Productivity should become the central feature for assessing the last CAP reform, says Gilles Dryancour.
Gilles Dryancour is the chairman of the Public Policy Group of CEMA, the European trade association representing the manufacturers of agricultural machinery.
‘The King’s dead, long live the King’ is a slogan that can also be applied to debates on Europe’s Common Agricultural Policy (CAP). As soon as discussions on the last CAP are over, it’s already time to start thinking about the next round and consider what will – and should – happen to EU farming subsidies after 2020.
One reason why reform proposals for the CAP need such a long time before trickling down into EU law – and subsequently into farming practice – lies in the CAP’s epic proportions and all-encompassing reach. Quite simply, the CAP is a complex construct, with lots of public money involved, armies of stakeholders concerned, and the entire farming sector affected.
So things aren’t exactly easy when it comes to starting an open, fundamental discussion on where the CAP’s funds should go after 2020 and what kind of criteria should be used to direct them. The best attempt probably is to start with the question: did we get it right last time? In other words, what has the reform of 2014 delivered? And are these effects in line with what was intended?
Moreover, what kind of fundamental changes do we see emerge in the world of farming – both in Europe and worldwide – which the next CAP should take into account?
While it is premature to assess how exactly the last CAP reform is impacting farming on the ground, it is already time to think about the fundamental parameters that should guide such an assessment. Here, a renewed focus on productivity growth should play a leading role. We believe productivity should become both the central feature for assessing the last CAP reform and the leitmotif to develop a new strategic agenda for the CAP after 2020.
There are a number of reasons for this. First of all, a renewed focus on productivity is a good way to boost sustainability and resource-efficiency in farming. Accelerating productivity means nothing else than enabling a farmer to grow more with less, i.e. to produce more food, feed, fibre, and fuel while using less water, land, energy, labor, and other inputs.
In this sense, enhanced productivity means a big leap forward in making European agriculture more sustainable and can be viewed as a greening measure in the best sense of the word.
Moreover, reviewing the CAP with productivity in mind could be a way to show in how far the 2014 reform of the CAP managed to support further productivity gains in European agriculture and which were the driving forces – technologies, machinery, farming practices, crop selection, infrastructure – behind any such gains.
This will deliver us a better idea of how CAP funding mechanisms should be re-adjusted in the future to actively encourage those processes and approaches in farming which help to drive productivity growth and deliver better outcomes on the ground.
In this context, the new concept of a productivity bonus could be envisaged: Farmers who are able to increase their productivity while strictly following the cross-compliance requirements could thus be rewarded. Such a productivity bonus could be calculated based on Total Factor Productivity (TFP) criteria, which by definition include: soil, water, and inputs management. Coming on top of the basic direct payment the productivity bonus could thus be part of a renewed and modified greening scheme.
We could envisage a meaningful chunk of up to 15% of the CAP’s total budget to be redirected towards EU research funding in agriculture. Why? Because Research & Development investments will bring about the agricultural jobs of tomorrow. And it will be the innovations springing from such investments that will help to drive up productivity, sustainability and resource-efficiency further.
Of course there is also another, more practical reason for such a move: It could make the CAP more acceptable in the public’s eye, as the days that voters supported the idea of taxpayers’ money being sent in the billions to farmers seem to be over – and unlikely to come back.
If we want to maintain the high level of public funding that agriculture rightfully needs and deserves, we need a smart approach. Assuming that the budget of the next CAP will be in the range of €400 billion, a total of up to €60 billion could thus be freed up for agricultural Research & Development.
But we must be careful not to lose focus in the debate. If we are serious about developing a new strategic agenda for the CAP post-2020, ideas such as a renewed focus on productivity growth in farming and a shift of EU funds towards research deserve a prominent place and further consideration.