It is EU practice (and legislation) to subject the CAP to a sophisticated system of evaluations. For each member state’s rural development program (RDP), an ex-ante, mid-term and ex-post evaluation is being undertaken by independent bodies. Other studies, commissioned by DG Agri or DG Research, examine specific CAP instruments across Europe on a rolling basis. In addition, the European Court of Auditors scrutinizes selected CAP instruments (here you can find summaries of their CAP-related studies).

But how independent are the evaluators? How strong is their mandate? How useful are the findings? In a recent article in EuroChoices, Angela Bergschmidt, an evaluator from the Federal Research Institute in charge of agriculture in Germany, offers a bleak account:

[It is] a useless evaluation; costly, often low in scientific quality, unread and unnoticed by policymakers and the wider public.

Evaluation results have apparently not been used to implement changes in the new RDP either at EU level or with respect to adoption by the Commission of the RDPs of Member States.

my experience in Germany is that neither the Federal Ministry for Food, Agriculture and Consumer Protection nor the Ministries of the Federal States are convinced of the evaluation concept. The Administration is accustomed to implementing measures without performance review, adapting them mainly for fiscal or political reasons. As a consequence, the results of an evaluation are used as a line of reasoning if they fit into actual strategies.

the main concern of individual managing authorities is to fulfil formal evaluation requirements

the evaluation unit remains understaffed and is unable to carry out quality control procedures for the large number of RDP evaluations

A seminar on May 19 will take a closer look at ‘Rural Development Policy in the EU – Lessons from the Past and Options for the Future’. The seminar focuses on the evaluation process for rural development programs and how this can inform and improve rural development policy in the EU. One objective of the conference is to discuss how better evidence on the key questions of policy design can be gathered. This is a crucial challenge ahead of the fundamental post-2013 CAP reform. In addition, the researchers have summarized the evidence that is available from existing evaluation reports, drawing lessons for the future direction of policy.

A smarter CAP debate

The seminar is part of a new series of seminars on CAP reform.

The EU needs a smart CAP debate. The CAP is the EU’s most expensive policy, costing € 57 billion annually. The success of the EU 2020 strategy and the next long-term EU budget cycle depends on CAP reform. Furthermore, the CAP is a key lever for promoting biodiversity and fighting climate change. A policy debate of the highest standards is needed to prepare the ground for making the right decisions on CAP reform.

But the debate about the future of the CAP is often poorly informed and distorted. Emotions take centerstage: fears over food insecurity, compassion for small-scale farmers and attachment to the rural way of life can hinder evidence-based analysis. The debate is also driven by special interests, with farmers protesting in the streets and extensive lobbying behind closed doors. Narrowly-conceived national interests in maximizing the receipt of EU subsidies also bias perspectives and arguments.

ECIPE and reformthecap.eu are organizing a series of seminars to help non-experts determine the facts. More and more stakeholders are starting to take an interest in the CAP. They feel that something is wrong with the policy but find it hard to challenge the justifications provided by insiders who defend the status quo. The seminars will provide an overview of what research has to say on critical issues in reforming the CAP. The aim is to inform all stakeholders through easily accessible, high-quality presentations by recognized experts: providing the best science at your fingertips.

The EP own-initiative report on the post-2013 CAP is taking shape as a new draft has become available (dated 24.3.2010). Though it is better packaged, and sexed-up with a ‘green growth’ tag, the content is just as dull and conservative as the earlier draft. The report captures the intellectual deficiency of the CAP-insider bubble.

The draft report suggests 5 ‘key building blocks’: area-based direct income support, climate change mitigation payments, payments to areas with natural handicaps, payments for biodiversity and environmental protection, and green growth subsidies with a focus on renewable energy. The first two payments are to be fully financed by the EU, and the other three co-financed by the member states.

