To date, there is relatively little information on how this new instrument would work and what it will mean. The Commission is still in the process of internal reflection to define the objectives and governance of the EIP. However, some light is thrown on the Commission’s thinking in the evidence of Commissioners Ciolos and Geoghegan-Quinn to a recent UK House of Lords inquiry into Innovation in EU agriculture.

The emphasis in the new tool is very much on overcoming perceived bottlenecks to getting research results adopted on the ground. According to the Commission’s analysis, the main problem is the insufficient information flow and missing links between different actors (farmers, advisers, enterprises, and researchers). As Mr Georg Häusler, Commissioner Ciolos’ chef de cabinet, colourfully put it in his evidence to the committee:

The basic difficulty seems to be that scientists are doing science somewhere in the corner and farmers are asking for something, but the scientists do not know what the farmers want and the farmers to not know what science does. This is why we launched the European Innovation Partnership.

European Innovation Partnerships – a new EU instrument

But first, some background. European Innovation Partnerships as a new approach to innovation were first proposed in the Europe 2020 strategy and further elaborated in the Commissions’ Communication on an Innovation Union in 2010. The idea was to speed up the development and deployment of the technologies needed to meet the various challenges for Europe identified in those documents. The Partnerships themselves focus on improved governance arrangements to help speed up the adoption of research findings and to overcome the fragmentation of research activity in Europe. Through Innovation Partnerships, the EU aims at rebuilding broken links in the chain between research and bringing innovation to the market.

Innovation Partnerships are a novel concept, so the Commission wanted to test the concept through a pilot partnership to help validate the added value of the concept, gauge the interest and commitment of all key stakeholders, provide insights into how best to develop work packages and assure effective governance. The pilot chosen was an EIP on active and healthy ageing. The ageing EIP was launched this summer following a public consultation and formation of a steering group to assist with the preparatory work. The Commission will later present an assessment of the experiences in this pilot, and preparatory work for the agricultural sustainability and productivity EIP is underway.

Objectives and functioning of the agricultural EIP

According to the Commissioners in their evidence to the House of Lords committee:

The main role of the future EIP ‘Agricultural Productivity and Sustainability’ would be to look at the whole innovation cycle from R&D all the way to products or services on the market and enhance the effectiveness and the integration of innovation instruments. In this respect it will rely mainly on existing instruments, rather than creating new ones. It will look at actions provided by the Rural Development Policy and the Research Framework. These may include cooperation, pilot-projects, knowledge transfer, advisory services, and dissemination. It is anticipated that the creation of a functioning network will fill the current gap between farmers, rural enterprises, and advisors, on the one hand, and science on the other to allow the sector to take full advantage of innovation to produce more with less. It will improve co-ordination between actors and facilitate the use of opportunities provided by the different policy fields (Common Agricultural Policy (CAP), EU Research Policy). will bring together all relevant actors at EU, national and regional levels in order to: (i) step up research and development efforts; (ii) coordinate investments in demonstration and pilots; (iii) anticipate and fast-track any necessary regulation and standards; and (iv) mobilise ‘demand’ in particular through better coordinated public procurement to ensure that any breakthroughs are quickly brought to market.

The partnership would mobilise and bring together all actors around a common target—from those conducting basic and applied research, all the way to the final user like farmers and businesses, including every step in between. This would require overcoming barriers resulting from a traditional ‘division of labour’, be it across geographical borders or areas of competence.

The partnership should provide these actors with a forum, in which they can identify, develop and test innovative solutions and ensure the smoothest possible transition from conception to implementation. In addition to these stakeholders, it will involve Programming Authorities, the SCAR, and the Commission.

To this point, the EIP seems something rather rarefied and top-heavy with a lot of meetings potential, but it is hard to see the direct connection with improvements in agricultural sustainability and productivity. Three tools within the EIP may give it more bite.

Funding

The first is the promise, in the Commission’s proposed multi-annual financial framework for 2014-2020, to increase funding in the next EU research programme (to be called HORIZON 2020) from less than €2 billion now to €4.5 billion. Most public agricultural research spending comes from member state budgets, but nonetheless this is a welcome increase.

