Sowing the seeds of the post-2020 CAP

Can the European Commission's proposals guarantee European farmers' fragile income and simultaneously help the EU deliver its climate change objectives? [Shutterstock]

In June 2018, the European Commission unveiled its much-awaited plans for the post-2020 Common Agricultural Policy (CAP).

In light of the Brexit and the emergence of new priorities such as security and immigration, the Commission proposed a 5% cut in CAP funding, triggering a strong reaction from EU farmers and the environmental community.

Can these proposals guarantee European farmers’ fragile income and simultaneously help the EU deliver its climate change objectives?

Disclaimer: This project has been funded with support from the European Commission. This publication reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein.

Background

Launched in 1962, the Common Agricultural Policy, or CAP, is a system of EU agricultural subsidies and programmes comprising the biggest single budget outlay for the EU – nearly 40% of today’s budget compared to nearly 70% in the 1970s.

The CAP has always been a work in progress. Reforms begun in the 1990s sought to phase out wasteful production quotas. In 2003, efforts were taken to “decouple” subsidies from specific crops or products, though the deal agreed on 26 June 2013 - and finally implemented in 2015 - changed that.

The 2014-2020 introduced a number of measures aiming to simplify the policy and cut red tape.

10 years of CAP simplification

After ten years of efforts, the European Commission and the member states are still trying to find ways to make the complex framework of the European Common Agricultural Policy simple and effective.

 

In June 2018, the European Commission unveiled its much-awaited plans for the post-2020 Common Agricultural Policy (CAP).

In light of the Brexit and the emergence of new priorities such as security and immigration, the Commission proposed a 5% cut in CAP funding, triggering a strong reaction from EU farmers and the environmental community.

Issues

A new delivery model

The executive was particularly criticised for its proposal for a new “delivery model”, which gives member states much more leeway to implement their “own CAP” adjusted to the different needs of their countries.

Many said that with these proposals, the CAP was being “nationalised” but for the Commission, this is part of the modernisation and simplification of the policy.

Phil Hogan, the commissioner for agriculture and rural development, said the CAP is simplified, “Delivering genuine subsidiarity for member states, ensuring a more resilient agricultural sector in Europe; and increasing the environmental and climate ambition of the policy.”

European Commission under fire after new CAP proposals unveiled

The European Commission unveiled on Friday (1 June) its plans for the post-2020 Common Agricultural Policy, triggering a strong reaction from EU farmers and the environmental community for cutting the budget, giving member states too much leeway and fudging environmental and climate issues.

National capitals will come up with their own national strategies, which in theory have to comply with the general goals set by the EU.

The Commission says it will then approve each plan to ensure consistency and the protection of the single market while the countries’ performance will be under its strict scrutiny.

“We will require ‘CAP plans’ for each country, with a detailed analysis of the measures proposed to deliver on the EU-level objectives and the financial allocations for those measures. These CAP plans will be approved by the Commission, thus ensuring the level playing field across the EU,” Agriculture Commissioner Phil Hogan told EURACTIV in an interview.

Hogan: Post-2020 CAP will ensure level playing field across EU

EU farmers should not fear a “re-nationalisation” scenario for the post-2020 Common Agricultural Policy as the Commission is set to give member states more powers to implement their own CAP national plans, Agriculture Commissioner Phil Hogan told EURACTIV.

But the Irish …

The European Parliament did not view the proposal in a positive light. The AGRI Committee stressed that any additional subsidiarity should be accompanied by the maintenance of a strong common regulatory framework.

“The structure outlined [by the Commission] is likely to make the CAP completely technocratic,” stated the EPP MEP Michel Dantin.

Greater subsidiarity risks “significantly increasing the bureaucratic complexity” of the CAP, noted socialist MEP Paolo de Castro.

Direct payments and rural development

In an effort to grant further flexibility in implementing national strategies, the Commission said the member states will have the possibility to transfer up to 15% of their CAP allocations between the two pillars, direct payments and rural development.

