EU 'can show global leadership' with CAP reform
by Dacian Ciolos
20 April 2012
Reforms to the common agricultural policy can put sustainability at the heart of farming – but implementing change will not be easy in an enlarged European Union and in a period of financial restraint, writes EU agriculture commissioner
The European Union's common agriculture policy is 50 years old this year. First established in the wake of the Second World War in the context of food shortages and the threat of rural depopulation, the policy has been at the centre of European integration. The CAP has been through a number of difficult phases, but it has always continued to evolve.
Through successive reforms over the last 20 years, the structural surpluses – grain mountains and milk lakes – that were synonymous with the policy in the 1980s have been overcome, and we now have a much fitter, more market-oriented agriculture sector in the EU. However, new challenges are emerging, and it is time for a further step in the evolution of the EU's oldest common policy.
In October 2011, the European Commission published legislative proposals to establish the rules for the CAP in the period from 2014 to 2020. The proposals fit into the political calendar linked to establishing the overall EU budget for the period after 2013, but the role of this public policy is more important than ever before – and this reform is crucial for bringing the policy closer to wider society to show that the CAP is not just for farmers.
I want to use the reform to establish a new balance through a genuine partnership between society as a whole, which provides financial resources through a public policy, and farmers, who keep rural areas alive, are in contact with the ecosystems and produce the food we eat. In short, this should be a topic that interests everybody.
Perhaps the first thing to mention is that this policy reform is probably more difficult than any previous ones, for three main reasons. Firstly, this is the first truly big reform of the CAP with 27 member states – and all the additional complexities that this brings, relative to 'just' 15 member states at the time of the 2003 reform. Secondly, this is the first CAP reform that involves full co-decision with the European Parliament. In the past, EU agriculture ministers were only obliged to take note of the opinions adopted by the parliament. Since the entry into force of the Lisbon Treaty, the parliament has the same status as the Council – and we will therefore have a strong MEP presence when it comes to the final end-game negotiations.
Thirdly, and this is perhaps the biggest shadow that hangs over the reform, this is just one part of a broader debate on EU spending. So while ministers of agriculture and MEPs will decide on the nuts and bolts of the reform, the level of ambition will depend on what finance ministers and heads of government decide about the budget.
These factors are important to bear in mind because they have had a major influence on how the commission prepared the reform proposals. The commission presented a communication on the future CAP in November 2010 – which was discussed by ministers, MEPs and other EU institutions, and formed part of a public consultation. However, in preparation for the November 2010 communication, we held a very broad public debate on a series of very fundamental questions that sought to identify the main objectives that our common EU policy should have in the future, which culminated in a major conference in July 2010.
The result of this extensive consultation highlighted broad support that the CAP should have three main goals. The first is to address the challenge of food security – to ensure that it is safeguarded by the competitiveness of all European farming. Secondly, it should help maintain our natural resources, to lay down the foundations for long-term competitiveness that is both environmentally and economically sustainable. Finally, the CAP needs to maintain the territorial balance in rural areas to ensure that agriculture flourishes throughout Europe.
In addition to this, in the context of the wider political priorities of the so-called Europe 2020 strategy, I was particularly keen to highlight the broader benefits that the CAP can have for society, such as boosting jobs and growth, encouraging research and innovation, and fighting climate change. Our only problem since then has been designing a politically realistic policy blueprint that achieves these aims.
There are 11 key points necessary for the future CAP First, better targeted income support to stimulate growth and employment. To improve the agricultural potential of the EU, we are proposing to support farmers' income in a fairer, better targeted and simpler manner. Basic income support will cover only active farmers, and will be degressive from €150,000 per holding and capped beyond €300,000, taking into account the number of jobs created. It will also be distributed more equitably between farmers, regions and member states.
Second, crisis management tools that are more responsive and better suited to meet new economic challenges. Price volatility is a threat to the long-term competitiveness of the agricultural sector. In addition to maintaining traditional safety nets, the commission is proposing to look at more effective and responsive options, such as the support we provided last summer in the wake of the fresh vegetables E.coli scare in Germany. We will also promote the creation of insurance and mutual funds.