Operational groups

The second tool is support for operational groups in the EAFRD Pillar 2 rural development budget. Here, the draft of the proposed rural development regulation (which may be revised next Wednesday), reads as follows:

The EIP for agricultural productivity and sustainability shall:

promote a resource efficient, productive and low emission agricultural sector, working in harmony with the essential natural resources on which farming depends;

help deliver a steady supply of food, feed and biomaterials, both existing and new ones;

improve processes to preserve the environment, adapt to climate change and mitigate it;

build bridges between cutting-edge research knowledge and technology and farmers, businesses and advisory services.

The EIP for agricultural productivity and sustainability shall seek to achieve its aims by:

creating added value by better linking research and farming practice and encouraging the wider use of available innovation measures;

promoting the faster and wider transposition of innovative solutions into practice; and

informing the scientific community about the research needs of farming practice.

EIP Operational groups shall form part of the EIP for agricultural productivity and sustainability. They shall be set up by interested actors such as farmers, researchers, advisors and businesses involved in the agriculture and food sector.

Beyond this, there is little information on how these operational groups will function in practice.

Farm Advisory Service

The third, more speculative, tool is some revamping of the farm advisory services. Mr Häusler discussed this in his evidence to the House of Lords committee

There is another difficulty with advisory systems to farms. We have FAS—farm advisory systems—which work in some countries but not as well in others. This is for various reasons. Sometimes administration has turned it into a system that farmers do not trust or use. What we are trying to do this time is emphasise the role of the farm advisory systems, give them a clear job description of what they are supposed to do, and also open up the system to private business consultants.

Despite this suggestion of a change in direction, there does not appear to be anything new proposed in the draft regulation. Farmers can continue to be reimbursed for payments for the use of advice (provided the advisors also give guidance on cross-compliance regulations and the practices required for the new green payment), and funding will be made available (on a degressive basis over 5 years) to set up a farm advisory service

Next steps

There is nothing wrong with the idea of getting the various actors in the ‘innovation complex’ together to address potential bottlenecks to the diffusion of new ideas and to ensure that innovative ideas are put into practice. But it is hard to feel enthusiastic that the EIP instrument, as just described, is going to have a major impact in reversing the slowing growth of agricultural productivity in the Union. I may well be wrong when further details emerge of the role of operational groups. But I am sceptical of the idea that improving the spread of existing knowledge alone is the key to unlocking productivity growth, in the absence of significant new resources for agricultural research.

The Commission intends to bring the Standing Committee on Agricultural Research (SCAR), farm organisations, environmental NGOs and Member States into its reflections during the coming months before finalising the EIP implementation plan. The official launch of the agricultural EIP will be followed by the establishment of a High Level Steering Group which will be tasked with identifying, prioritising and selecting the areas that will most benefit from a partnership approach, and deliver productive, sustainable agriculture through innovation. This will be followed by a presentation of the EIP to the Parliament and the Council. So there is still some way to go before this much-heralded instrument becomes a reality and we can really assess its potential.

Front-page image from EU Commission, A Decade of EU-funded GMO research (2001-2010), Brussels

They observe – and endorse – an emerging “new rural paradigm” which

is based on the notion of the multifunctionality of rural areas, where various sectors beyond agriculture are acknowledged to play a key role with regard to rural areas’ competitiveness, and where investments across sectors are considered to be a more appropriate tool than farm subsidies alone. This shift can also be viewed as a change from an exogenous model of Rural Development, emphasising policy interventions “from outside”, to a more endogenous approach based on the notion of Rural Development as a process involving multiple levels, dimensions and actors, that is also self-driven.

Despite plenty of tough criticism of the status quo, the RuDI study concludes that rural development should nevertheless remain an element of the CAP. Their argument is

that Rural Development policy has a unique value-added element compared to other policy fields (e.g. Regional Development, Social Cohesion), namely: the presence of a physical dimension (environment, landscape, biodiversity) and its explicit requirement for the integration of this physical domain with the economic and social dimensions. The integration of these three dimensions is inherent in, and crucial for, rural development. As a result, there is an inseparable link between quality of rural life, the competiveness of rural areas, and environmental quality.