I will not go into the reports’ food-security and fair-income arguments (though they thoroughly deserve criticism) but will limit myself to commenting on some peculiar lines of reasoning that are considered to prop up the case for a strong CAP.

whereas the share of CAP expenditure in the EU budget has steadily decreased from nearly 75% in 1985 to a projected 39.3% in 2013; whereas this represents less than 0.45% of the EU’s GDP; whereas the decline in budgetary expenditure on market measures is even more significant – from 74% of all CAP expenditure in 1992 to less than 10% at present;

“Measured against the EU budget and GDP, we are wasting less money today than in the past.” This is correct as an empirical assertion about past policy changes. It is not an argument that could justify the expenditure of a single euro on the CAP. Maybe 0.0% is the right spending target. It could theoretically also be optimal to spend 1.0% of GDP on agriculture through the CAP. Whatever the right solution is, reference to past spending levels is not acceptable as an argument in the debate about desirable future policy choices.

whereas the EU continues to experience a widening trade deficit in agricultural products

and

insists that EU agriculture must remain competitive against fierce competition from well-subsidised trade partners; therefore believes that competitiveness should still be a fundamental objective of the CAP post-2013 to ensure that the EU has the raw materials to produce high-value European food products and they continue to win a greater share of the world market

Where is the problem with a trade deficit in agriculture? And why should the EU gain shares in world agricultural markets? The basic assumption of economists is that each country benefits if it specializes according to its comparative advantage. In those developing countries where the most competitive sector happens to be agriculture, governments are often skeptic about excessive specialization and prefer a more complex economic argument based on the dynamic gains of investing in manufacturing and service sectors that allow their country to climb up the value chain in the future. But the EU’s competitive advantage is much more concentrated in high-value-added sectors (high-tech, professional services, luxury goods, research and innovation). In other words: we are lucky. It makes no sense to work against this specialization and export more agricultural products. Since trade accounts roughly balance in the long-term, more agricultural exports would automatically imply fewer exports of these high-value-added products and services in which the EU enjoys a comparative advantage.

recalls, therefore, that unless farming activity is preserved across the EU, no provision of public goods will be possible;

and

insists that the cost of support through a strong CAP is nothing compared to the costs of no action and its negative unintended consequences;

The death of European agriculture is again at the doorstep. The day the CAP is abolished, there is no country to walk in, no food to eat, no water to drink, no air to breathe. These wild beliefs can be divided into two ‘analytical’ steps: first, that agriculture would actually collapse, and second, that this would create overwhelming problems. In reality, agricultural production will most likely continue to grow – with or without policy support (see DG Agri study: Don’t be afraid of liberalization and Crystal ball gazing: Scenar II study on the effects of CAP reform). If agricultural production were to decline dramatically, this would cause some problems – but it would also create great benefits, notably in terms of water quality and climate change (though this depends on second-order effects abroad). But CAP supporters rarely say “We believe that without the CAP, there would be a slight decrease in production, and this would have negative effects on balance.” They almost inevitably turn to the dramatic – “unless farming activity is preserved across the EU, no provision of public goods will be possible” – a situation that would be so horrible that the €55 billion we are paying every year must be deemed nothing short of “nothing”.

I have criticized three points: the reference to past spending as a justification for future spending; the blindly mercatintilist appetite for world market shares; and the all-or-nothing drama when it comes to the survival of European agriculture and the public goods that depend on it. Together, they are examples of a fundamental problem in EU agricultural policy-making: the CAP debate is taking place in a bubble. Agricultural ministries, DG Agri, the EP Committee on Agriculture, farmers, the landowners and rural interests reinforce each other in the CAP-insider community. Radically critical voices are sidelined. The CAP is made within a bubble by people who want to keep the CAP as it stands or to reform it as much as is necessary to preserve it. Lines of arguments such as those I have picked out above can prosper in such an environment. Strikingly unsound statements, which would, in other policy domains, be dismissed with laughter as intellectually deficient, are the respectable mainstream in agriculture.

The Rapporteur of the Committee on Agriculture and Rural Development (ComAgri), George Lyon, has presented his take on the post-2013 CAP. Once the document has been discussed and amended by ComAgri, it will be voted upon first in ComAgri (June) and then in the EP plenary (July).

The starting point of the draft already chills expectations: “The Common Agricultural Policy has been largely successful in fulfilling the objectives it was set out to accomplish so far.”

