Series | What will come from the CAP Strategic Plan Negotiations?

 

Europa Building by Samynandpartners CC BY-SA 4.0

While the next CAP reform is still in discussion at the Council, and the European Parliament has not yet taken a final position, Samuel Féret explains the rationale of the new concept of CAP Strategic Plans for a future CAP as proposed by the European Commission. This is intended as a pivotal piece of the future new delivery model, probably the biggest proposed change in how the CAP is set to operate in the future. This is the second in a five part article series on what happens next for the CAP.

In this second part Samuel Féret comes back to the work started to amend the European Commission proposal. This relates to  what is intended to be the main CAP regulation which would define what are called the CAP Strategic Plans, and the analysis here focuses on both the Council and by the European Parliament. Feret focuses on ongoing talks at the Council: where do the Council talks stand now? What has emerged so far on the SPs? Where did the former European Parliament’s agriculture committee (Com Agri) stand on the Strategic Plans? What are the main differences between the com AGRI and com ENVI positions and can they be aligned? After the European elections, will the new Com Agri continue the work of the old committee and how could it do that? How might the relationship between the two institutions play out?

Series | Where Next for CAP – Can Strategic Plans Deliver?

Background

One year ago, first reactions on the strategic plans regulation (SPR) were either skeptical or negative at the Council and EP levels. Both expressed either fear or rejection of any form of re-nationalisation of the CAP. Indeed, any kind of re-nationalisation would lead to an unequal playing field within the EU in which divergent national preferences would be exacerbated, losing the “common” approach of the Common Agricultural Policy. Such fears are partly unfounded as the agricultural playing field is already uneven among the 27+1 MS taking part. It’s not all because of the CAP, but because of other reasons.

First, the CAP direct payments are still paid by the EU at 100% on average and the EC proposal did not plan to substitute all EU resources by national and regional contributions. Even though last year the budget Commissioner Oettinger did put some co-funding options for CAP expenditure in the MFF proposal, a majority of Member States having signed the “Madrid memorandum” is likely to oppose them. Secondly, the 2013 CAP reform already introduced a wide range of flexibilities for adjusting the implementation of direct payments (speed and rate of internal convergence, rate and speed of redistributive payments, optional coupled payments, exemptions and derogations to green measures, optional payment for areas under natural constraints, rate for the young farmers’ top up, optional small farmers scheme). So in fact the policy already was ‘à la carte’ from the 2003 CAP reform implemented in 2005 including various internal convergence options.

Thirdly, those rural development programmes whose design and implementation are already left to national and regional managing authorities already have a similar approach to the CAP strategic plans: from SWOT analysis, identification of needs, consultation of stakeholders to  evaluation and monitoring. Since their inception in 1999, these Pillar 2 measures can be tailored to national and regional needs, with additional funding provided at those levels.

The Council has Started to Discuss Impacts of the New Delivery Model

Obviously Brexit remains the political priority of the heads of states, with or without a deal between the UK and the EU. The first thing that policy makers considered about the post-Brexit CAP relate to the MFF. Will the next MFF budget allow a comfortable operating space for the future CAP? That’s the key unresolved question that slows down the discussions in every CAP reform.

In expectation of such delays, agricultural ministers have entered into very technical details regarding sunk their teeth into the Strategic Plans regulation proposal. And it’s amazing to see the level of detail discussed: web-streamed sessions of the Council show Agriculture ministers have already started to discuss how the CAP strategic plans would be implemented, without knowing either the consequences of Brexit on the EU agricultural sector, nor the agricultural expenditure granted to each Member State.

It creates the feeling that CAP talks at this level have been somehow “de-politicised”. Indeed the real big political battle about the future CAP will be on the MFF   – while the talks in Council seem to have been downgraded to a process of translating the CAP into a manual for each national user.

Of course some agriculture ministers –from the big players like Spain, France or Poland – remind their peers in each Council session that the new MFF should not reduce the ambition of the reformed CAP. Or in the words of the French minister Guillaume at the July session of the Council, in order to meet societal expectations and reach a greater environmental ambition for the CAP, the current level of CAP expenditures must be maintained.