I wonder, though, why a space-based, sustainable, integrated, bottom-up approach should be run best by agricultural authorities with an agricultural policy label on it. If the approach of rural development is really valuable and different from the approach taken by other regional policies, rural development should still be merged with the other regional policies and its beneficial characteristics be expanded. Indeed, there should be potential for mutual learning. The reformers of regional policy community speak very much the same language as those who want to improve rural development (see e.g. the Barca report). It’s time to think big about the restructuring of competences – and to rename the CAP.

read the key quotes refering to the excessive concentration of rural development on agriculture and insufficient integration with other regional policies

download the official 8-page summary of the RuDI project

The philosophy of monitoring, learning and adjusting is correct – but it can lead to an excessive trust in our abilities to manage economic processes, including their social and environmental implications. We must recognize the limits of our ability to glean information about the diverse challenges on the ground, to identify the locally diverse and multifaceted effects of policy interventions, to process this information intelligently and impartially, and to draw adequate conclusions. In other words, we must take the limits of top-down government seriously.

Some problems of evaluation are clear-cut and, theoretically, remedies are within reach. For instance, the data needs of evaluators could be better integrated into routine statistics and evaluators could be made more independent from policymakers. However, the very fact that these problems exist though they are simple to understand and to resolve – and that they exist not only with regard to the CAP but in all policy areas and countries – gives reason to doubt future progress. Sound evaluation tends to hurt; it always focuses on the weaknesses and adopts ever tougher benchmarks. Policymakers and administrators therefore take care that evaluation does not become (too) sound.

In addition, evaluation is beset with dilemma that even the most ambitious reformer cannot resolve. The advantages of control can be offset by a loss of trust: lower-level actors may prefer to have an impeccable formal record rather than to be effective and innovative. The benefits of evaluation must be balanced against their administrative demands on governments and farmers. The system should be sophisticated (and thus yield value even for the most advanced member states) yet also manageable for those member states with the weakest analytic resources. Evaluation reports should be quickly available and incorporate the long-term effects of policy measures. Reports should be adapted to local circumstances – and be comparable across member states. Indicators should be stable, so that evaluators can learn how to handle them and that policymakers can observe how policies work across time, but they should also change in response to new insights and challenges. As a result of such dilemma, improvements in one regard tend to come at hidden costs in other dimensions.

In brief, policy evaluation is not like a new technology whose potential is still hard to grasp; it is an age-old technique whose inherent limits are well known. This matters for policy design.

First, policy objectives should be spelled out clearly and guidance on suitable indicators should be provided directly in the legislation establishing the policy instrument. Currently, objectives are often left vague and actual policies designed in a way that makes a mockery of subsequent evaluation (e.g. when the very intention of a policy is to create windfall gains for farmers but the evaluator is asked to ‘show’ its beneficial effects on competitiveness).

Second, the number of policy objectives and instruments should be limited. DG Agri counts more than 150 indicators to assess rural development – this plethora favors box-ticking over thorough analysis. Interestingly, environmental impacts tend to be easier to measure than socio-economic impacts. It is, for example, impossible to get a solid grip on the net job effects of farm modernization subsidies – especially when cross-sectoral effects are accounted for. This is yet another argument for focusing the CAP on sustainable land use.

Third, difficulties of policy evaluation and learning at the top speak in favor of devolving responsibility to lower levels of governance. Local authorities are best able to identify their needs, to see which solutions work best and to get results at lowest costs. Co-financing is therefore an important tool to create strong incentives for local and national authorities to use their informational advantage for more effective rural development.

This post is based on the personal lessons that I took away from a recent seminar on rural development evaluation. The seminar presentations can be downloaded here.

‘In principle this European funding is great news for wildlife because it supports agri-environment schemes which protect biodiversity – but the truth is that implementation of the policy by many member states is weak,’

warned RSPB’s head of agriculture policy Gareth Morgan.

‘In compiling this report we found examples of agricultural schemes receiving large amounts of public subsidy from the EU which had no environmental benefit at all, in fact some were causing the degradation of the environment.’

Farmland bird species are in decline across Europe and this is often linked to changes in agricultual activities. Many of these threatened species are extremely senistive to changes in their habitat caused by intensification of farming. For example, the Spanish imperial eagle requires large areas of sparse wood picture rich in rabbit and the eastern European red-footed falcon requires traditional farmland with ponds rich in dragonflies.

‘The findings of this report make it clear that the CAP is still not functioning properly and requires radical reform. Agri-environmental schemes can and do deliver great results for farming and wildlife, but only if member states commit to them properly – otherwise it is simply an exercise in handing out money for nothing.’

