Category: Blog posts

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Agreeing the allocation of CAP funds between Member States

The great bulk of EU CAP expenditure (the Heading 2 ‘Preservation and management of natural resources’ in the 2007-2013 Multi-annual Financial Framework) is allocated to member states in the form of national ceilings under Pillar 1 and national breakdowns under Pillar 2. One of the reasons for the success of the Fischler and Health Check reforms was that they did not fundamentally alter the allocation of member state receipts.

Redistribution a central issue in CAP 2020 negotiations

The distribution of CAP funds between states is now a central issue in the CAP negotiations given the commitment to bring about greater convergence in the level of entitlement payments per hectare. There is certainly no logic in the current distribution which reflects the historical legacy of the origin of the payments as compensation for support price reductions for particular commodities, as well as the outcomes negotiated by the new member states over the size of their Pillar 1 and Pillar 2 envelopes as part of their treaties of accession.… Read the rest

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What Durban means for EU agriculture

Agriculture, uniquely, has a dual role in climate change discussions. It faces significant adaptation challenges as global temperatures rise and there is a greater frequency of extreme weather events. But it also has the potential to help mitigate climate change through reducing emissions and removing them through carbon sequestration.

In this post, I ask what the implications of the outcome of the Durban UNFCCC climate conference might be for EU farming and agricultural policy.

Agriculture and EU emission targets – where we stand

Agriculture is included in the accounting for the EU’s Kyoto Protocol emission reduction targets for the period 2008-2012 and in the Climate and Energy Package (CEP) 2020 target of a 20% reduction in global greenhouse gas emissions over the 1990 base year.

How farming might be affected by these targets is up to the individual member states to decide. There are no agriculture-specific targets at EU level. Agricultural emissions contribute just under 10% to total EU emissions, but what counts in measuring the potential contribution required from agriculture to the EU targets is its contribution to total non-ETS emissions.… Read the rest

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Launch of E-learning CAP course

For those interested in learning more about the EU’s Common Agricultural Policy, a new online learning course on the CAP has just been launched by Groupe de Bruges in association with Associazione Alessandro Bartola/Agriregionieuropa and SPERA (Interuniversity Center on Rural, Environmental, Economic Policies) led from the University of Ancona. The course consists of eight modules and participation is free [Disclaimer: I have contributed one of the modules on the CAP in an international context]. Each module consists of one or two powerpoint lessons lasting around 40 minutes, and there are short entry and exit tests to help students assess their knowledge. Financial support for the development of the course was provided by the European Commission and the Swiss Fondation Charles Léopold Mayer pour le Progrés de l’Homme.

Already in the first month around 200 people from 30 countries had registered to take the course. This thread is open for comments and feedback from anyone who has registered and participated in the course.… Read the rest

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Agricultural consequences of the eurozone crisis

The consequences of the decisions at the fateful Brussels summit on 9 December 2011 will take time to assess. Whether leaders did enough to calm the markets and allow eurozone governments to refinance their enormous debts next year at reasonable interest rates will be known relatively quickly. Many commentators feel that financial markets will not be impressed, and that the EU is facing into a prolonged depression in which the break-up of the eurozone is a real possibility.

The significance of the institutional changes implied by the creation of a new inner core of EU member states pledged to achieve greater fiscal integration will only be known over a longer time span. Whether Britain, by opposing a new treaty, has lost influence and will move towards the EU’s exit door is also still unclear.

EU agriculture and agricultural policy-making in the EU will not be immune to these momentous changes. Whether the CAP budget can be safeguarded in the negotiations for the next Multi-annual Financial Framework must be increasingly in doubt.… Read the rest

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New CAP income payment could produce new policy failures

The new CAP reform has been promoted by its creators as being more target-oriented and better adjusted to what the public expects from the funds invested in agriculture. To meet these expectations and particularly to preserve as much funds for agriculture as possible, the first pillar direct payments have been veiled under various new support schemes. The most important ones are the basic payment scheme and its “greening” component. Let us focus on the basic payment, which will take up from 43 to 55 per cent of the direct payments envelope.

Politics trumps economics

The aim of the basic payment is unify the payments among the Member States and at the same time provide a kind of income support to agriculture. It could be understood as a single regional payment, i.e. a single payment per-hectare of all eligible areas in a region; the size of the region has not yet been defined, so far the condition was set at a minimum of 3 million inhabitants.… Read the rest

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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?… Read the rest

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Public goods measurement concerns in the CAP post 2013

The term public goods first entered into the CAP debate in 2007 when it was used in an agricultural context by the environmental NGOs. Since then it has gradually infiltrated the mainstream policy debate appearing in many papers and speeches from research papers to the highest level of decision making. The need for securing mainly environmental public goods in the future CAP is echoed by an increasing number of stakeholders, rallying behind the slogan of “Public Money for Public Goods”, developed by Zahrnt (2009). Becoming the primary focus, the concept is now used more generally to refer to any sort of public benefit from agriculture, thereby justifying the need for public support, as expressed by various stakeholders.

Now it seems that the Commission wants to link the provision of public goods to direct payments by greening the first pillar which would represent a very important innovation in the history of the CAP.… Read the rest

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EFAs v. Set-Aside

Earlier this week, at the European Parliament, I moderated a seminar on the Commission’s proposal for ‘greening’ measures for the direct payments of the CAP, with a particular emphasis on the plans for ecological focus areas. The event was organised by the European Environmental Bureau and hosted by Austrian MEP Karin Kadenbach, who sits on the Parliament’s environment committee.

To qualify for the 30 per cent of the direct payments budget that the Commission has earmarked for ‘greening’ the CAP, farmers with grazing livestock will be required to preserve permanent grasslands, arable farmers will be required to cultivate a diversity of (three) crops and practice basic crop rotation. In addition, all farms must designate 7 per cent of their farmland as ecological focus areas (EFAs).

EFAs draw on a Swiss policy in which farmers are paid a subsidy to dedicate a fixed percentage of the farm land to an environmental use rather than agricultural production.… Read the rest

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New Commission study on impacts of Doha Round

The G20 Cannes Summit, despite being side-tracked by the continuing eurozone crisis, did address other issues of importance to the global economy. In the section of its final communiqué on trade, the heads of state reaffirmed their ritualistic commitment to the Doha Round mandate. However, they went on to note that “It is clear that we will not complete the [Doha Development Agenda] if we continue to conduct negotiations as we have in the past.” Instead, they called for “fresh, credible approaches to furthering negotiations, including the issues of concern for Least Developed Countries and, where they can bear fruit, the remaining elements of the DDA mandate” to be pursued in 2012.

However, as the preparations for the forthcoming WTO Ministerial Council on 15-17 December rachet up in Geneva, there is little evidence that the same countries are ready to reach agreement on a common approach to the next steps to rescue the Doha Round.… Read the rest

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‘Greening’ – a return to compulsory set-aside

Among others, the latest proposal of the EU Commission aims to green the Common Agricultural Policy (CAP). One of the proposed measures looks very much like a new ‘set-aside’ programme. Generally, the programme stipulates that individual farmers have to set aside seven per cent of their arable land. Some exceptions are allowed in case individual farmers already produce environmentally friendly, e.g. organic production, or have already contributed to desired environmental effects. As the proposal is not yet put into legal form, it may be worthwhile to discuss the new measure’s rationale, to evaluate its associated costs and effects on incentive compatibility and to look for alternatives for achieving the objectives.

Rationale of the envisaged programme

The first question that has to be investigated concerns the aim of the measure. Objectives are based on norms and these norms reflect value judgments; of course, the norms of scientists are not necessarily better than those of anybody else.… Read the rest