Almost all Member states have gone along with  the new delivery model, but they fear that if they perform badly and do not deliver what they promised in their national strategy, their pillar 1 envelopes would be cut. National administrations fear of clearance of accounts (the audit of the CAP by the European Commission’s DG AGRI) in countries where management of EU funds is already poor. The agriculture ministers have entered a long tunnel of uncertainties, where the entrance is the MFF’s CAP expenditure and national envelopes, and where the exit will be results-based payments depending on the achievements of the strategic plans.

Even if a majority of Member states support the new delivery model, they believe there’s still room for improvement and simplification. Agriculture ministers are concerned about the way the new delivery model will operate in practice for their national administration and paying agencies. When the European Commission told them that under the new delivery model, they’d move from compliance to performance, some asked why according to the proposed “horizontal” CAP regulation of finance, management and monitoring, they were being asked to do both?

Agriculture ministers have constantly asked for clarity and predictability for farmers, but cannot do more than urge political caution, as nobody knows the future MFF and its share dedicated to the CAP.

Member States fear they will be overburdened with red tape incurred by the strategic plans regulation. Some national delegations warned Commissioner Hogan that too much information will be required, claiming it would be more than is required on rural development programmes today. In such a context, many agriculture ministers have asked for the streamlining of requirements on design, monitoring and the evaluation system, including:

  •  Relaxing the evaluation and monitoring tasks, including a performance review every two years and not every year, having 7 years milestones instead of annual ones and to reduce the number of indicators for each specific CAP objective 
  • Increasing the tolerance margins in case of poor performance so to avoid the risk of losing money at national level
  • Having more flexibility to decide unit amounts for financial allocations at national level

Looking for a New Green Architecture

Even starting from a rather streamlined proposal, the new green architecture of the CAP –from conditionality to the agri-environmental and climate schemes in second pillar and the eco-schemes in between- has already been challenged by the Council. The European Commission is worried, as many Member States started to water down the proposal for an enhanced conditionality. In an internal working paper amending the CAP strategic plan regulation, the Council presidency is proposing that standards for conditionality shall be designed  by Member states alongside other interventions to be chosen by them. In fact, this would mean that common conditionality standards would be substituted by national standards, with predictable differences among Member states and race to the bottom among EU farmers.

Your National Ag Minister is Killing an Environmental CAP

Many MS oppose any reinforcement of conditionality and rather prefer to stick to the current cross compliance plus a shift of greening measures to conditionality. In detail, that means that they oppose or are divided on following GAECs: crop rotation, nutrient accountability, not leaving bare soils during sensitive periods and farmland devoted to non-productive features for landscape and biodiversity.

Despite the German minister Klöckner telling colleagues on the 15th July that the green architecture is extremely important for the acceptance of the CAP among the general public / tax payers, the green architecture seems to be again on shaky foundations. Despite the need for subsidies to deliver more on environment to keep with the green box of the WTO, note that traditionally, Member States and farmers unions somehow prefer a blank cheque. They  don’t like any constraints at all, even if it is basic good farming practice that makes agronomic sense. They they rather prefer financial incentives in the eco-scheme, without any mandatory conditionality or ring-fencing. Critics have noted that delivering performance reporting every two years undermines the new delivery model of performance based payments. To use an analogy,   an ocean going tanker trying to change direction takes a long time. For farmers identifying a missed target, notifying it, then agreeing a remedy and implementing that would easily take half a programming period, while actually reaching the target might never happen.

Member States are also divided regarding the eco-scheme in pillar 1. Few support the idea of a mandatory regime at national level but it being optional for the farmers. Many would prefer optionality on the national level. Eco-schemes intend to support annual incentive payments for transitioning to sustainable practices and possible lump sums awarded for organic farming, permanent grasslands, conservation agriculture and certification schemes, among others. But without any agreement on the MFF and on a solid green architecture, it’s too early for national administrations and cabinets to advise agriculture ministers to move from assumptions towards decisions.