‘Some EU governments are clearly unprepared to stand up to the vigorous lobbying of their agricultural sector. If they continue to put forward dodgy agri-environmental schemes which have no positive impact on biodiversity then Brussels should have the backbone to kick them out.’

Examples of money down the drain included €790m in Portugal that has been invested in irrigation projects which will destroy wildlife habitats and increase water over-abstraction. In Cyprus conservation money is being spent on opening forestry roads and creating forest firebreaks which fragment bird habitats and disturb populations. Italy, France and Ireland also get the thumbs down for spending money on agri-environmental schemes that have no impact on normal farming practice and no benefit for the environment.

However, in England agri-environment schemes are judged to have been well designed and to be delivering benefits for biodiversity.

The full report can be downloaded here.

It all reminds me of something Alistair Campbell, former press secretary to Tony Blair, said to me years ago as we were waiting for a meeting on the communications strategy for the UK’s Rural White Paper to begin. He turned to me and asked,

“So have I got this right, from the perspective of the farmers, the best rural policy would be for me to get a big dumper truck and fill it with money, drive up the M6 to just past Birmingham, stop and tip it all out into the nearest field and then drive back to London?”

I suspect he was only half joking.

Now that the Northern Ireland government is taking almost as direct an approach for handing out CAP grants to farmers for modernising their holdings, the Commission has stepped in. Michael Mann, spokesman for the EU Agriculture Commissioner, told the BBC Radio 4 World At One that this method is not legal as it doesn’t comply with the rules for offering EU money on an equal basis to all applicants. Michelle Gildernew, Northern Ireland farms minister, has brushed off the criticism. In a radio interview she disparagingly refering to Mann as “this individual”. Who will prevail?

Meanwhile the farmers in Northern Ireland are preparing for a long, cold night…

“The importance and contribution of the agri-food sector to the sustainable development of rural areas” (PDF download) concerns itself with the role of agriculture as the primary sector in the broader economy of food production, distribution and retail. It shows that agriculture is most important in the new member states and the Iberian peninsular, southern Italy and Greece (see map below). In 2004, the agriculture sector accounted for 2.1% of GDP in EU-27 but for more than 10% in some Member States such as Romania and Bulgaria. It should be noted that these figures include the contribution of state subsidies, which are estimated in the region of 20-30% of net value added. So stripping out farm subsidies, agriculture contributes more like 1.5% of EU GDP. According to the report, around 6.6% of jobs in EU-27 were in the agriculture with significant higher levels in several Member States (more than 20% in Bulgaria and Romania).

The report makes a few analytical observations, including:

- The EU has 14.5 million farms, most of which are very small farms located in member states that joined the EU in 2004 and 2007. The long term trend is towards fewer, larger farms.

- Rural economies will continue to evolve with an increasing importance of service sector. It will be driven by the urbanisation of rural areas around the metropolitan centres where in-migration is occurring, but also thanks to increasing connections with urban economies and the formation of ‘city regions’.

- Rural economic activity can exist without agriculture and, conversely, strong agriculture can exist where non-agricultural rural economic activity is limited. The economies of some rural areas depends largely on agricultural activity and this will continue be the case in the future.

- Income growth, urbanisation and dietary diversification will lead to new demands for ‘quality certified products’.

- Social demand that is also driven by environmental and health concerns will likely also define the natural and social constraints on EU land use and on agricultural practices.

- An increased segmentation of the EU market will take place because of the growing relative importance of transport costs in the agri-food sector.

- Liberalisation of international agri-food trade presents the greatest challenges for beef and poultry producers, especially grass-based systems, which are least competitive in pure cost terms. Areas that specialise in upland pasture-raised livestock may need targetted assistance to maintain jobs in farming and/or to diversify their economic base.

“Rural Development in the European Union – Statistical and Economic Information – Report 2007″ (accessible here) contains a veritable treasure trove of statistics relating to rural areas in Europe.

The whole interview is well worth reading as is Agra Focus for those who wish to keep up to date with developments in the CAP debate. Over the next few days we shall publish some highlights from the interview.

Allan Buckwell said that in the 1990s there was a consensus that policy had to change and the direction in which it had to move was liberalisation. That meant moving away from distorting commodity markets. Now there is not the consensus on what direction to take the CAP.