Third, a greening payment for preserving long-term productivity and ecosystems. To strengthen the environmental sustainability of agriculture and enhance the efforts of farmers, I am proposing to spend 30 per cent of direct payments specifically for the improved use of natural resources. These measures – crop diversification, maintenance of permanent pasture, and the preservation of environmental reservoirs and landscapes – are practical, simple to implement and will have a genuine ecological effect, if we get every farmer to make that additional effort.
Next: additional investment in research and innovation. To produce not only more with less, but also better products, the commission is proposing to double the budget for agricultural research and innovation, including through a new European Innovation Partnership. These funds will support research projects that are relevant to farmers; encourage closer cooperation between scientists and farmers, as well as faster transfer of positive results from the laboratory to the field; and provide better information and advice to farmers.
Fifth, a more competitive and balanced food chain. Agriculture plays a critical role as the first step in the food supply chain, but the sector is highly fragmented and unstructured, and its added value is not recognised. To strengthen the farmers' position, I am proposing to support producer organisations, and develop inter-professional organisations and direct sales between producers and consumers. Sugar quotas, which have lost their relevance, will not be extended beyond 2015.
Also: encouraging agri-environmental initiatives. The specificities of each territory should be taken into account and environmental initiatives will be encouraged at national, regional and local levels. For this, we are proposing rural development policy priorities for restoring, preserving and enhancing ecosystems, and for resource efficiency and the fight against climate change. These will be designed by the member states in order to take account of local specificities.
Seventh, facilitating the establishment of young farmers. Two-thirds of farmers are over 55 years old. To help the younger generations to get involved in the agricultural sector, I am proposing to create a higher rate of support to farmers under 40 years of age during the first five years of their project, in addition to installation aid in order to ease the financial burden that they must take on in order to enter the sector.
Next, stimulating rural employment and entrepreneurship. To promote employment and entrepreneurship, the commission is proposing a series of measures to stimulate economic activity in rural areas and encourage local development initiatives. For example, a starter kit will be created to support micro-enterprise projects, with funding up to €70,000 over five years. The Liaison Entre Actions de Développement de l'Économie Rurale local action groups will also be strengthened.
Ninth, better addressing fragile areas. To prevent desertification and preserve the richness of our land, the commission is providing an opportunity for member states to offer additional support to farmers in areas with natural handicaps. This is in addition to other aid already available under the rural development policy.
Tenth, a simpler and more efficient CAP. To avoid unnecessary administrative burdens, the commission is proposing to simplify several administrative mechanisms of the CAP, including the rules of conditionality and control systems, without losing efficiency. Moreover, aid to small farmers will also be simplified. For the latter, a flat rate of €500 to €1,000 per farm per year will be created. At present, roughly 30% of EU farms claiming CAP support are three hectares or less – yet they account for just 3% of the agricultural area. The change should considerably reduce the administrative burden for member states. We will also encourage the sale of land by small farmers who are ceasing their agricultural activity to other farmers who are willing to restructure their farms.
And finally, EU leadership on sustainable competitiveness. If we look at European agriculture in recent years, there have been significant gains in yields and productivity – however, this has come at a price. People often forget how much the pressure on our natural resources has increased in recent years. Within the EU, roughly 40% of agricultural land is vulnerable to nitrate pollution, threatening water resources, and 45% of European soils face problems of soil quality. If we fail to address this, then there is a longer-term threat to our food production potential in Europe. Whatever anybody says about the level of public spending on the CAP, if we do not address the question of sustainability now, then it will be considerably more expensive after 2020.
At the recent International Forum at the Berlin Green Week, I participated in a debate with agriculture ministers from all five continents. The discussion highlighted very clearly that agriculture in all parts of the world is facing this fundamental challenge of having to producing more to match rising demand, while also having to produce more sustainably in order to ensure that land remains productive not just for the next five to 10 years, but for at least the next 50 to 60 years.
Each region of the world has slightly different challenges, but regional agriculture policies remain an important way of addressing the issues relevant for that region. With our reform, I believe that the EU can show leadership to the rest of the world by setting a clear signal on the importance of embracing sustainability into the very heart of farm policy.
