Despite the numerous critiques of direct payments expressed in the vast majority of the professional literature analysing the future of the CAP, the European Commission seems to maintain them in the future. In order to justify the decision, the EC has found out a new slogan for saving this ineffective policy instrument – the provision of public goods.
However, this is not the first time in history when the Commission searches for justifications in order to save direct payments. Founded in 1992, the original idea behind direct payments was to compensate farmers for the price cuts of the MacSharry reform. This can be treated as an economic justification for the instrument as farmers, at least to the Commission, will be better off with this support than without them.
By the beginning of the 21st century, it turned out that direct payments have many problems like unequal distribution by members and farmers, the dissipation of these payments to input suppliers and landowners, etc. Moreover, the internal pressure of the high share of direct payments inside the CAP budget together with the external pressure of the WTO and the possible accession of several new member states also called for a reform. However, as farmers have become dependent on, if not addicted to, continued support, the Commission has found out a new justification – direct payments are not compensation anymore but income support to farmers, thereby creating a social policy from an economic policy. As Single Farm Payments (SFP) are decoupled from production, a farmer need not even produce to receive a fixed income, meaning that direct payments have become social rights.
Based on the various critiques of the profession on the functioning of direct payments, after 2008, the EC has found itself again in an ongoing debate on why do we need this policy instrument. However, instead of elaborating a strategy of phasing them out completely, the Commission has found a rationale for the third time, calling for the ‘enhanced provision of environmental public goods’ via the ‘greening component’ of direct payments. Invoking the evergreen topic of the conservation of the environment, the EC now seems to justify the need for direct payments on environmental grounds, thereby creating an environmental policy from a social policy.
However, this new idea also has many deficiencies. Besides the need for significant institutional and administrative support for the management of this new concept, the Communication seems to neglect the fact that one of the biggest problems with the provision of environmental public goods in agriculture lies in the insufficiency of measurement methods.
The CAP is still spending 70-75% of its budget to direct payments and it seems that it continues to do so after 2014. Direct payments have already been justified on an economic and social basis and now appear to be saved again on an environmental basis. I wonder what else might justify the continuation of this ineffective policy instrument.