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The sacred cow of the two pillars

Latest proposals of the European Commission seems to maintain the two-pillar structure of the CAP, in which Pillar 1 finances direct payments as well as market measures while Pillar 2 funds rural development measures. The clear separation of objectives between the two Pillars is now somewhat blurred by the latest proposals. It seems that Pillar 1 funds can be used for measures traditionally addressed by rural development funds (e.g. payments to the provision of public goods), creating the need for raising Pillar 1 funds partly by a backward modulation (i.e. transferring funds from Pillar 2 to Pillar 1). This argument stands on dubious theoretical grounds as each and every communication since 2000 was in favour of transferring funds to rural development and easing the currently unequal financial distribution between the pillars. The debate is now underway on how Pillar 2 can tackle the enormous rural and agri-environmental tasks ahead without posing a crucial question – is the current structure working well? I would suggest not.

While the vast majority of Pillar 1 funds is spent on a single policy instrument (direct payments), the logic behind Pillar 2 raises serious questions on the definition of rural development. Current priorities allocate the vast majority of resources to the first two axes – competitiveness enhancement and agri-environmental issues. Are these issues really about rural development? I would suggest that rural development should rather focus on the alleviation of rural poverty and the increasing urban-rural income gaps, which are closer to the current third axis and LEADER. Although many measures in the first two axes also have a number of second order effects (enhancing local agricultural employment, tourism, etc.), they are not well-targeted towards the most pressing issue of rural poverty.

According to the official Communication of the Commission in last November, the three main objectives for the CAP are: (1) viable food production, (2) sustainable management of natural resources and climate action and (3) balanced territorial development. Though it is clear that these objectives correspond to the policy instruments related to food markets, agri-environment and rural development, we still have just two pillars financing these three different and differentiated headings. If we have three main objectives, why do not we have three pillars?

As food security, price volatility and economic crisis are back to the top of the political agenda, I would find it legitimate for the current Pillar 1 to only address food market issues and facilitate competitive, secure, safe and valued food supplies with a new name – Food Market Pillar. It is also clear that there are legitimate concerns about both rural development and the management of the environment to be tackled by European policies. I would therefore suggest that the issues involved under each heading are sufficiently different that each deserves its own ‘pillar’, meaning that a Rural Development Pillar and an Environment Pillar should be created.

This concept stresses that one pillar (Environmental Pillar) should be added to the CAP as well as the existing first pillar should be renamed (Food Market Pillar) in order to represent its clear (and changed) meaning. Note that this idea also corresponds with the conventional notion of the critical aspects of sustainability: economic, social and environmental.

Thinking in terms of a triangle, this idea might also be operationalized if an appropriate index of the importance of policy action under each of these three headings could be defined and measured. Thus, the relative balance of policy action might be determined or given relative balances of importance between regions and/or member states compared with the EU average, the concept might illustrate the intra-EU differences. In other words, this outline might provide a framework to identify the gaps between reasons for policy action, and the capacity of the present policy to meet these objectives.

I know that this suggestion is not for the current debate as it seems quite evident that the current two pillar structure will be maintained. However, it would be much more efficient, at least as I suggest, to change our way of thinking in this regard in the future.

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