Dacian Ciolos is European Commissioner for Agriculture and Rural Development. This article was first published in PublicServiceEurope.com's sister publication Public Service Review: European Union
The European Union's common agriculture policy is 50 years old this year. First established in the wake of the Second World War in the context of food shortages and the threat of rural depopulation, the policy has been at the centre of European integration. The CAP has been through a number of difficult phases, but it has always continued to evolve.
Through successive reforms over the last 20 years, the structural surpluses – grain mountains and milk lakes – that were synonymous with the policy in the 1980s have been overcome, and we now have a much fitter, more market-oriented agriculture sector in the EU. However, new challenges are emerging, and it is time for a further step in the evolution of the EU's oldest common policy.
In October 2011, the European Commission published legislative proposals to establish the rules for the CAP in the period from 2014 to 2020. The proposals fit into the political calendar linked to establishing the overall EU budget for the period after 2013, but the role of this public policy is more important than ever before – and this reform is crucial for bringing the policy closer to wider society to show that the CAP is not just for farmers.
I want to use the reform to establish a new balance through a genuine partnership between society as a whole, which provides financial resources through a public policy, and farmers, who keep rural areas alive, are in contact with the ecosystems and produce the food we eat. In short, this should be a topic that interests everybody.
Perhaps the first thing to mention is that this policy reform is probably more difficult than any previous ones, for three main reasons. Firstly, this is the first truly big reform of the CAP with 27 member states – and all the additional complexities that this brings, relative to 'just' 15 member states at the time of the 2003 reform. Secondly, this is the first CAP reform that involves full co-decision with the European Parliament. In the past, EU agriculture ministers were only obliged to take note of the opinions adopted by the parliament. Since the entry into force of the Lisbon Treaty, the parliament has the same status as the Council – and we will therefore have a strong MEP presence when it comes to the final end-game negotiations.
Thirdly, and this is perhaps the biggest shadow that hangs over the reform, this is just one part of a broader debate on EU spending. So while ministers of agriculture and MEPs will decide on the nuts and bolts of the reform, the level of ambition will depend on what finance ministers and heads of government decide about the budget.
These factors are important to bear in mind because they have had a major influence on how the commission prepared the reform proposals. The commission presented a communication on the future CAP in November 2010 – which was discussed by ministers, MEPs and other EU institutions, and formed part of a public consultation. However, in preparation for the November 2010 communication, we held a very broad public debate on a series of very fundamental questions that sought to identify the main objectives that our common EU policy should have in the future, which culminated in a major conference in July 2010.
The result of this extensive consultation highlighted broad support that the CAP should have three main goals. The first is to address the challenge of food security – to ensure that it is safeguarded by the competitiveness of all European farming. Secondly, it should help maintain our natural resources, to lay down the foundations for long-term competitiveness that is both environmentally and economically sustainable. Finally, the CAP needs to maintain the territorial balance in rural areas to ensure that agriculture flourishes throughout Europe.
In addition to this, in the context of the wider political priorities of the so-called Europe 2020 strategy, I was particularly keen to highlight the broader benefits that the CAP can have for society, such as boosting jobs and growth, encouraging research and innovation, and fighting climate change. Our only problem since then has been designing a politically realistic policy blueprint that achieves these aims.
There are 11 key points necessary for the future CAP First, better targeted income support to stimulate growth and employment. To improve the agricultural potential of the EU, we are proposing to support farmers' income in a fairer, better targeted and simpler manner. Basic income support will cover only active farmers, and will be degressive from €150,000 per holding and capped beyond €300,000, taking into account the number of jobs created. It will also be distributed more equitably between farmers, regions and member states.
Second, crisis management tools that are more responsive and better suited to meet new economic challenges. Price volatility is a threat to the long-term competitiveness of the agricultural sector. In addition to maintaining traditional safety nets, the commission is proposing to look at more effective and responsive options, such as the support we provided last summer in the wake of the fresh vegetables E.coli scare in Germany. We will also promote the creation of insurance and mutual funds.