Moreover, the broader European debate, which in 2005-6 seemed to be moving away from the accumulated outcome of 40 years of incrementalism was now replaced by very little strategic thinking at all. There was retrenchment all over Europe and a shift to Euroscepticism rather than taking a clean sheet of paper and thinking about what a new Europe could look like.

Allan Buckwell suggested that policy faced two challenges, a food challenge and an environmental challenge. Recent events suggested that there might also be a risk management challenge as well.

He reiterated his belief that the CAP should evolve to become a Food and Environmental Security Policy. There was no difficult in convincing people that environmental security was a big issue. ‘Unfortunately, coming from where I do, if you mention the words food security you are immediately accused of being a farmer protectionist and wanting higher prices.’

Buckwell insisted, ‘I am arguing that food and the environment are inter-related and there are such big market failures surrounding the environmental impacts of agricultural production, that this justifies a policy.’ What was needed was not the agricultural policy we have had for the last 40 years, but there was a clear job to be done.

Part of what he has in mind is stimulating agricultural development in the new member states and modernising infrastructure and marketing there. He also emphasises the need for research and development work on how one maintains the productivity of agriculture and yet reduce its environmental impact. These are worthwhile aims for public action.

Allan Buckwell expresses doubts about the efficacy of the Single Farm Payment. He comments, ‘It is a very simplistic stablization measure and the distribution of the payments is a big odd.’

Later in the interview, he explains, ‘I was never really a big fan of the Single Farm Payment. It was an absolutely necessary step to unhook support from prices … When you look at the payments per head or per hectare or per annual work unit by Member State, there is a variation of about 3-50 fold from the highest to the lowest.’

He also expresses doubts about the two pillar distinction which has been regarded, perhaps too uncritically, as a central plank of the recent development of the CAP in order to increase spending on the ‘multifunctional’ or public goods aspects of agriculture. He notes, ‘The distinction between the two pillars served a purpose. If it’s creating an obstacle to the development of a better policy, then let’s scrap it.’

He comments, ‘There is little doubt that Pillar 2 is becoming unpopular. It is unpopular with farmers: many farmers in many countries say they cannot access the schemes that are available. They see it as bureaucratic, and also complain that money is leaking away to others. The bureaucrats and the administration say that it is a complex system with very high administrative costs and co-financing puts off Member States from doing more of it.’

He argues that co-financing is the key issue. If co-financing rules are stopping sensible reform, they should be changed. It might be better to co-finance everything with the member state contribution related to the national income per head. What is needed, he argues, is an explicit debate about the underlying principle rather than about ‘funny little new programmes.’

The total amount of expenditure for 2007 is estimated to be around 12 billion euros of EU-funded expenditure and around 8 billion in nationally funded expenditure under co-financing requirements. National and regional rural development plans contain more details of the exact areas of expenditure. Summaries of national and regional rural development programmes are available on the European Commission website and the full plans are available on respective national and regional government websites.

Disclosure of recipients of the main CAP payments (the ‘first pillar’ comprising single farm payments, export subsidies, market interventions etc) is due by April 2009. The French government pushed for the delay until 30 April 2009 during the final negotiations on the revised Financial Regulation.

So far, there have been new websites launched by France, the UK and Ireland. An Austrian site was opened earlier this year. The first prize for government action to thwart transparency goes to Ireland. The website is almost unusable since it requires that searches specify (1) the name and (2) the location of the recipient and (3) the approximate amount of the subsidy payment. I believe this to be in breach of the EU law and have written to the European Commission requesting that action be taken. The Government of the Republic of Ireland should not be allowed to stick two fingers up at the European taxpayers who pay for the CAP and have a right to know how their money is spent.

There is a farmsubsidy.org briefing note which gives some background information on the disclosure of recipients of EU rural development funds.

“The more specific you make the policy, the more room you give to bureaucrats who make the decisions. Non-targeted payments give more power to farmers.”

In case it’s not clear, Mr Gandalovic was making the case against targeted payments. In doing so, perhaps inadvertently, he touched on a question that goes to the very heart of the debate about the future of the CAP: the extent to which the CAP’s 54 billion euros of annual public expenditure should be targeted on clearly defined objectives and measurable outcomes. It is a debate raging right now within DG Agriculture, a power struggle that is pitting CAP ‘modernisers’ who seek a greater role for the current rural development pillar against CAP ‘consolidators’ who defend the “Fischler settlement” and the current Commission Health Check agenda. What it boils down to is a debate over the fundamental role of public policy in agriculture.