Agreement on a partial general approach was not achieved by the end of the Romanian presidency. On 15 July the Finnish presidency said it was also not its objective to reach one by the end of December 2019. There’s still a lot of work ahead on the strategic plans regulation, with many details still to clarify.

The European Parliament warned against CAP re-nationalisation

Comagri adopted the report drafted by Esther Herranz Garcia (EPP, ES) on 2nd May. As this report had not been voted by the plenary because of the European elections coming just after this vote, the EP still has no official position nor mandate to negotiate with the Council.

As usual in previous similar cases on CAP, the draft report has generated a large number of amendments, following a ‘shopping list’ syndrome, so as not not to forget anything for future agriculture and rural development, that had been missed out of the Commission’s “everything goes unless otherwise specified” drafting approach for a less prescriptive, less common new delivery model. Therefore the Herranz Garcia report warned against any attempt to re-nationalise the policy. This defence of the commonalities of the CAP – the C of the CAP – is a very commendable intention but MEPs have been accused of being afraid to lose influence on future policy.

In a nutshell, the main proposals of the Comagri report on the strategic plans regulation were:

  • To relax the threshold of capping and degressivity of direct payments, from €60,000 proposed by the Commission to €100,000 (note – this passed by just two votes!)
  • To speed-up and reach full internal convergence: Member States shall ensure that, by claim year 2024 at the latest, all payment entitlements have a value of at least 75% of the average planned unit amount for the basic income support, and full 100% convergence by 2026
  • To delay the implementation of the CAP strategic plans regulation by one year until 2022 to allow more time to Member States to prepare them
  • To ring-fence 2% of direct payments for young farmer’s (as today) and an increase up to €100,000 for their setting-up and their rural business start-ups in pillar 2
  • To ensure equality between men and women and integrate the gender dimension into the strategic plans’ preparation and implementation
  • To set a minimum 20% of pillar 1 national envelope for the eco-schemes, while enlarging their scope to include  animal welfare
  • To limit the transfer of funds from pillar 2 to pillar 1 to 5% and not the 15% proposed by the EC; this 5% must go to eco-schemes. However Croatia, Poland, Hungary and Slovakia, may transfer up to 15% while still respecting the 5% for eco-schemes.
  • To increase co-funding rates for pillar 2 several rural development measures that boost competitiveness, with no increases for environmental or community schemes
  • To pay more attention to groups of farmers, to high natural value farming, to agroforestry, to precision farming and to protect herds against predators, amongst others

The newly elected Com Agri might have a different opinion on this report and on the strategic plans regulation. Com Agri has new members and a new leadership, under Norbert Lins (EPP, DE) as the new chairman. Vice-chairs, a largely symbolic role, are Francisco Guerreiro (Greens, PT), Daniel Buda (EPP, RO), Mazaly Aguilar (ECR, SP, from the extreme right Vox), and Elsi Kaitanen (RE, FI).

A quick look at Mr Lins’ CV on the Parliament portal indicates he’s not a farmer and has no track-record in the agricultural sector while having served in the former Com Envi. He was a shadow rapporteur in the long running organic regulation negotiations. However, there are some experienced CAP negotiators: former Com Agri chairman Paolo de Castro (S&D, IT) will meet former agriculture commissioner Dacian Ciolos (RE, RO) in this committee. Ciolos did not take any position in Com Agri but chairs the Renew Europe party (old ALDE group) so sits at the conference of EP presidents. As a reminder, former EPP leaders/negotiators from ComAgri such Albert Dess and Michel Dantin have left the Parliament.

Where is the political center of gravity on CAP talks?

The Council is ahead of the Parliament, as the pace of work on the Strategic Plans regulation has differed between both institutions. The Council started to work on CSP early in June 2018 under the Bulgarian presidency, has proceeded under the Austrian and Romanian presidencies and will continue under the Finnish one. Almost 13 months of work has been carried out by the Council, representing at least 41 meetings at working party level and 23 SCAs (special committees on agriculture) between June 2018 and June 2019.

