How Member States are implementing the new CAP

All the focus last week was on the publication of the Commission Communication on the Future of Food and Farming. This document has been greeted with both curiosity (concerning the potential of the proposed new mode of delivery and governance to deliver both simplification of the CAP as well as improved targeting and results on the ground) and criticism (from farm groups worried that it eliminates the ‘common’ in the Common Agricultural Policy and environmental groups worried that it could facilitate the continued transfer of a large chunk of the EU budget to farmers with no questions asked). It will take some time to tease out its full implications, and this is something I will return to on this blog in the future.

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Leaked draft of the Commission Communication on Future of the CAP

Brussels has been buzzing in the past week since copies of the draft Commission Communication on the Future of the CAP which is set to be launched on 29 November next were leaked – you can read it and download a copy from the ARC2020 website. The status of this document is not clear – my guess is that this is the version that has been prepared by DG AGRI for the Inter-Service Consultation process which normally takes two to three weeks. This is where DG AGRI would get the formal opinion of the other DGs on its proposal, which it would then take into account in its final Communication.

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Which is the best risk management tool?

The extent and nature of the risk management tools that should be offered to EU farmers is one of the main issues which will be debated in the context of the future CAP after 2020. Already, in the COMAGRI amendments to the Omnibus Regulation, we see the interest of parliamentarians to extend the risk management toolkit and to make it more attractive for farmers to use.
The COMAGRI amendments seek to allow Member States to use CAP funds to contribute to insurance premiums for market-related hazards (that is, price variability) and revenue variations as well as just production variations due to adverse climatic events, diseases, pest or an environmental incident as at present; to provide for sector-specific income stabilisation tools so that farmers could enrol in schemes for a specific production and not necessarily for whole farm income; and would allow indemnification payments to farmers whenever the production loss (or income loss in the case of mutual funds operating an income stabilisation tool) exceeds 20% rather than the 30% in the existing legislation.

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How well are CAP direct payments linked to the supply of environmental public goods in agriculture?

We are pleased to bring you this guest post by Dr Alessandra Kirsch who recently completed her PhD thesis Politique agricole commune, aides directes à l’agriculture et environnement : Analyse en France, en Allemagne et au Royaume-Uni at the Université de Bourgogne Franche-Comté. Dr Kirsch did her research at the CESAER, INRA DIJON, France, under the guidance of Professor Jean-Christophe Kroll and Dr Aurélie Trouvé. Her work was financed by the French Ministry of Agriculture.

The evolution of the Common Agricultural Policy shows an increasing emphasis on environmental objectives since their first appearance in the Maastricht treaty in 1992. The research presented here was stimulated by an important contradiction in public discourse.

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EU farm incomes in 2016

It is frequently asserted in Brussels agricultural policy discussions that European farmers over the past few years are barely surviving, buffeted by unprecedented price collapses, the unwillingness of supermarkets to pay decent prices, the closure of external markets and tightening regulations. Commissioner Hogan spent much of the first half of his term of office bringing forward one emergency financial package after the other as taxpayers pumped more money into a sector supposedly on its last legs.
This picture of an industry in crisis is naturally promoted by the well-oiled publicity machine maintained by the farm lobbies in Brussels and national capitals.

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Does capping direct payments make sense?

CAP Pillar 1 direct payments were originally introduced to compensate farmers for the reduction in intervention support prices following the MacSharry reforms in 1994. This was an important and necessary step to help farmers adjust to a new economic situation. However, assistance for adjustment should only be temporary. As the years have passed, the argument that direct payments are intended as compensation payments has become less and less credible. As result, a number of alternative rationales for the continuation of Pillar 1 direct payments have been proposed.
These payments are variously justified as addressing low farm incomes, as a necessary support for EU food security, as providing a safety net for farmers against unexpected market shocks, as compensating for higher regulatory standards and as ensuring more sustainable management of natural resources.

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CAP – out of the box thinking

Last Monday saw the launch of a report “CAP – thinking out of the box” by the Rural Investment Support for Europe (RISE) Foundation. The report director was Allan Buckwell and the other contributors to the report are Erik Mathjis, David Baldock and myself. The report is a response to the public consultation on the modernisation and simplification of the CAP launched by Commissioner Phil Hogan in February.
Below, I reproduce a short summary of the key messages of the report.

Further adaptation of the CAP is necessary to help EU farming become a well-structured industry which is economically viable and environmentally sustainable.

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Is a level playing field an argument for continued support to UK agriculture after Brexit?

We are pleased to publish this guest post by David Blandford (Penn State University) and Berkeley Hill (Imperial College London).

The President of the National Farmers Union (NFU) of England and Wales told the Food Manufacture Group’s Business Leaders’ Forum (Feb 14, 2017) that the NFU is currently actively lobbying the UK government to ensure that British farmers are not disadvantaged with respect to their main competitors in Europe following Brexit. The fear seems to be that cuts in the £3 billion of direct aid, which seem highly likely when Britain leaves the EU and its CAP, will result in a non-level playing field in which UK farmers are put at a competitive disadvantage.

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More on the future of direct payments

Yesterday, I had the privilege of presenting my report on the future of direct payments to a workshop on the future of the CAP after 2020 organised by the AGRI Committee in the European Parliament and its Policy Department (AGRI Research). I reproduce below my statement to the workshop which attempted to convey the flavour of my report.

It is an honour to be invited to address you today on the background note that I have prepared on the future of direct payments. Direct payments accounted for around 72% of the CAP budget and for just less than 30% of the EU budget in recent years.

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Focus on the distribution of direct payments

Each year, the Commission presents a report on the distribution of direct aids to agricultural producers (links are provided on this web page). In this report, the Commission presents the breakdown of direct payments by Member State and size-class of aid. It is the source for the graphs which compare the cumulative amounts of payments with the cumulative number of beneficiaries.

The graph from the most recent report for the 2014 financial year (thus covering direct payments made to farmers in 2013 as Member States are reimbursed in the following financial year) is shown below. It confirms that the oft-quoted statistic that 80% of direct payments go to just 20% of farmer beneficiaries is alive and well; indeed, the distribution is even more skewed in Bulgaria and Romania than in other Member States.

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