Three groups of objectives are identified. 1) Supporting economic needs – including an EU agriculture competitive on world markets, EU food security in an unstable world context, and the valuable contribution EU agriculture and the downstream agri-food sector make to EU growth and employment.

2) Responding to social concerns – to enhance farmers’ incomes that are lower than the EU average in most member States and that decreased in 2009; to support the sustainable, dynamic and balanced socio-economic development of European rural communities; to attract younger generations to rural areas and activities; and to tackle rural unemployment.

3) Delivering benefits in terms of public goods – with a focus on the positive externalities of agriculture, justifying ‘a strong and well-supported CAP’.

From these objectives, the draft moves to an outline of future CAP measures and structures. The basic tenet is: keep things roughly as they are. Maintain some market measures as a safety net, continue with the Single Farm and the Less-Favored Area Payments, and uphold flexible spending entitlements that are fully community-financed (roughly corresponding to Art. 68). The current budget should also be kept, and co-financing limited to the sort of measures that currently fall under co-financing.

At some point, the report asks for the “maximisation of the delivery of environmental goods”. But this is misleading rhetoric. You can spend any Euro only once. If you want to serve many objectives and finance many measures that have nothing to be with environmental goods, you are leaving little for the environment.

For this draft, any argument is good enough if it results in payments to farmers. In the category “Supporting economic needs”, one objective is “corrections to market failures such as exposure to natural disasters, high risk and price volatility, lack of demand elasticity, farmers’ position as ‘price takers’ in the food chain, etc.” Since when are natural disasters a market failure? Or high risks, or a lack of demand elasticity? These are market conditions that determine how profitable a given sector is and who should be in this sector (according to how successful individual economic actors are in coping with these conditions). They can, in particular circumstances, give rise to market failures, and these market failures can, again in particular circumstances, justify efficient state action (which is unlikely to take the form of round-about income support or market intervention to support prices). But considering all these phenomena enumerated above as ‘market failures’ that somehow warrant the Single Farm Payment or price intervention is untenable.

What is most upsetting is that this draft comes from George Lyon, who happens to be a Liberal Democrat from the UK. These are the best reform credentials one could wish for. Once MEPs from other party groups and member states have introduced their amendments, the outcome will likely be worse.

But why would a Liberal Democrat from the UK write such a draft? Have a look at his homepage. Mr. Lyon was brought up in a seventh-generation tenant-farming family, occupied different positions within the National Farmers’ Union (NFU) starting in 1989, and had a stint as President of NFU Scotland in 1998-1999. He is hardly a special case. ComAgri MEPs frequently have close farming ties, which helps to explain why they overwhelmingly support a CAP that serves farmers first. If the EP wants to be worthy of its new powers in agriculture, it must intervene early and forcefully in the work of ComAgri.

Agriculture Commissioner designate Dacian Ciolos will appear in a confirmation hearing at the European Parliament in Brussels this Friday. Here is a list of 25 questions that MEPs should put the man who – subject to their approval – will set the agenda for European food and farming policy over the next five years.

The hearing will be webcast live, between 9am and noon, Brussels time.

The basics

1. Should maximising food production in Europe be a central objective of the CAP?

2. How would you respond to those who say it is hard to make the case for the CAP as a policy to support farm incomes when there are six and seven figure subsidies being paid every year to the likes of the Queen of England and Prince Albert of Monaco?

3. What is your opinion on the variation in rates of direct payments between new member states and the EU-15? Is any action is required to to address the issue?

4. Do production controls have a role in the future of the CAP?

5. Are you in favour of strengthening or relaxing the cross compliance conditions for those receiving direct payments?

6. Has the CAP gone too far down the road of decoupling subsidies from production – or not far enough?

7. What is your opinion of the US’s programme of counter-cyclical farm subsidies? Could such a system of direct payments that vary according to market prices be appropriate for the EU?

Farm economy

8. In terms of farm structures and farm sizes, where is European farming headed? What farm structures should be encouraged in the New Member States?

9. Do you agree that direct payments increase the market price of land and therefore make it harder for young farmers to start new farm businesses? What should be done?

