CAP direct payments poor value for money

The major weakness of the Commission’s CAP Health Check Communication is its failure to spell out a rationale for maintaining the Single Farm Payment after 2013. Yet another report, this time commissioned by the European Parliament’s Committee on Budgetary Control, lambasts the lack of efficient targeting and ensuing excessive cost of the SFP system. Written by Jorge Nunez Ferrer and Eleni Kaditi of the Centre for European Policy Studies in Brussels, and not yet published, the report examines both CAP market and rural development expenditures from the perspective whether EU interventions add value, that is, whether the benefits of these policies outweigh their costs. The report’s authors argue that CAP direct payments are highly inefficient and detrimental in terms of efficiency and value added in the way they are designed.

“For direct payments, the reason is simple: the stated objectives and the policy design are unrelated. New aims and objectives have been added onto payments that are not devised to address them. Payments intensity and distribution are based on yields nearly two decades ago, routinely relabeled and obligations added to them without any cost based approach. Benefits that may accrue from the policy are overshadowed by the over- or even under-compensation for costs incurred to implement the cross-compliance obligations. By being unrelated to objectives and uneven across areas, farmers (read EU citizens) are also treated unequally.”

The draft report notes that the rationale for SFP payments has changed over time, from compensation payments for falling price support, to income support payments and finally to environmental cross-compliance enforcement tools, not to mention a wider and difficult to define protection of the multifunctionality of agriculture, which includes any benefit that directly or indirectly can be attributed to agriculture. Evaluating the performance of direct payments to achieve their objectives is thus difficult.

The report concludes:

“To the question of whether the CAP and the rural development policies generate the potentially highest value added in the areas in which they intervene, the answer is strongly negative for the CAP direct payments, and variable for rural development, depending on the measure. For both the value added could be increased considerably by improving the rationale and targeting of support.”

Once the report is published I will post it on this site.

Update: The report has been published and can be downloaded here.

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