Friday, June 26, 2009

The debate on the post-2013 CAP

The debate on the future of the CAP after 2013 has now started following the informal Farm Council in the Czech Republic earlier this month. Those who want to influence the debate have about twelve months before the Commission publishes a Communication (effectively a White Paper) on future policy in the summer/early autumn of next year. Formal legislative proposals will then be published in the middle of 2011 together with the proposals for the financial perspectives from 2014 to 2019 or 2020.

At the Farm Council there was a surprisingly strong consensus on maintaining a strong 1st Pillar after 2013, principally in the form of Single Farm Payments (SFP). Britain sent a junior minister, Jane Kennedy, who has since resigned and she made a ritual reptition of the UK Government's position of wanting to phase out direct payments altogether. However, it is clear that this argument is going nowhere and that the French subsidisation discourse is back in the driving seat.

Justifications advanced for subsidy

What are the justifucations for continuing SFP? Are they an income support or are they there to support the provision of public goods? If the former, they are remarkably inefficient as most of the money goes to larger farmers. Commissioner Fischer Boel, however, made the argument that dairy farmers would be in even worse trouble without direct payments.

The Commission has estimated that 40 per cent of farms would disappear in some sectors if the CAP budget was stopped tomorrow - and farmer incomes would drop by more than two-thirds, from levels already below the EU average. No serious analyst is recommending withdrawing the budget overnight. We would rather not be here, but we do not start with a blank sheet of paper. However, objectives need to be clearly stated and prioritised and there needs to be a measureable link between objectives and policy instruments. In other words, no blanket subsidies that do not lead to demonstrable outcomes.

It is argued that the ovearching objective is to maintain farming across the EU, i.e., to avoid rural exodus and abandonment of the land. Leaving the land unfarmed would certainly have negative biodiversity impacts and also impair landscapes, affecting rural tourism. However, there needs to be more emphasis on the overall vigour of the rural economy, reducing its dependence on farming and ensuring that infrastructure such as broadband is in place everywhere.

A widely used argument at the Council was that the higher environmental, food safety, food quality, traceability, animal health and welfare standards that EU producers face in relation to non-EU producers cannot be rewarded by the market and therefore justify subsidies. There is certainly a case here, but the monitoring and enforcement of cross-compliace needs to be substantially improved if these subsidies are to be justified.

The food security argument was also raised and the difficulty with this is that it can become a portmanteau argument for 'business as usual', rather than taking a careful look at what might be required, for example, in terms of climate change adaptation.

Abandoning old forms of calculation

There was broad agreement that the historical reference base must be abandoned to legitimise payments after 2013. The adoption of a regional flat rate payment for all member states seems likely, although Finland is pressing for a differentiation between different types of farms, e.g., arable and livestock. Decoupling is also important, but Finland has argued in favour of coupling in sensitive regions where farming might otherwise stop.

Some are nore equal than others

Retiring European Parliament Agriculture Committee chaurman Neil Parish paraphased Orwell by stating that while all Member States are equal, some are more equal than others. New member states receive less than €200 per hectare in SFP compared with an EU average figure of just over €300. Greece receives more than €500 per hectare and Latvia barely €100.

However, French Minister Michel Barnier made it clear that 'equity was not the same as equality', arguing that a wide range of other criteria should be considered. Commissioner Fischer Boel made it clear that she thought that a flat rate payment across the EU was unrealistic.

Commissioner Fischer Boel has reserved her position about serving a second term as Farm Commissioner, but acknowledged that she would have to come to a decision in the near future.

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