10. What lessons should be drawn from the crisis in the dairy industry in 2009?

International trade

11. What is needed to reach an agreement on the trade negotiations in the Doha Development Agenda?

12. The EU maintains high tariffs on certain key agricultural commodities and products even though this makes food more expensive for European shoppers. Will you seek to reduce tariff levels?

13. Do you pledge the end of all EU export subsidies by 2013?

Environment and rural development

14. There is currently a lot of talk about public goods. What, in your opinion, are the public good that are most relevant in the context of agricultural policy?

15. Is it your opinion that some types of farming are better for the environment than others that, in some cases, can be very damaging to the environment. How should the CAP take account of these differences?

16. Should agri-environment support be restricted to farmers or should anyone who manages land and can potentially provide environmental services be eligible for aid?

17. Do you consider that the proper place for European rural economic development policy is as part of European regional policy, not as part of the CAP?

18. Do you agree that agriculture should be included in any European plans for reducing greenhouse gas emissions and not given special exemptions?

19. Should the CAP have a new ‘third pillar’ to help Europe mitigate and adapt to climate change? If so, what kind of policy measures would it contain?

Reforming the CAP

20. What will be your main objectives and guiding principles for the CAP post 2013?

21. Are you in favour of retaining the two pillar structure of the CAP and if so, what advantages do you see?

22. Would you favour the further use of modulation to shift funds from Pillar 1 to Pillar 2 of the CAP?

23. Is there a linkage between the CAP and the issue of national budgetary imbalances and various corrections and rebates in the EU budget?

24. How do you regard the connection between decisions on the shape of the CAP post-2013 and decisions on the EU financial perspectives for 2013-2020?

25. In future, should the first pillar of CAP, like the second pillar, and much of the rest of the EU budget, be nationally co-financed?

Over at the excellent farmpolicy.com Roger Waite, editor of Agra Facts, has posted a thorough account of the appointment of the new EU Agriculture Commissioner Dacian Ciolos. He says that while Romania had sought the powerful position, it was really a case of appointment by default:

I tend to feel that Barroso was left with no other option, as no one was willing to put forward a good candidate – and that he was the only suitable candidate from among the nominees.

[...]

With the CAP among the EU’s oldest and biggest policies, it’s something of a surprise that no country has nominated an ‘agriculture specialist’ for the commission. This makes for a challenge to select an able successor to Mariann Fischer Boel, who came to the post having served as Farms Minister in Denmark as well as having farming background herself. In Brussels it seems as if the front-runner is the current Energy Commissioner Andris Piebalgs of Latvia. [...]

Leaked copies of a document from the European Commission’s budget directorate reveal an aspiration to substantially cut agriculture’s share of the EU budget from 2013 onwards. [...]

Mairead McGuinness is an MEP from Ireland and a senior member of the Agriculture Committee. She’s also the new chair ofLUFPG, the informal ‘CAP Reform’ group of MEPs. It appears her website has been hacked by TeAm MoStA from Algeria.

Until recently, I have walked through Brussels with this grey-blue bag that all participants of the 2008 budget review conference received. In the meantime, it has fallen apart, and I don’t have anything to replace it. This is somewhat similar to the CAP & EU budget debate: the 2008 conference presenting the results of the consultation process briefly attracted broad attention, but subsequently, the debate fizzled out and was overwhelmed by the financial and economic crisis. [...]

The next agricultural commissioner will have the chance to shape the future development of the CAP. So who will it be? [...]

It’s a familar scenario: the milk price falls; farmers come out to the street; and the Commission starts to panic. Following a ‘milk strike’ across Europe, an emergency meeting is to be held by farm ministers on October 5th. Nineteen member states have signalled support for a Franco-German initiative for an aid package for dairy farmers. However, farm commissioner Mariann Fischer Boel, insists that there is no prospect of reversing the decision to abandon dairy quotas as part of the CAP reform process. [...]

Just as it’s hard to love Commission President José Manuel Barroso, it’s hard to loathe him. Maybe that’s why he’s the ultimate compromise candidate and has just secured a second five year term of office. President Barroso has just published political guidelines for the next Commission, setting out his stall for a ‘2020 vision’ of the EU. [...]