The executive prioritised the protection of direct payments in the new budget in order to ensure farmers’ income and leave smallholders unaffected.

As a result, direct payments will not fall by more than 4% in any member state.

The direct payments will be reduced as of €60,000 and capped for payments above €100,000 per farm. In addition, small and medium-sized farms will receive a higher level of support per hectare, while member states will be obliged to earmark at least 2% of their direct payment allocation for helping young farmers get into the sector.

EU farmers opposed the proposals, saying that the farmers’ income is already squeezed – it’s almost 40% below average EU earnings in others sectors of the economy.

“We are very concerned about the impact of these proposals. Direct payments, which are the best and by far most efficient way to stabilise farmers’ income and help them to better manage income risks, are being eroded further under this proposal. We oppose any capping or degressivity of payments as proposed by the Commission,” said Joachim Rukwied, the president of Copa, the EU farmers’ union.

Farm Europe, a think-tank specialised in farming issues, said the farmers’ income would be reduced by 16 to 20% and this would eventually result in a massive exodus from the rural areas.

Regarding the rural development, the Commission proposed a 10% cut, and then it will be up to the member states to cover this gap.

“If a member state decides to move on to cover the gap, there will be no cut in rural development and farmers won’t be affected,” the Commissioner emphasised.

However, considering that public budgets are already under huge pressure, it’s not clear how the member states will respond to this challenge.

In the meantime, a coalition of member states led by France reacted negatively to the Commission’s proposed cuts and, through the “Madrid Declaration”, called for the CAP budget to be maintained at the current level.

Germany recently joined this group of countries. “I welcome the fact that Germany has joined us in the opposition to the Commission’s proposed budget on the CAP. A common Franco-German language is essential to guarantee the European added value of this major policy of the EU,” France’s Agriculture Minister Stéphane Travert said.

CAP and climate change

Environmental NGOs say that with the new delivery model and the proposed cuts, the goals related to climate will be hard to achieve.

Particularly, NGOs stated that increased member states’ decision-making powers would kill EU's commitment under the Paris Agreement.

“The reform pins all its hopes to achieve EU objectives on wishful thinking, assuming that the member states will pursue public over vested interests. The last 20 years of CAP implementation suggests that when given the option, agricultural ministers tend to cave into the powerful intensive farming lobby,” BirdLife Europe said.

“The prospect of increased subsidiarity without increased accountability raises the spectre of a race to the bottom where each country tries to outcompete the other with production subsidies,” it added.

The Commission says it has set higher ambitions on environmental and climate action. The EU executive noted that the new CAP would require farmers to achieve a higher level of ambition through both mandatory and incentive-based measures:

  • Direct payments will be conditional on enhanced environmental and climate requirements;
  • Each member state will have to offer eco-schemes to support farmers in going beyond the mandatory requirements, funded with a share of their national direct payments’ allocations;
  • At least 30% of each rural development national allocation will be dedicated to environmental and climate measures;
  • 40% of the CAP’s overall budget is expected to contribute to climate action;

At a workshop organised by EURACTIV on July, Dr. Bérénice Dupeux, a policy officer for agriculture of the European Environmental Bureau (EEB), noted that the Commission’s proposal was set to fail when it comes to environment, as member states are not asked to report on the performance but on how much they spend under certain schemes and how much farmers are going to enroll on those schemes.

“More flexibility to member states leads to a race to the bottom,” she added.

Tassos Haniotis, director of DG AGRI, noted that the fears of re-nationalisation and more flexibility to the member states come from the fact that the starting point is the current policy and not what we want to do in the future.

“If we all agree that the objectives we have to meet are common and specific, then how you specialise these objectives implies three levels of responsibility,” Haniotis said.

“The Commission, which has to set the overall framework; the member states, which have to look into their regions and their problems and decide on their problems; and the farmers, who all have to contribute, because this is not just an obligation for them but an opportunity to adjust to the climate change,” he emphasised.

