Why would this be the time to overturn the strategy for CAP reform?

Those of us with long memories of CAP reforms know that there can be many dramas, dead ends and diversions along the way. Nonetheless, there has been a discernible direction of travel for two decades or more. It has been towards clearer and more relevant objectives, efforts to reduce major market distortions and a strategy to link public money more to the supply of public goods. Agricultural support has been at the heart of the policy but wider societal needs and expectations have gained more prominence. It has been a widely understood form of modernisation, compromised though it may be.

Now, however, the leaked versions of the draft legislative proposals for the next CAP and the surrounding rumours suggest that the Commission is ready to more or less abandon the public goods strand of this strategy. Is this a rather perverse by-product of a preoccupation with the New Delivery Model or really the intention? Commissioner Hogan for example has been amongst those underlining that climate and environmental pressures linked to farming in Europe require a much higher level of environmental ambition in the future CAP. The draft texts suggest quite other priorities and a significant step backwards from the machinery of the current CAP. The gap between expressed intentions and mechanisms proposed is so large as to be alarming.

To bring the policy back into alignment with the public goods trajectory and to allow contributions to be made to international commitments – such as the SDGs, Paris Agreement and the Biodiversity Convention – at least four steps could be taken without reopening the fundamental architecture of the proposals.

First, secure sufficient funding for environmental measures in Pillar 1. The principle of linking 30% of Pillar 1 income support to the fulfilment of public goods in the 2013 reform sent an important signal that all farmers in receipt of direct payments should contribute to environmental delivery beyond basic and statutory requirements. Removing that link puts the entire strategy of mainstreaming public good delivery based on results into question. To build on the proposed ‘enhanced conditionality’ and to address the lessons learned in the implementation of “greening”, the proposed eco-scheme must be a mandatory part of all Member State CAP strategic plans and represent a significant part of the EAGF envelope (at least 30%). This is even more necessary in light of the recent budgetary proposals (MFF) and the considerably enhanced risk for environmental delivery within the whole CAP arising from the proposed disproportionate cuts in Pillar 2 and increased national co financing rates.

Second, sharpen the specific objectives that will be used for setting targets and monitoring progress by Member States under the New Delivery Model. The proposed new delivery model is a potentially bold move to ensure that all streams of agricultural support are fully utilised to achieve environmental, economic and social sustainability in a coherent and locally tailored way. However, to be effective in addressing the significant sustainability challenges facing rural areas and society more broadly, CAP “specific objectives” must be sufficiently concrete and measurable for quantified milestones and targets to be established in Member States’ CAP plans. Without this, it will be difficult for the Commission to assess Member States’ performance properly. This is more than a detail – none of the proposed CAP specific objectives in the current proposals are framed in a results-oriented manner. Moreover, it is unclear how key objectives and targets related to air, climate, water, soil and biodiversity (many set out in EU environmental and climate legislation and policies) will be specified separately. Maintaining this stance would be a step backwards in comparison with existing Pillar 2 priorities.

Third, give Member States greater flexibility to transfer funds from Pillar 1 for environmental spending in Pillar 2. Whilst the obligation on Member States to run agri-environment schemes within their Pillar 2 programmes continues, (at the same level as now, i.e. 30%), proposed cuts to the Pillar in real terms risk undermining investments in so called ‘dark green’ measures in many Member States, especially those with limited resources. There is therefore a serious risk that the Commission’s declared intention to increase the CAP’s environment and climate and ambition will not materialise. Unfortunately, suggestions that the hole in Pillar 2 funding will be filled by higher contributions from national expenditure do not seem very realistic in many cases, particularly in central, eastern and southern Europe. Member States must therefore be given the flexibility to transfer as much as they need from the Pillar 1 envelope into Pillar 2 to safeguard and increase investments in more advanced and site specific environmental and climate measures. These transfers should remain 100% EU financed in Pillar 2.

Fourth, funding for Areas facing Natural Constraints should be under Pillar 1, not Pillar 2. Payments to support the continuation of farming in areas of natural constraints (ANCs), remain an important area for public intervention. Given the proposed cuts in Pillar 2 funding and the increased national co financing rates, there is a high risk that many Member States will feel obliged to maintain ANC funding and be forced to reduce expenditure on more targeted agri-environment measures to pay for it. To avoid this, and to improve the sustainability of the future CAP, ANC support should instead be offered under Pillar 1 in the form of a direct payment top-up. Then Pillar 2 funding for the environment can primarily target more environmentally targeted measures.

The full debate on the next CAP still lies ahead. But reversing progress towards public good provision and the spirit of Cork from the very outset would, to say the least, be a regrettable start. It is difficult to see how the Commission could propose this as part of a “budget focused on results”.

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16 May 2018


David Baldock, Allan Buckwell