The modernisers favour a ‘programming approach’ that ties public money to definable public benefits and introduces quasi-contractual relationships between the state as purchaser and the farmer as service provider. In most cases the services to be provided are ‘environmental services’: preservation of biodiversity and wildlife habitats, action on water pollution, soil erosion and so on. This is the underlying ethos of EU rural development policy, although there are significant elements of the RDP that don’t quite meet the standard, the most obvious being Less Favoured Area payments. The modernisers see the old market intervention measures and direct payments (the single farm payment) as poorly targeted, both in terms of need (big, competitive farms get the most subsidy) and value for money (the link between subsidy payments and public goods provisions is, at best, weak).

The consolidators see things rather differently. They perceive that across the board, EU farmers lack competitiveness on world markets, in part because of the burden of meeting higher regulatory standards and having higher costs for land, labour and farm inputs. For this reason, the EU must step in and provide a blanket form of support to almost all farmers, approximately on the basis of their output. This ‘market correction’ will allow farmers in the EU to compete on a ‘level playing field’ internationally. For the support to be WTO-compliant it must be decoupled from production. This change was the most important part of the Fischler reforms agreed in 2003 and implemented with to varying degrees by member states. The fear expressed by consolidators, which is articulated in great length in the Scenar 2020 report, is that without a big cash injection, most European farmers would go out of business.

The limited ambition of the CAP Health Check proposals represent a victory for the consolidators, although the contours of the debate are visible in discussion of key health check elements such as the level of modulation, the introduction of payment limits and the potential of Article 68 measures which, depending on how they are drafted, could follow a programming-approach or resemble an old-style production subsidy.

It is unclear how long-lasting the consolidators’ victory will be. Those around Agriculture Commissioner Mariann Fischer Boel echo her line of ‘one vision, two steps’ with varying degrees of radicalism, inferring quite different notions of the shape of the CAP beyond 2013. For some senior members of her Cabinet, the single farm payment is just a transitory arrangement, as it had originally been intended when direct payments were first introduced in the 1990s. Broadly speaking there are a two alternative visions of the future: (1) a flat-rate per hectare payment for all European farmers or (2) a massive expansion of the rural development budget under the programming approach. Both involve major redistributions which present significant political challenges.

Some fear that without the current SFP (or its flat-rate successor) as a one-size-fits-all entitlement policy run from Brussels, DG Agri would likely face budget cuts, loss of prestige within the Commission and a diminished power to shape land management practices across the continent. They also fear that a programming approach implies greater flexibility for member state discretion, a CAP à la carte, partial renationalisation and the undermining of the single market. Some federalists of the old school are consolidators simply because the CAP is the policy area that has seen the highest level of European integration. For them, criticism of the CAP is critism of European project.

These then are the battle lines of the coming debate over the future the CAP in the EU budget review. What we see now is the phony war, the real action will wait until after the next European Parliament elections and the appointment of a new Commission with – it is widely assumed – a new Agriculture Commissioner.

Environmental Defense, a US conservation group, has joined with 14 other NGOs in calling on Congress to resist pressure to release 24 million acres from the Conservation Reserve Progam (roughly three quarters of all land currently enrolled in the program). The letter says:

“We urge you to protect the taxpayers’ investment in soil quality, water quality, and wildlife habitat and not allow landowners to leave CRP contracts early without fully reimbursing the Treasury for the taxpayer-funded investment in those lands.”

Currently, conservation contract enrollees who terminate their contract prior to the end of its 10- to 15-year term must reimburse the federal government for the rental and cost-share payments they have received, plus interest, and a penalty of 25 percent of the total rental payments received.

It is important to note that there is a major difference in emphasis between EU and US conservation programmes in that EU schemes are less about land retirement and more about improving practices on working lands. A European farmer who puts land into an agri-environment scheme is not required to abandon all production on the land, rather to farm the land according to higher standards of soil and conservation, apply fewer agrochemicals and take action to benefit wildlife and biodiversity.

In cases where EU agri-environment schemes do entail a significantly lower intensity of production, I have no doubt that many European farmers are already considering whether it’s worth staying in the scheme.