For Volcher Koch-Achelpoehler, the head of Bayer's Brussels EU liaison office, the greening of the CAP should simultaneously be linked to innovation.

“At the end of the day, the CAP has to develop agriculture in a way that is resource-efficient and at the same time productive and fulfilling the societal needs with regard to food.

“We cannot look at climate change only through new technologies […] if we don’t innovate ourselves away from the fact that animal production is the source of the most emissions, if we don’t restructure our agricultural sector, structurally not technologically,  we will fail to deliver our international commitments,” Dupeux warned.

In the meantime, the leaders of the European Parliament’s political groups decided on 5 July to grant the Environment Committee “shared competence” with the Agriculture Committee in the environmental aspects of the post-2020.

This practically means that MEPs from the ENVI Committee will have a bigger say when it comes to the future CAP and will be able to push for “greener” policies.

The move was warmly welcomed by NGOs, but EU farmers insisted that CAP proposal should remain under the competences of European Parliaments Agriculture Committee.

EP’s AGRI committee no longer alone on CAP reform negotiations

The leaders of the European Parliament’s political groups decided on 5 July to grant the Environment Committee “shared competence” with the Agriculture Committee in the environmental aspects of the post-2020 Common Agricultural Policy (CAP).

Innovation

The Commission also decided to earmark €10 billion in Horizon Europe for research and innovation in food, agriculture, rural development and the bioeconomy.

The move pleased the biotech industry, which urges EU policymakers to take the agricultural sector a step forward.

The discussion about innovation in the future of EU agriculture is expected to heat up in the coming years.

One example is the ongoing debate about the so-called new plant breeding techniques (NPBTs). The European Court of Justice will decide on 25 July if the NPBTs fall under the GM legislation, in a highly anticipated ruling that has divided the relevant stakeholders.

The term NPBTs describes a number of scientific methods for the genetic engineering of plants to enhance traits like drought tolerance and pest resistance.

New plant breeding techniques concern law interpretation, Commission says

The future of new plant breeding techniques (NPBTs) at the EU level lies in the European Court of Justice’s interpretation of existing law, Health Commissioner Vytenis Andriukaitis told EURACTIV.com, adding that the executive will act accordingly at the political level.

The agri-food industry says the plants obtained through these techniques could also be the product of conventional cross-breeding techniques that mimic natural processes and hence cannot be considered GMOs.

Others, mainly environmental NGOs and Green politicians, warn that the agri-food industry wants to bring GM products to Europe through the back door.

The executive has made clear that the case concerns law interpretation but notes that a broader reflection on innovation is needed.

“We look forward to the preliminary ruling. In general, broader EU reflection on new breeding techniques and innovation in the seeds sector is needed and is ongoing. The Court decision will offer an opportunity to clarify some aspects of the matter,” an EU spokesperson told EURACTIV.

Plant breeding techniques: Commission wants broader reflection on innovation in seeds sector

The European Court of Justice will decide on Wednesday (25 July) if the so-called new plant breeding techniques (NPBTs) fall under the GM legislation, in a highly anticipated ruling that has divided the relevant stakeholders

US attack the CAP

Another topic set to give the EU capitals a headache is the new US administration's stance toward the CAP.

Analysts suggest that the increasing US protectionism cannot leave the CAP unaffected. The US government is ready to impose tariffs on imported Spanish olives after finding they’ve been dumped on the US market and damaged domestic producers.

US questions CAP’s raison d'être with Spanish olives investigation

If the ongoing US government investigation into imported Spanish olives ends up imposing anti-dumping duties, it could potentially set a dangerous legal precedent and question the entire functioning of the EU Common Agricultural Policy (CAP), experts and farmers warn.

But according to analysts, this case could open the Pandora’s Box as it sets a bad legal precedent for EU products funded by the CAP.

