By Sebastian Lakner & Guy Pe’er
Drawing on their work with 22 scientists in analysing CAP, Sebastian Lakner & Guy Pe’er question the effectiveness of the current CAP’s performance, as well as the lack of ambition in the CAP communication.
Since 1992 the Common Agricultural Policy of the EU (CAP) has gone through a series of reforms, scheduled usually in parallel to the seven-year round of the EU financial framework. The Council and EU Parliament decided on the last CAP-reform in December 2013, that the next financial framework will start in 2021 – meaning that, with little public attention, the EU Commission and the Member States (SM) have already started the preparation of the next CAP-reform. On November 29, 2017; the EU Commission launched a Communication Document “The Future of Food and Farming”, which has already been discussed on the Arc 2020-website (see the contribution of Martin Häusling or the Arc2020 analysis of the Hogan paper and the reactions of stakeholders). On 19.02.2018, the Council officially discussed the Commission paper during its regular meeting.
Last year, a group of 22 agricultural scientists from different disciplines published a “Fitness-Check of the CAP Report”, investigating based on nearly 500 publications whether the CAP fulfils it’s objective and contributes to the UN’s Sustainable Development Goals (SDGs). The assessment study was led by Dr. Guy Pe’er (iDiv and the UFZ, Leipzig) and Dr. Sebastian Lakner (University Göttingen), asking whether the CAP is effective and efficient, whether it is coherent internally (between CAP measures) and externally (with other policies), whether the CAP contributes to the EU added value and whether it is relevant for citizens and farmers (for Methods see here). Despite some positive elements, the overall results indicated, quite strongly, that the CAP is not fit for purpose in many respects.
With the results of the Fitness-Check in mind, we took an in-depth look into the Communication Document of the Commission. Our analysis indicates that the Communication Document is not ambitious enough to launch a substantial CAP-reform process, which would be necessary to address the future challenges. It is insufficient in describing reality and reflecting on the main sources of criticism on the CAP, neither does it communicate a will for an ambitious CAP-reform.
We believe that our criticism is important for citizens and tax-payers to know. Here is a selection of our findings – the longer version of which is available here (Comments on “The Future of Food and Farming” (EN)):
1) The performance of CAP is not portrayed correctly
The EU Commission mentions at various points in the paper some important challenges of the future CAP, giving a good impression at a first glance. One can read about “sustainability”, “care about natural resources of soil, water air and biodiversity” and “climate change”, which indeed relate to key challenges for the future of farming from a scientific point of view. However, the Commissions also claims to be already successful in those areas, something which we can’t confirm based on the literature. Our fitness-check report shows poor performance of the CAP on the topics environment and biodiversity, and extremely poor performance on climate change where almost nothing is done. Environmental measures are generally ineffective and inefficient, and there is little coherence in these areas within the CAP and also with other environmental policies like the Birds and Habitat-Directive.
From our perspective, the Commission claims for successes where the CAP is actually weakest. Critical findings from science are not sufficiently reflected by the Document. For instance, there is a small remark in the communication stating that environmental performance is reduced by bureaucracy. This is an oversimplification of a much larger problem, serving the political purpose of pushing toward simplification, but not addressing the many failures that result primarily from lack of ambition, lack of investment and lack of clear targets and measures.
The EU commission even concludes – seemingly based on the claimed successes in sustainability and environment – that direct payments are also necessary in the future CAP to secure those successes and public goods – whereas if anything, direct payments are the one measure contributing least to this objective.
2) The communication is led by a ‘business as usual model’
Within the text, the term “continue” appears twelve times, the word maintain another three times. This forms the impression that the CAP in its current form is fit for purpose and can be maintained largely as is. The same message resonates also through Phil Hogan’s speech on 30.1.2018. This is where the document clearly departs from the solid ground of evidence and facts. It has been shown repeatedly, that direct payments are (inefficient) income-transfer and have nothing to do with public goods. Even with Greening, most of the greening brings no significant results, e.g., 75% of ecological focus area are ineffective for biodiversity, and crop diversification does not require diversity – to name just some examples.
3) The Commission fails to consider reducing or fading out direct payments
The largest part of the CAP remains the direct payments (DP), taking 68% of the CAP’s budget. This instrument, supposedly aiming for income support, has been criticized for decades now for being inefficient even towards its own aims. The Commission has not defined any clear target for this type of subsidies: We still miss a sufficient argument, why we need special agricultural income policy parallel to the general social and income policies; and if so, where is the evidence that DP is the right instrument for that?
The Commission again uses the same inappropriate indicators to seemingly prove the necessity of income transfers. Specifically, In the Communication Document we see (again) the known figure showing the difference between farm incomes and the incomes in other sectors. This, however, is based only on farm incomes. While other social and income policies are based on the “household income”, in the context of the CAP the Commission ignores other income sources of the farmer, the income of partners, assets, and living costs which, put altogether, would portray a very different picture than the Commission may desire. Yet, by presenting this figure, it can be argued that the Commission may b ,to an extent, deceiving the public? Besides this, direct payments are passed on to land owners – in some rental contract direct payments are even explicitly mentioned. So public money doesn’t always support farmers, but rather land owners who are not necessarily farmers at all. These problems are anything but new, however, the Commission fails to address them. There are a number of arguments, for altering, reducing or even totally fading out direct payments. Even a potential first step, a substantial cut of DPs in Western Europe is not mentioned in the paper. This view is also shared by many other scientists working on the CAP, and reflected in various documents which the Commission has chosen to ignore.
