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CAP policy instruments and policy goals: cause or effect?

Fellow blogger Wyn Grant presented a paper in Paris last month which presents a wide-ranging overview of the changes in CAP policy instruments since its inception to the present day. His basic thesis is that over time the instruments have changed much more than the objectives and that this does reflect a shift in the content of the CAP and its ultimate goals. He concludes that it is changes in CAP policy which have led to changes in policy instruments, although he does cite some examples where the introduction of new instruments, possibly by creating obvious anomalies, can spark off wider policy debates (trading SFP entitlements, voluntary modulation).

Grant provides a useful typology of CAP policy instruments:

  • Policy instruments that have been dropped or are effectively defunct (green currencies/switchover mechanism; monetary compensation amount; objective method; target price; threshold price; variable import levy; guarantee thresholds;  budgetary stabilisers; butter disposal aids) or in one informative case was never deployed (virtual cow).
  • Policy instruments that are still in place, but are likely to diminish in importance over time or in some cases disappear (intervention purchasing (including distillation);  export subsidies; quotas;  co-responsibility payments;  set aside; tariffs).
  • Relatively new policy instruments that are likely to be of importance in shaping the CAP in the future (decoupling; single farm payment; modulation; cross-compliance;  financial discipline mechanism; IACS).

Of relevance to the CAP Health Check debate is his observation that some of the recently introduced policy instruments have opened up scope for re-nationalisation of the CAP. While he rejects the notion that what we have is a ‘cafeteria CAP’ as some have suggested, he acknowledges that a shift away from a common policy has taken place and that this allows countries to adapt policy instruments to suit their own particular circumstances. This trend has been evident for some time in the menu approach available for rural development programmes under Pillar 2, but has gained ground also in Pillar 1 following the introduction of the Single Farm Payment and the different arrangements allowed to Member States. On the other hand, the recent victory of the European Parliament in limiting the ability of Member States to opt for voluntary modulation suggests that there are still severe limits to the a la carte approach.

It will be interesting to see how this tension is played out in the Health Check debates. The Agriculture Commissioner Mariann Fischer Boel has made clear her preference for some greater uniformity and harmonisation in the application of decoupling, at least among those Member States which do not apply the SAPS scheme, and foresees the elimination of all exceptions after 2013. But the more disparate interests among the greater number of members of the enlarged EU may lead to pressures for greater flexibility. For example, will we see the debate on voluntary modulation re-opened? What about co-financing of Pillar 1 payments? Just how much appetite is there to go down the road of re-nationalising the CAP?

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2 Replies to “CAP policy instruments and policy goals: cause or effect?”

  1. Thanks for your comment on my paper. I am currently writing another paper for a conference in September which looks at whether there has been a real reform of the CAP. The policy instruments have changed, but this was partly intended to revive the CAP’s flagging credibility and to allow farmers to receive a broadly similar sum in support to the amount they received historically. The political calculus surrounding re-nationalisation is very complex, especially in an enlarged EU as you point out. But, very crudely, countries that found they had to pay more to their farmers under re-nationalisation would be less enthusiastic about it.

  2. Farmsubsidy.org has calculated estimates of net budgetary gain/loss from the CAP at the member state level for the most recent year that figures are available (2005). This list of winners and losers gives an idea of who will favour more re-nationalisation and who will oppose, based on a crude view of budgetary balances.

    It is important to remember that this is not a static league table, and the member states that joined the EU in 2004 and afterwards will move progressively up the table towards being greater net beneficiaries, while countries like France will move towards being net payers. This is likely to be rather important. It should be possible to make an estimate of the position in, say 2012, any volunteers?

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