The final paragraph of Commissioner Fischer Boel’s valedictory leaflet is revealing and foreshadows the debate that has yet to surface about the future of the CAP after 2013, the end of the current financial perspective. Mrs Fischer Boel makes the case for maintaining a common European agriculture policy among the EU’s 27 member states, presumably funded from the EU budget, as it is now. [...]

With co-decision on agricultural issues likely to come into force from next year, the European Parliament’s Agriculture Committee has assumed a new importance and there was plenty of competition for places. However, one unasnwered question is whether the Budget Committee will have a stronger influence on plenary voting patterns than the Ag committee. [...]

Recently, I attended a conference of the British Land Use Policy Group (LUPG) on ‘Securing our Common Future through Environmentally Sustainable Land Management – Vision for the Future of the CAP post 2013′. The first speaker noted that ‘the challenge of the next months is to identify the questions for CAP reform’. Toward the end, a commentator from the floor summarized the discussion: ‘We had a lot of questions and not many answers.’ Should we really place ourselves at such an early, exploratory stage where we struggle to grasp the main dimensions of the problems, at best determine broad directions for reform? [...]

The anti-EU agitprop outfit Open Europe has been huffing and puffing over the golden goodbyes that await those European Commissioners who will be put out to pasture when the current Commission’s five year mandate comes to an end later this year. Among their number is thought to be our own Agriculture Commissioner, Mariann Fischer Boel who, after five years of service in Brussels stands to receive approximately 270,000 euros of ‘transition money’ before her 43,000 euro a year pension kicks in.

The 66-year old Dane, who sports a trademark shock of snow white hair, has invoked the spirit of Hollywood actress Jennifer Aniston in the L’Oréal commercials, insisting the payout is entirely justifiable “because I’m worth it”. It’s just as well that the Commission scheme is so generous since Fischer Boel, who together with her husband owns several large livestock farms, is too old to qualify for the EU-funded early retirement scheme for farmers, which pays out a maximum of €18,000 a year to farmers who quit before turning 55. The typical ruse is for farmers approaching 55 to “retire” and apply for the early retirement money while passing the legal title of the farm on to a son or daughter who, in all likelihood, will qualify for an EU-funded young farmers startup grant worth up to €40,000. Both continue to work on the farm as before.

I’m told that the Finnish and Swedish governments (backed by the French EU Presidency) are working right now to insert a loophole to new EU biofuels sustainability standards that would allow the destruction of the world’s peat lands, with appaling consequences for increasing global greenhouse gas emissions. Chapter and verse from BirdLife International after the jump.
[...]

Today’s meeting of the Agriculture Council witnessed the frequently irrestistable force of French attachment to the Common Agricultural Policy run into the occasionally immovable object of UK, Swedish and new member state desire for change. The result was that a much-trumpeted French vision paper for the future of the CAP beyond 2013 was roundly rejected. In the end France used it’s presidential prerogative to adopt the paper as ‘Presidency conclusions’ but as such it has no political weight whatsoever. Some will remember that UK vision paper for the CAP lauched in the final weeks of its own EU presidency at the end of 2005 met a similar fate. [...]

A week ago I asked why a unfavourable report on cross compliance by the Court of Auditors, adopted on 4 November, has not yet been published. I wondered whether it had anything to do with the imminent end game of the health check negotiations, which featured propoals to further weaken cross compliance requirements. Turns out my hunch was correct. The Commission did not want the report to see the light of day, at least not until the health check was done and dusted, according to Paulo Casaca MEP.
[...]

Roger Waite, Editor of Agra Facts, gives the inside story on the all-night negotiations that led to a deal early this morning (20th November) on the health check of the CAP. He explains how the negotiations were handled, that the big winners were Italy, Germany and France and that at key moments there was intervention from several heads of government. He also explains that the United Kingdom was joined by several of the new member states who were not able to fully endorse to the final agreement.

According to Roger the biggest surprises were a new milk fund and the decimation of the progressive element to its plan to redirect farm subsidies from direct aids to funds for farmland conservation and rural economic development.

