While the Commission’s Communication on the future of the CAP after 2013 is less remarkable for what it says than what it leaves out, one of the accompanying documents is a fascinating read, and reveals much about how the Commission regards the future of the EU’s €55 billion-a-year farm policy.

Despite its unpromising title, the Consultation Document for Impact Assessment shows there are at least some people in the DG Agri bunker who are engaging their brains on the future of the CAP. What’s more, the document hints we might expect something altogether more radical and ambitious when the Commission’s legislative proposals are made later this year.

Most striking about the document are the home truths told about the state of EU agriculture – admissions that one would rarely, if ever, hear uttered in public by a Commissioner or a senior DG Agri official.

First, European farming is in a parlous economic state and ‘the current policy has a strong focus on income support’. According to the document’s authors, farming is chronically unprofitable and the imperative of “short term survival dominates the perception of many farmers”, making it very difficult to reorient policy towards greater economic and environmental sustainability. Income support measures not only dominate the policy but are unfair, insufficiently targeted and ‘hard to justify to the general public’.

Second, food security concerns advanced by farm unions and others are misplaced. All but the very poorest Europeans can afford to feed themselves perfectly adequately and are likely to be able to do so for the foreseeable future. Food security may be an issue for people in the Global South living on less than $2 a day, but not for relatively wealthy Europeans. The dominant food policy worry for Europeans is over-consumption and the authors pulls no punches in blaming the food industry and the mass media for the marketing of “unhealthy food stuffs (soft drinks, highly processed foods)” that contribute to obesity, diabetes, cardiovascular disease and cancer.

Third, while much rhetoric is devoted to the public goods provided by farming, the reality is that agriculture does as much to despoil the environment as it does to enhance it. Agriculture is using more water than ever, particularly in southern Europe where it is a particularly precious resource. A quarter of EU soils suffer from unsustainable erosion and almost half have low organic matter content. Biodiversity is declining across the continent, and farmland wildlife is suffering the most. Agriculture contributes upwards of 10 per cent of EU greenhouse gas emissions, yet is exempt from the Emissions Trading System. (On the positive side, fewer agrichemicals are being applied than in the recent past).

In considering the farm income question, which is rapidly emerging from the shadows as the fundamental justification for the CAP, the Commission authors make a basic but fundamental error that has been previously discussed on this blog. They equate income-from-farming with the incomes of farm households. While income from farming may be ‘lower than that of the rest of the economy’, it doesn’t follow that incomes of farm households are necessarily any lower than non-farming households. At least a third of farmers have non-farm incomes (and yet more have a spouse with a non-farm income). This ought to be taken into account in deciding whether farm households need a dedicated, EU-funded income support policy. More time should be spent on the question of whether farmers should continue to enjoy an EU-funded income support policy that is not offered to any other sector of the European economy.

The document concludes by proposing three objectives for the future CAP and five scenarios for the future of the CAP. The objectives are:

1. Maintaining agricultural production capacity throughout the EU (but don’t tell anyone at the WTO!)

2. Preserving natural resources and the countryside

3. Contributing to the vitality of rural areas

The five proposed scenarios to be analysed in detail in the full impact assessment are as follows:

1. ‘Adjustment scenario’ – gradual change in line with previous reforms of the CAP.

2. ‘Integration scenario’ – a thoroughly revised policy framework to address three objectives via substantial changes to both the first and second pillars of the CAP.

3. ‘Re-focus scenario’ – phase out the income support and market management elements of the CAP in favour of a less expensive policy targeted on sustainable growth, environmental conservation and climate change (economic and social policies would be hived off from the CAP to the EU’s existing cohesion policy).

4. Status quo

5. No policy

The document is open for consultation until 25 January 2011 and respondents are invited to address eleven questions listed at the very end.

It is now over a week since the confirmation hearing of Commissioner-designate for Agriculture and Rural Development Dacian Ciolos before the European Parliament, but it was only this weekend that I had the opportunity to listen to the EP’s video of the hearing itself. Commentary elsewhere on Mr Ciolos’ performance has been rather negative (my colleague Jack Thurston described it as a lack-lustre performance both in style and substance) and I would not disagree with this assessment – his responses on co-financing and on the legitimacy of equal per hectare payments across all EU Member States were just two examples of woolly and obfuscatory replies.

But I think we may need to take into account the context of this confirmation hearing, which was solely before members of the EP’s Committee on Agriculture. Thus, Mr Ciolos was faced with a totally one-sided perspective on agricultural policy by agrarian representatives. Committee members sought his views on the reintroduction of price supports, higher barriers against third country imports and more support for their special interest groups. While in a democratic parliament farmers have every right to have their views and concerns raised, why were there no representatives from the Committee on Development? From the Environment Committee? From the Health Committee? From the Committee on Budgets and from Consumers? All of these groups have a legitimate interest in agricultural policy. This was a disgraceful decision by the Parliament, which in the case of other Commissioner-designates associated members of other Committees with the questioning of the nominee.

Given this loaded confrontation, I thought Ciolos actually made a reasonable fist of his replies, in that he avoided giving hostages to fortune while showing a suitable deferential attitude to the Committee which had the power to influence his nomination. He described himself as a reformer, although he clarified that this meant adapting the CAP to the realities of 27 Member States and to new situations, and did not mean reducing financial support to agriculture or giving up existing instruments. But he was firm in making clear that there could be no return to the market support instruments of the past, while leaving open the need for new instruments to address questions of price and income volatility. He also seemed to be prepared to think creatively about the second pillar, and his defence of the current level of the agricultural budget was not a defence of the Pillar 1 budget alone. I would not be prepared to write off prospects for CAP reform yet during the period of Mr Ciolos’ tenure.

There is a useful summary of the hearing exchanges prepared by the Parliament here, but as yet no full script of the hearing. The written answers to questions posed by EP AGRI to Mr Ciolos are available here.

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?