They fear that Washington could eventually question the validity of the CAP system for other products as well, ranging from the French wine to Italian cheese.

“The argument that the US is using to punish Spanish olives can be used systematically as the recipe for all the other sectors where farmers receive direct payments,” Joao Pacheco from the Farm Europe think tank told EURACTIV.com.

New tariffs on Spanish olives indicate US protectionist trend

The US trade department decided on Tuesday (21 November) to impose tariffs on imports of Spanish table olives, in another sign of rising protectionist measures under Donald Trump, which have drawn criticism from Europe.

Positions

“The Commission’s plans offer almost no protection for health, the environment and climate. The EU props up the agriculture industry with billions every year. The least people can expect is that these investments help achieve climate and environment goals, and deliver healthy, nutritious food,” Greenpeace EU agriculture policy director Marco Contiero underlined.

“The European Parliament and our governments must fix the CAP’s priorities and stop funnelling money to a few large landowners and factory farms. Every one of us has a right to know that what we eat isn’t cruel to animals, polluting our water, warming the planet or making us ill,” he added.

“Considering the disastrous income situation of farmers, we cannot accept that such a high percentage of direct payments is ring-fenced towards climate change objectives under the 1st pillar as it will further reduce their economic viability. Farmers’ economic sustainability is crucial to enable them to deliver more on the environment and climate issues,” Copa President Rukwied said and warned about a massive exodus of farmers and land abandonment.

Farm Europe, a think-tank specialised in agricultural issues, conducted a survey which found that the new governance model is “tricky” as it means that in practice more powers are granted to the European Commission.

“With the paradigm shift proposed, the power to build the CAP and the vision for the future of EU agriculture would move from the co-legislators to the exclusive power of the European Commission to approve, or not, each national or regional strategy based on a first pillar offering 98% financial flexibility and 65% in rural development (30% earmarked for environmental measures and 5% for LEADER),” Farm Europe said.

“Our overall conclusion is that the proposals do little to discourage intensive farming and to instead use CAP funds to payments for biodiversity, environmental public goods and sustainable farming practices. In fact, they risk driving further intensification through increased flexibility for Member States without this being complemented by sufficient safeguards or any real accountability for results,” BirdLife International said in a statement.

Timeline

  • 1962: European Economic Community launches the CAP.
  • 1992: Reforms focus on producer rather than market support.
  • 2003: Introduction of stronger food safety, environmental and animal welfare rules.
  • April 2010: Launch of public debate on the EU's future farm policy.
  • November 2010: Commission communication on the CAP towards 2020.
  • 12 October 2011: Commission presents proposals for CAP reform.
  • 2011-2013: Debate on the proposals in the European Parliament and the Council.
  • 20 October 2011: EU agriculture ministers hold first exchange of views on proposed reform.
  • 7 November 2011: European Parliament’s Agriculture Committee hears national farm ministers.
  • 23-24 January 2013: Agriculture Committee backs a less green, more ‘flexible’ CAP.
  • 12-13 March 2013: Parliamentary debate and vote on the different regulations and implementing acts.
  • April-June 2013: Negotiations between the European Parliament, European Commission and Council of national agriculture ministers.
  • 1 January 2014: New CAP enters into force, but delays in the approval process postpone implementation until 2015.
  • November 2015: European Commission presents proposals to streamline CAP greening, market organisation and other requirements.
  • 2016: Introduction of CAP streamlining measures
  • 2016: Review of CAP greening measures
  • 2017: CAP “health check”
  • February - May 2017: Public consultation
  • 2 May: Commission presents its proposal for the Multiannual Financial Framework for the 2021-2027 period
  • 1 June: Commission unveils its plans for the post-2020 Common Agricultural Policy
  • 18 June: Agriculture and Fisheries Council discusses the post 2020 CAP reform package
  • 2020: New EU budget cycle and possible CAP update.

Further Reading

EU Institutions

International Organisations

Business and Industry

NGOs and Think Tanks

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