safety and business requirements become very quickly so burdensome in standard food processing procedures that a small farmer who wants to process his raw materials to consumer goods must scale up his business and facilities very quickly in order to make the venture profitable and be able to compete with retailers," he said.

"It's complete nonsense to say that we save European agriculture and rural areas only by selling and processing direct from the farms. I'm afraid that consumers are not going to pay for it, because it will be too costly and time-consuming for them," Pesonen continued.

Of course in some cases it can work, he said, but "it is not the global answer and we have to find a combination of the two" – the market oriented retail-processing primary production input industry strain and regional cooperatives, he explained.

Jack Thurston, co-founder of farmsubsidy.org, an NGO campaigning for CAP transparency, notes that while the "public good" rhetoric is gaining ground in press releases and speeches, "the policy behind it changes slowly" and what politicians say is "nowhere near the reality".

Furthermore, he noted that talk of new eco-conditionality of direct subsidies for farmers does not really make sense, because cross-compliance requirements already exist and farmers are expected, even now, to respect EU environmental law.

"In the EU we don't have the principle 'the polluter gets paid not to pollute', we have the polluter pays principle. If you pollute, you should be getting a criminal civil action anyway, not just having your subsidies removed. So in theory it's flawed, and in practice it's not really being implemented very strongly. The inspections are very infrequent and when the fines are imposed they are very small, between 1-3%, and mostly it's to do with not having the correct ear tags on cattle – that's the main crime that they find," said Thurston.

Instead, he suggested "agri-environmental" payments requiring farmers to go beyond the minimum legal requirements on the environment under a long-term contract to maintain the land's productive capacity.

BirdLife, an environmental NGO, is calling to "reform the CAP by shifting substantial financial support to farmers who manage their land sustainably and deliver biodiversity and ecosystem services as well as healthy food, but often have a low income".

BirdLife International, Butterfly Conservation Europe, the European Forum on Nature Conservation and Pastoralism and WWF wish to put the spotlight on preserving Europe's High Nature Value (HNV) farming systems, which the organisations argue are "essential both for preserving biodiversity and people's livelihoods in many European rural areas".

Ariel Brunner, head of BirdLife's EU office, stressed that HNV farming systems currently struggle to stay on the market because, despite producing an enormous amount of public goods, they are not "super productive" and are "systematically discriminated by the CAP," with most subsidies going to the most polluting intensive farms.

 

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