Out of the box thinking on the CAP

A Task Force brought together by the RISE Foundation presented preliminary ideas for the next round of modernisation of the CAP at an Intergroup meeting in the Europe Parliament on Tuesday 10th January 2017. The RISE Foundation was set up by Franz Fischler and is currently chaired by ex EU Commissioner for the Environment Janez Potocnik. The meeting was entitled "CAP - Out of the box thinking" and was hosted by Karl Heinz Florence who is President of the Intergroup on Biodiversity, Hunting and the Countryside.

Janez Potocnik introduced the meeting by providing the context for this new thinking. This is the need for all economic sectors, which must of course include food and agriculture, to adjust to incorporate the Sustainable Development Goals including, not least, those on halting climate change and its damaging effects. The message is that further tinkering with agricultural support systems is insufficient; more fundamental change in attitudes, behaviour and policy are required.

This message was hammered home for the specific case of the Common Agricultural Policy in a presentation by Prof Alan Matthews. He focussed particularly on the Pillar 1 direct payments which account for over 70% of CAP payments (and nearly 30% of the EU budget), and concluded they are ineffective, inefficient and inequitable. They do not serve well the purpose of income support of those most needy, food security, efficiency of resource use, nor the delivery of rural environmental services or moving to more sustainable agriculture. The conclusion was they should be replaced by targeted assistance to help farmers face specific challenges or provide specific public goods. This should be done by replacing the concept of entitlements with contracts for services.

The Task Force identified that the two principal aspects of the CAP requiring attention are land management and risk management. These were the subject of specific presentations by David Baldock (IEEP) and Prof Erik Mathijs (University of Leuven) respectively. Implicitly, the other main aspects of the CAP for Rural Development, including skills, knowledge exchange, farm product marketing, rural economic diversification, and rural infrastructure were less in need of radical over-haul.

Baldock’s presentation on land management showed that current environmental standards are not being met, and unless agriculture’s GHG emissions can be further cut it will be exposed as contributing steadily more of total EU emissions. Key points to remedy this situation included: the need to set clear strategic targets for farming so that farmers can better appreciate the task that confronts them; to clarify the trade-off in reaching a low carbon strategy whilst also paying attention to soils, water quality and biodiversity conservation targets. It was stressed that this cannot be achieved by the CAP alone, but general regulation, plus advice, training R&D and institutional development are needed, and a significant part of the action must be contributed by the private sector. The CAP itself should be transformed to achieve this. Baldock argued that increased targeting of the right measures, in a programmed, multi-annual approach is required. But he put great emphasis on the need to develop a new culture with more attuned modes of delivery emphasising engagement of the parties rather than heavy controls, inspections and sanctions. This suggested a quite different, more integrated, tiered structure of supports for base-level performance, for the marginal areas such as areas of natural constraints, for specific farming systems, and at the highest level where specific management is required. He closed by emphasising that this work cannot be achieved by the CAP alone and that the right long-term objective should be to internalise the environmental costs of farming into food prices so that it better signals socially aware consumption patterns too. This will not be achieved without the active engagement of the private food processing and retailing sectors.

Erik Mathijs’s presentation on risk management started by arguing that the goal must be to replace the present system in the CAP of partial market orientation supplemented by direct payments with full market orientation (for market goods) plus a much more holistically conceived safety net system. The present system has too many distorting elements which are inhibiting farmers from better mitigating the risks they face. Mathijs explained that risks will be far better managed if the full range of options available to farmers are brought to bear: using spot and futures markets, better specified contracts with buyers, improving relations with buyers, taking equity downstream, towards fuller vertical integration. He demonstrated that different instruments are appropriate for catastrophic risk versus market risk versus normal business risk, and these in turn are best approached (respectively) at policy, market and farm level. A key consideration is that other policy instruments should not inhibit or ‘crowd-out’ the deployment of this range of measures, and at present the existence of substantial direct payments is doing just this and therefore restricting the use of the full canvas of risk mitigation measures. The prescriptions which emerge from Mathijs’s analysis are that risk prevention demands appropriate technology, information systems and training; risk mitigation requires private risk management measures some of which would benefit from administrative support; and risk coping might justify a suitably structured and financed income stabilisation tool.

This was as far as the analysis has reached. The proceedings were drawn together by some ideas presented by Prof. Allan Buckwell who wondered if the kind of reforms being discussed were achievable within the current EU decision structures and procedures. In particular, one of the ideas he floated was that more radical proposals might be more discussable if they were initiated by the joint inputs of several DGs within the Commission and then negotiated by joint agri and environmental Parliament Committees and Councils. This would enable each DG, Committee and Council to defend their natural constituency but within an integrated procedure better allowing trade-offs to be explored and settled.

There were lively reactions and comments from several MEPs to these ideas and the audience. Farmers’ organisations are highly nervous of the implications of this analysis; much more should be done to explain and balance these proposals. Perhaps not many of these ideas were entirely new, but they certainly aimed to stretch the box of possible trajectories for the CAP a bit wider! The final report of this project will be presented on 27 March 2017.

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16 Jan 2017


Allan Buckwell