Thursday, March 15, 2007

Three options for the future of the CAP

The chief economist of the CLA, Allan Buckwell, has been an academic and has worked for the Commission as well as for the landowners' organisation, so what he has to say on the future of the CAP is worth listening to.

He recently outlined three scenarios for the future of the CAP. The first was to defend the status quo and argue for the biggest possible ongoing payments to farmers based on their contribution towards enhancing the environment. He expected this to be the strategy adopted by COPA, the European farmers' organisation. But (and these are my words) it is well known that COPA is something of a political dinosaur that has lost the CAP plot. Environmental groups are not going to be taken in by a continuation of existing subsidies by other means.

A second option was to advocate a more integrated rural policy, with a much bigger share of aid devoted to correcting market failures to stimulate a more diversified rural economy. Buckwell was, of course, one of the architects of the EU's shift towards a rural policy, although it suffered a severe setback with the 2006 budget settlement which actually cut back Pillar 2 funding for rural development. Its success would also depend on profitable commodity prices and national governments matching EU contributions towards rural development.

A third option would be to ditch the CAP and create what Buckwell has provisionally entitled a European Food and Environment Security Policy. Its objective would be to enable the production of socially optimal quantities of high quality food, energy, biodiversity, landscape and so on.

The problem would be, who decides what is 'socially optimal'? If it's not the market, it's the government, influenced by the farm lobbies, and that is what got us where we are - which is not a good place to start from.

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