Where are we now and where next?

A clearly intentioned introduction kicked off the 2016 DG AGRI Outlook conference in Brussels on 6-7 December with Commission President Jean-Claude Juncker giving the first speech. Juncker pledged support and commitment to stand by the agricultural sector in difficult times as illustrated in 2016 with economic crises in the dairy, pigmeat and cereals sectors in a number of Member States. Nonetheless, considering the pressure of the demands on the EU budget from the crises of the Eurozone, refugees and Brexit, it seemed surprising that the President was so effusive in his defence of the CAP and farmers. This might have been the occasion to suggest to farmers that they might have to do more to justify their apparently generous treatment in the EU budget. Speaking after his President, Agriculture Commissioner Hogan outlined the priorities the next CAP will seek to address, under the overarching objective of “modernisation and simplification”:

  • Ensuring resilient farm businesses through a set of market measures designed notably to provide a more rapid and sectoral response during economically challenging times, to improve the effectiveness of risk management tools and safety nets, and to strengthen farmers’ position in the food chain;
  • Achieving a more sustainable system of agricultural production, with climate change moving up the agenda as a top environmental priority and technology and investment presented as key tools to address this;
  • Encouraging generational renewal, for example through increased support to young farmers.

Hogan said the next CAP has to take into account the Sustainable Development Goals and the climate commitments of the Paris Agreement, recently ratified. Interestingly the Cork 2.0 declaration was not mentioned. A public consultation will be launched on the topic in early 2017 and the results will be used to help shape a Commission Communication on the future CAP “before the end of 2017”.

In addition to Juncker’s introductory speech, Karmenu Vella and Miguel Arias Cañete, respectively Commissioners for Environment and for Climate Action and Energy, had also been invited to speak. The presence of the Commission President and three Commissioners certainly gave weight to the proceedings and sent a clear message that this Commission is joined-up and that climate and environmental commitments must be a more prominent part of future EU agricultural policy. This message was reinforced by the expansion of environmental indicators in the 2016 Agriculture Outlook report to cover projections on greenhouse gas emissions, ammonia emissions, nitrogen balance as well as soil erosion and biodiversity.

In this context, there was particular interest on the two dedicated sessions on climate change and sustainable agriculture. In particular, the session on “sustainable agriculture in a resource-constrained world” sent a powerful message about the urgency and scale of the environmental challenges lying ahead for the agricultural sector. Panellists and speakers from different sectors, representing the JRC, FAO, OECD, the academic world with INRA (the French agronomic research institute) and Allan Buckwell from the IEEP, reached a clear consensus on some specific points. All agreed that the scientific evidence was cumulating to indicate that agricultural ecosystems may be approaching tipping points. There are already established causal links and significant economic implications for society – for example the costs of nitrate pollution in Britany in France – as well as directly for farmers, who, for certain vegetable crops or rapeseed have to compensate for declining productivity resulting from lack of pollinators by using other inputs. Against this backdrop, panelists wondered why this message is not getting across as strongly in policy.

Speakers suggested that the next reform of the CAP should promote a rebalancing of economic, environmental and social priorities. The aim will be to incentivise farmers to seek on their farm the best possible balance between the protection of natural resources, climate change objectives (which sometimes conflicts with other environmental outcomes), and the pursuit of a fair level of income. Social benefits should naturally emerge from this better balanced outcome, such as enhanced dynamism in rural areas and importantly, making agriculture more attractive to future generations.

An interesting further session compared structural change in farming in the United States and in the EU. Notwithstanding the much smaller number of, on average much larger, farms in the USA there were surprising similarities in the overall lessons of structural change in farming on both sides of the Atlantic. Family farming dominated both, even amongst the largest farms. All sizes of farms can be profitable, although there is great variability in profitability within all size classes. There is a marked shift to larger and more complex business structures as farmers discover the many ways of dealing with the low-margins in agricultural production. These include: combining into multi-farm firms; diversifying income sources to the farming family; hiring services out or in; and adding more value on-farm, i.e. vertically integrating in the food chain.

Some legislation and some mechanisms under the current CAP already are offering incentives which reward those farmers and land users seeking to deliver a more balanced set of public and private goods. The greening of direct payments, a number of rural development measures, the Nitrates Directive and the Directive on the Sustainable use of pesticides all – to a greater or lesser degree – should lead farmers to think about the best way to achieve economic viability while mitigating damage, protecting and/or enhancing the environment.

But the situation presented at the Outlook conference showed that so far the joining up of economic and environmental thinking has not been coherent or forceful enough. The setting of the conference itself revealed some dichotomy in the discussions held between two days. Climate, the environment and sustainability were high on the agenda on Day 1 in strong contrast with the second day focused on sectoral outlooks and farm income, where environmental or climate commitments often felt somewhat distant considerations. More than ever the next CAP reform needs to treat those themes jointly rather than in isolation.

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PUBLICATION DATE

15 Dec 2016

AUTHOR

Anne Maréchal; Allan Buckwell