Third, a greening payment for preserving long-term productivity and ecosystems. To strengthen the environmental sustainability of agriculture and enhance the efforts of farmers, I am proposing to spend 30 per cent of direct payments specifically for the improved use of natural resources. These measures – crop diversification, maintenance of permanent pasture, and the preservation of environmental reservoirs and landscapes – are practical, simple to implement and will have a genuine ecological effect, if we get every farmer to make that additional effort.
Next: additional investment in research and innovation. To produce not only more with less, but also better products, the commission is proposing to double the budget for agricultural research and innovation, including through a new European Innovation Partnership. These funds will support research projects that are relevant to farmers; encourage closer cooperation between scientists and farmers, as well as faster transfer of positive results from the laboratory to the field; and provide better information and advice to farmers.
Fifth, a more competitive and balanced food chain. Agriculture plays a critical role as the first step in the food supply chain, but the sector is highly fragmented and unstructured, and its added value is not recognised. To strengthen the farmers' position, I am proposing to support producer organisations, and develop inter-professional organisations and direct sales between producers and consumers. Sugar quotas, which have lost their relevance, will not be extended beyond 2015.
Also: encouraging agri-environmental initiatives. The specificities of each territory should be taken into account and environmental initiatives will be encouraged at national, regional and local levels. For this, we are proposing rural development policy priorities for restoring, preserving and enhancing ecosystems, and for resource efficiency and the fight against climate change. These will be designed by the member states in order to take account of local specificities.
Seventh, facilitating the establishment of young farmers. Two-thirds of farmers are over 55 years old. To help the younger generations to get involved in the agricultural sector, I am proposing to create a higher rate of support to farmers under 40 years of age during the first five years of their project, in addition to installation aid in order to ease the financial burden that they must take on in order to enter the sector.
Next, stimulating rural employment and entrepreneurship. To promote employment and entrepreneurship, the commission is proposing a series of measures to stimulate economic activity in rural areas and encourage local development initiatives. For example, a starter kit will be created to support micro-enterprise projects, with funding up to €70,000 over five years. The Liaison Entre Actions de Développement de l'Économie Rurale local action groups will also be strengthened.
Ninth, better addressing fragile areas. To prevent desertification and preserve the richness of our land, the commission is providing an opportunity for member states to offer additional support to farmers in areas with natural handicaps. This is in addition to other aid already available under the rural development policy.
Tenth, a simpler and more efficient CAP. To avoid unnecessary administrative burdens, the commission is proposing to simplify several administrative mechanisms of the CAP, including the rules of conditionality and control systems, without losing efficiency. Moreover, aid to small farmers will also be simplified. For the latter, a flat rate of €500 to €1,000 per farm per year will be created. At present, roughly 30% of EU farms claiming CAP support are three hectares or less – yet they account for just 3% of the agricultural area. The change should considerably reduce the administrative burden for member states. We will also encourage the sale of land by small farmers who are ceasing their agricultural activity to other farmers who are willing to restructure their farms.
And finally, EU leadership on sustainable competitiveness. If we look at European agriculture in recent years, there have been significant gains in yields and productivity – however, this has come at a price. People often forget how much the pressure on our natural resources has increased in recent years. Within the EU, roughly 40% of agricultural land is vulnerable to nitrate pollution, threatening water resources, and 45% of European soils face problems of soil quality. If we fail to address this, then there is a longer-term threat to our food production potential in Europe. Whatever anybody says about the level of public spending on the CAP, if we do not address the question of sustainability now, then it will be considerably more expensive after 2020.
At the recent International Forum at the Berlin Green Week, I participated in a debate with agriculture ministers from all five continents. The discussion highlighted very clearly that agriculture in all parts of the world is facing this fundamental challenge of having to producing more to match rising demand, while also having to produce more sustainably in order to ensure that land remains productive not just for the next five to 10 years, but for at least the next 50 to 60 years.
Each region of the world has slightly different challenges, but regional agriculture policies remain an important way of addressing the issues relevant for that region. With our reform, I believe that the EU can show leadership to the rest of the world by setting a clear signal on the importance of embracing sustainability into the very heart of farm policy.
Dacian Ciolos is European Commissioner for Agriculture and Rural Development. This article was first published in PublicServiceEurope.com's sister publication Public Service Review: European Union
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