One major change in this new CAP proposal is that the concept of CAP strategic plans gives more power to Member States and therefore to national administrations. As a result, it could arguably reduce the influence of the EP on the negotiation of the CAP strategic plans, as in the end it won’t be the EP who will have to implement the CAP strategic plans, but rather the Agriculture ministers will be accountable.

Moreover, the pace of work on the CAP strategic plans regulation is still uneven between both institutions. As the CAP files were falling under the vague “unfinished business” rule for reports not reaching a plenary vote in the old EP, the newly elected EP has to decide what to do with the Herranz Garcia report on the strategic plans regulation. They have just decided to resume work rather than start amending the original commission proposal from the very beginning, but are still to decide exactly how they will do that: how to open up the report voted in the old parliament’s ComAgri? How to rework new compromises and in what sections of the text? And how to involve the new members of the new Com Agri, of which a staggering 70% are either entirely new to the EP or new to the committee how do these MEPs take political ownership of the highly contentious file? Meanwhile, three Council presidencies have had the CAP strategic plans regulation on their agenda so far. The MS will drive the talks forward while the EP will be trailing behind, simply because the users matter more (EP is a co-legislator but not a co-implementer of the CAP).

The political influence of the EP on the CAP strategic plans proposal is very low in the Herranz Garcia report: almost all improvements focus on direct payment-related items but not on the governance of strategic plans themselves, which remains very much as originally defined in the Commission original, except for delaying its implementation. Defending the “Common” of the CAP is a great intention but without any plenary vote, it is a poor value proposal so far.

This Comagri report did not put forward extra proposals to improve significantly the approach, the concept and the design of strategic plans.  Com Agri intentions were legitimate but because of the end of the EP term, the intrinsic national character of the strategic plans and perhaps a weaker leadership, the EP rapporteur could not –or did not want to – deliver a stronger signal on CAP strategic plans regulation  to the Council beyond fears of re-nationalisation.

Without any doubt, in such a context the centre of gravity of talks about CAP after 2020 tips towards the Council. This is not new but once again, it will be the MS and not the EP that will implement strategic plans.

Of course, many uncertainties remain ahead. As it was already the case during the 2013 negotiations, talks on the future CAP will move and accelerate once the MFF deal is achieved. Barely four months separated both political agreements back in 2013.

What new priorities will the next European Commission put on the table in relation to the CAP? Could the intention to look at a sustainable farm and food policy impact the CAP objectives and the development of the strategic plans model? These are possible. Stronger ambitions from the new European Commission  could arise especially on:

i) climate;

ii) pesticides and therefore biodiversity;

iii) use of antibiotics and animal welfare, as shown by the leak on draft working  priorities of next  European Commission  but also on

iv) a new protein strategy after the devastating, massive fires clearing habitat in the Brazilian rainforests and savannas.

To what extent will the newly elected MEPs review the report voted in Com Agri in May? ComAgri will first need to manage legal issues in order to re-open the voted report, so to add specific improvements.

Will the next MFF reduce the CAP expenditures and if yes, to what extent for both pillars? If there’s a big drop in CAP budget, a leaner CAP structure and less ambitious green architecture can be expected.

Will the implementation of CAP strategic plans regulation be delayed? Probably yes, with a one year delay as happened pre 2014. The departing Commissioner Hogan stated the European Commission will prepare a transitional regulation for guaranteeing continuity of direct payments for farmers in 2021; the first of two such transitional regulations is already prepared and must be signed into law by the co-legislators by 31 December 2019 to ensure continued payment for outstanding rural development work carried out by farmers and rural communities, with a second due to be finalised by summer 2020.

Perfect logical rationality is not achievable in many complex real world settings and the CAP seems to be a good example. An asynchronous work rate between EU institutions and equation with multiple unknowns obviously slow down the negotiation talks. The real world moves us away from rationality and some problems cannot be solved optimally.

To follow next: part 3 | what drivers might influence the CAP Strategic Plans’ design?