4) Flexibilities are not necessarily subsidiarity and might even water down the CAP
The commission proposes a result-based CAP, where the member states take responsibility: Commission and the national governments agree upon a number of targets, which are summarized in strategy plans. The commission claims that more competences for member states would involve more subsidiarity within the CAP. Subsidiarity means that policies are decided on the appropriate level (i.e. regional, national or European), where their main impacts can be found. In general, more real subsidiarity could improve the efficiency of the CAP. The theory of Wallace Oates shows that with heterogeneous preferences fiscal subsidiarity efficiency of policies can be improved. However, analyzing the communication document, it remains completely unclear how such a policy design works and whether it is really oriented on the principal of subsidiarity.
The interesting detail is that we can already observe similar instruments in the second pillar: The plans for rural development are designed by the member states or the regions, the EU Commission has to agree to these plans, there are evaluations and if a MS doesn’t reach the target, the EU can (theoretically) cut spending. However, reality shows that policies are not always efficient, the evaluations are often poor since many required indicators (like “hectares of a measure” or “farmers participating”) do not reflect the quality of a program, and resulting from this, member states can easily both fail the real targets AND avoid fiscal penalties. Flexibilities as a solution gives little reason to be very optimistic, especially if examining how flexible elements installed in the last CAP-reform 2013 have been used by MS to water down measures like Greening or redistribution of direct payments.
It is hard to believe that a target-oriented policy would function for both pillars, if it doesn’t deliver even in pillar two. Flexibilities are not automatically more subsidiarity. On a conference on the next CAP-reform one week ago in Loccum, Northern Germany, the representative of the German federal Ministry for Food and Agriculture was asked what kind of indicators they would think of. The answer was mostly vague and the only concrete statement he wanted to give was “hectares of a measures, like in Greening”. The commission should think carefully whether this “new flexibility” will really improve the CAP. Given the past experience, we would be quite skeptical. The only outcome of such a policy could be that the Commission could always point at the member states, when it comes to criticism on the CAP. Given such a scenario and outcome, why do we need the CAP at the EU level at all?
5) Conclusion: the Commission is missing ambition for the next CAP-reform
Our conclusion from the communication paper so far is that the Commissions does not sufficiently address the main challenges and is missing ambition to take a substantial reform for the CAP post 2020. Our fitness-check offers a very strong indication that a substantial reform is necessary not only to improve the CAP but also its image CAP as an “old tanker”. At the conference in Loccum, there was also broad agreement among scientists and experts, that an ambitious CAP-reform is necessary.
We have to admit that the circumstances are not easy for a serious reform, but this was true as well in 2013. This time it is Brexit that is looming, with the implication of a lower overall EU budget. Financial Commissioner Günter Oettinger is thinking about how to close the gap, and the CAP is clearly a good target. However, the idea of having more redistribution is far from an improvement. If it failed in the previous reform, and even led to critics by OECD, WTO and others, why should it work now? And, what’s new?
In addition, there are a number of conflicts on the future of the European Union itself. A number of East-European countries are in conflict with the Commission, Germany and France: The Polish and Hungarian government have a different agenda not only in the refugee crisis and in those countries, legal standards and the free press are under fire. Besides Poland and Hungary, a number of Eastern European countries might expect from the CAP-reform that the levels of direct payments are even increased. This might be the reason why the Commission seems to tend to maintain the direct payments to avoid tearing the CAP completely apart, but at the end, it is taxpayers and the public who pay the bill for this type of bargaining – instead of taking the bulk of knowledge and evidence, and making the efforts to deliver a REAL improvement.
But circumstances in the EU do not get better over time and are no excuse for missing ambition. And if the Commission can’t find arguments as to why we need a CAP at the EU level, finance ministers will use the CAP to cut the budget. So it’s time to get more ambitious. With an evidence-based policy reform, the commission could show that the European Union is able to reform one of its large policies and increase efficiency of spending taxpayers money. Game-changer in this could be the German and French government and especially the members of “En march” in the newly elected EU parliament in 2019. However, to find reform-oriented partners, the Commission has to get more ambitious and to sharpen the policy within the official legal proposal for the CAP-reform, foreseen in Summer 2018.
Analysis: The Future of food and farming in Europe: Is the EU heading towards a real improvement of the CAP?, iDiv and UFZ; Leipzig
Fitness Check: Pe’er, G., S. Lakner, et al. (2017): Is the CAP Fit for purpose? An evidence-based fitness-check assessment, Report, published by iDiv Leipzig, Birdlife Brussels and NABU Berlin.
Communication document: EU Commission (2017): The future of Food and Farming, Brussels
Dr. Sebastian Lakner, Research Associate at the Chair for Agricultural Policy at the Georg-August University Göttingen.
Guy Pe’er is a conservation biologist working at the German Centre for Integrative Biodiversity Research (iDiv) Halle-Leipzig-Jena and the Helmholtz Centre for Environmental Research – UFZ in Leipzig, Germany.
The above article is based on the Fitness Check Report by a group of 22 scientists. This is report is available here on the website of the German Centre for Integrative Biodiversity Research.