Throwing out the current CAP would be justified. There is little excuse for continuing with the status quo which maintains such an inherently flawed system, badly skewed by political and business influences. As a modern, environmentally and socially just, and efficient form of policy, the CAP just does not add up.

Yes, it’s true that in recent years the CAP has been reformulated, mostly to fit in with the requirements of trade negotiations. But, it has the look now of a very badly refitted car – it looks shiny, but it is still polluting and liable to break down at any moment. The recent ‘emergency’ intervention in sectors like dairy and the fear this has created of the return of the ‘old style’ CAP shows just how vulnerable the policy is to collapse.

But if not this, then what is the alternative? The job that needs doing is to create and protect a sustainable and globally fair EU farm system as part of a sustainable and fair food system. Reform, or revolution, in farm policy alone will never be enough to sort out the problems caused by the rest of the food chain - from seed suppliers to food processors and the retail sector. It will not be enough to tackle the food chain’s inequality, its inability to feed people enough or healthily, or its huge capacity to damage the environment. Addressing these problems will require policy change in many other areas including trade, retail planning, intellectual property rights and competition policy, to name a few. But a new agriculture policy could help significantly. Three things should be considered: supply management; demand management; and targeted support.

Revisiting Supply Management

Most farmers need protection, support, advice and they need to cooperate better to achieve better prices. This is as true of farmers in Namibia as in Norfolk. It has already been suggested by a few that supply management should not be ignored as a policy tool. It is not the dirty mechanism that so many assume. If badly designed and poorly managed within the overall policy and trade framework - with little input from the stakeholders it is designed to manage i.e. farmers - it inevitably fails to perform well. This was the case with supply management measures like set aside and milk quotas. Whilst these measures achieved some control, the overall effect has been to discourage production efficiency and the development of either a competitive edge or sustainability in production. Free riding and slippage have limited set aside’s real effectiveness. Quotas have led to industry polarisation, with large producers getting larger at one end, and increasing numbers of smaller producers unable to achieve the scale needed to survive, at the other. With 74% of the funds going to just 20% of EU farmers, while at the other end of the scale, 70% of farmers share just 8% of the funds, this polarisation is inevitable. This concentration occurs not as a result of market forces, but as a result of the poor targeting of public funds.

Prices and Demand At the Heart of Farmers’ Production Decisions

But, what if we had a supply management system that works and combined it with a demand management system? It is not beyond the skill of the bureaucrats to design a supply management system which avoids undue influences, mismanagement and slippage. There are examples of models that work to a degree, such as the Canadian system which supports the dairy, egg, and poultry sectors. This relies on three pillars:

1. import controls - knowing the level of imports allows Canadian farmers to fill most domestic demand for poultry, eggs and dairy products, without producing excess;
2. producer pricing (collective marketing) - provincial producer organisations have the ability to negotiate fair prices;
3. production discipline to ‘balance the negotiating power between stakeholders to obtain fair prices for the producer'.

But does it really work for societal good? At present, there is limited evidence of environmental sustainability and welfare benefits. And, can it work in Europe? The beauty of such a system is that it means prices are at the heart of the process but they are set on the basis of what food is needed and how much money farmers need to produce it. This just does not happen now in Europe as the system is imbalanced by the strength of the small number of buyers (mainly huge retailers or processors) and the confusion resulting from years of poor policy.

Supply management could mean managing the land better with all the competing demands on it for food, fuel and housing. Without supply management we have a free for all at the mercy of a rapacious and wholly unreliable financial and commodities market.

This would not be enough to ensure all the public goods we need to secure from farming in Europe. We certainly need to manage demand too - possibly in the same way we are managing demand for energy or carbon - but starting with mechanisms such as creative awareness raising programmes, government procurement policy, and standards in product marketing. It will not be easy but it will, undoubtedly, be essential. In this way we could start to ensure we produce enough for what Europe needs. This does not mean everything it wants – which is clearly too much given increasing global malnutrition and the unsustainable global demands on land for food, feeds for intensive livestock, and agro-fuels.

Targeted Subsidies for Maintaining Biodiversity and Landscape

We will also need targeted subsidies to promote and protect the environmental and social goods that the market will never support – from maintaining farming in remote areas, to maintaining biodiversity and landscapes, and to promoting the types of farming which minimise greenhouse gas emissions. If the WTO Green Box is to be reviewed - as recently demanded - many of the existing ‘uncoupled’ forms of support will possibly be deemed unacceptable. New targeted subsidies, that provide clear outcomes, will be fit for purpose.

The answer will lie in the right balance of all these measures, coupled with policy reform in other areas. So to the many institutes and bureaucrats thinking about the future of the CAP beyond 2013: spare a thought to supply and demand management - put it in the mix and see if it works better than what’s on the table already.