With the ink barely dry on the Council of Ministers’ final compromise deal on the health check, leading members of the European Parliament are laying into each other after a day of chaotic voting on the Parliament’s approach to the CAP. In a podcast interview yesterday, Paulo Casaca MEP (Socialist Group) told me that the Parliament was ‘lost’ and suffering from a lack of political leadership, something he thought could come from the Commission or from within the Parliament itself. Meanwhile Neil Parish MEP, chairman of the Agriculture Committee and a senior member of the right-leaning European Peoples Party – European Democrats grouping, voted against his own committee’s report and against the EPP-ED position. [...]

European farm ministers have reached a deal on the CAP health check. The principal points are these:

* Five annual milk quota increases of 1% each with effect from April 2009, prior to total abolition of the quota system as from April 1 2015 (unchanged from Commission proposal). As is now traditional, when it comes to milk quota, Italy will receive a special derogation that allows it to increase its quota by the full 5% in the first year.

* The rate of modulation (shifting funds from direct aids to rural development aids) will be raised from 5% at present to 10% by 2012. The increase will be made gradually: 7% in 2009, 8% in 2010, and 9% in 2011. The progressive modulation concept has been watered down; only recipients of more than €300,000 will face a higher modulation rate: 4 per centage points higher than the standard rate. The resulting money will be allocated for ‘new challenges’ – climate change, energy, biodiversity and water management but will it will also have to fund “accompanying measures” for the dairy sector.

This looks like a setback for the Commission, which had hoped to ‘walk the talk’ on increasing the emphasis on targeted policies like farmland conservation and rural economic development over traditional farm handouts.

The Commission’s green paper of November 2007 floated the idea of a basic modulation rate of 13% by 2013, rising to 23% on payments over 100,000 euros, 38% on payments above 200,000 euros and 58% on payments above 300,000 euros. By May 2008 the Commission had scaled back its ambitions to a basic modulation rate of 13% by 2013, rising to 22% on payments above 300,000 euros. Today the Council has agreed a basic modulation rate of 10% in 2013, and that there should be no intermediate bands of higher modulation, with just a 14% band for payments above 300,000 euros.

According to previous impact assessments, the budgetary effect of this is to transfer 1.2 billion euros for rural development by 2013 (less than this in the earlier years). This is from a total direct payments pot of some 36 billion euros a year. As a rule of thumb, each percentage point of modulation skims off 200 million euros a year.

This represents a victory for those who want to preserve the CAP as a system of income entitlements for landowners and a defeat for those who want to see public money targeted at public goods.

* The existing partial coupling options for arable crops will be abolished from 2010. For nuts, protein crops, flax and hemp, the end of partial coupling has been delayed until 2012.

* A maximum of 10% of each country’s single farm payment allocation may be re-allocated under Article 68 schemes that allow for sectoral targeting of aid. The Council increased the proportion of this money that may be coupled to production from 25% to 35%. €90m per year saved by the abolition of energy crop subsidies will be allocated for Article 68 measures in the 12 new member states.

* Single Farm Payments will not be paid below a minimum value of €250, or a minimum one hectare of SFP-eligible farm area. Countries may be entitled to vary this threshold upwards or downwards, according to their own circumstances.

Download the full Presidency press release (in French). Versions in other languages will be available here.

The European Parliament today votes on the CAP health check. I spoke with Neil Parish MEP (pictured right), who represents the largely rural constituency of South West England and is a farmer himself. He also chairs the Parliament’s agriculture committee, which drafted the report that is being voted on today. Perhaps unusually for a committee chairman, Neil will be voting against his own committee’s report. We discuss the key issues in the health check end-game and the role of the Parliament, the prospects for the CAP reform in the EU budget review and the positive effect of the fall of sterling for UK farmers.

If Europe’s wealthiest landowners, from the Duke of Westminster in the UK to Prince Albert of Monaco to the fabulously-named Johannes Adam Ferdinand Alois Josef Maria Marko d’Aviano Pius von und zu Liechtenstein (aka Hans Adam II, Prince of Liechtenstein) were having sleepless nights over the future of their six and seven figure annual handouts from the Common Agricultural Policy, they can rest assured that they have friends in high places. Or at least, they have friends in the European Parliament. [...]