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Groupe de Bruges
Dilemmas of CAP reformcompetitiveness and public goods,
can farmers deliver both? 8th April 2011
The CAP and Public GoodsA view from land managers
Allan BuckwellPolicy Director
Agricultural competitiveness and land-based public goods
• The economic and policy context
– Agricultural commodity market context
– European fiscal austerity
– The size and allocation of the EU budget for the MFF 2014-2020
– Trade liberalisation: Doha and Mercosur
– Undersupply of environmental goods
Implications?
– Less for what the market rewards; more for the market failures• Higher market returns = less
justified income support, & more need and more cost for environmental delivery
– Social equity, between• Member States, • CAP Pillars, • Arable vs livestock• Favoured vs less favoured• Europe’s marginal farmers
The story of 20th Century commodity prices
real non-energy commodity prices, 2000 =100
80
120
160
200
240
280
320
360
4001900
1904
1908
1912
1916
1920
1924
1928
1932
1936
1940
1944
1948
1952
1956
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
2000
2004
2008
2012
2016
2020
Source: World Bank, April 2009
1917
1951 (post war rebuilding)
1974 (first oil crisis)
2008
forecast
… and UK Foresight projections of commodity prices by 2050…
Equity – between Member States?
The CAP towards 2020• The Commission’s three objectives
– Viable food production– Sustainable management of natural
resources and climate action– Balanced territorial development:
avoiding land abandonment, dealing with the 5.5m semi-subsistence farmers
• The two key proposals:• Commission – Ciolos, bolstered by the
three Commissioners 11th March letter • Parliament – Dess
• Council failed to find consensus • The debate is still open
Commission’s Option 1
• Pure financial redistribution
Option 2 Greening Pillar 1• Basic decoupled direct payment: uniform per Ha
in each MS/Region; keeping entitlements and cross compliance, plus ceilings – adjusted for labour
• A mandatory greening component, – Non-contractual annual payments, perm
pasture, green cover, rotation, ecological set-aside, enhanced cross compliance and N2K
• Additional income support to all farmers in areas with specific natural constraints as area-based payments, to complement P2 action in LFAs
• Plus specific small farmer scheme + limited voluntary coupled supports
• Better definition and targeting to Active Farmers
Option 3, European Parliament rapporteur
Albert Dess’s ideas• Pillar 1 remains but smaller (?)
– Greening of P1 via conditionality to P2– Maintaining production capacity, GAEC.
• Pillar 2 expands; resource protection role– Conditionality: obligatory participation in
2 priority programmes in P2 (to get DP)– Co-financing reduced – Pillar 2 resource protection beyond XC.– Mentions: erosion, permanent pasture,
ecological strips, rotation, CO2 sequestration, organic farming, new green technology’ innovation
Comparison of Ciolos and Dess• Similarities:
– Two pillar CAP, more compulsory low-level greening– Reference to WFD, Climate Change and N2K– Restrict support to active farmers– Greening = crop rotation, green cover, EPA and PP
• Differences:• Ciolos Dess
– Greens P1 (thinly) Conditionally greens P1 in P2 + organic, erosion, CO2, Green
technology and innovation – No more P2 resource ? Expands P2 resource– Annual non-contractual Multi-annual, contractual,
M&E– New XC controls Existing controls in P2– LFA top-up in P1 Existing LFA payments in P2 – Payment ceilings No payment ceilings– No mention of Co-fin.Reduce Co-financing in P2
• Political assessment– Legitimises pillar 1? Undermines Pillar 1?– Poor delivery of PGs? Stronger delivery of PGs?
Other contentious issues
• How countries/farmers who are signed-up for existing agri-environment will fit in?
• If Ciolos or Dess proposals go through, existing schemes will have to adapt
• Ceilings on support: scale and adjustment
• Narrower definition of “Active Farmer” ?
• Are we doing more for the Less Favoured Areas?
• What is happening to Co-financing?
• Few new ideas on Rural Development
Other competitiveness issues
• Dealing with volatility– Maintain minimal safety net intervention– Sarkozy: control of speculation; restricting
export bans; more open info on stocks– Commission: Canadian Income
Stabilisation scheme, MS voluntary in P2
• Fairer conditions in the food supply chain– Changes in competition law– Codes of conduct
• Much talk about R&D and skills but no new actions mentioned
• Simplification – especially control & penalties
Where is this leading?
• The task is more complex than 1999 0r 2004:
– 27 MS, co-decision, budget pressure,
– lack of consensus on the key problems; especially the key question of this conference.
• Less strong leadership
• The momentum is with the Commission unless the EP provides a strong clear steer.
• Commission proposals autumn (four new regulations: CMO, DPs, RDR, Finance)
• The timetable looks like slipping.
Likely outcomes
• The CAP has to grasp competitiveness and public goods; with more resource to the latter.
• The CAP will be smaller for the next period, still two pillars, with even less clear functional distinction
• With some redistribution of supports between MS and farmers.
• More low-level greening over most of the territory
• Some simplification of administrative procedures; but not as seen by farmers
• Farmers will be asked to jump through more hoops to get what support remains.
Contact details
Allan BuckwellTel + 44 (0) 20 74 60 79 [email protected]
www.cla.org.uk
CLA16 Belgrave SquareLondon SW1X 8PQ