Strategic dialogue report

The final report of the Strategic Dialogue on the Future of EU Agriculture is now available: https://agriculture.ec.europa.eu/common-agricultural-policy/cap-overview/main-initiatives-strategic-dialogue-future-eu-agriculture_en#strategic-dialogue-report

'There is consensus among members of the Strategic Dialogue that economic, environmental and social sustainability in the agri-food sector can reinforce each other, especially when supported by coherent policy measures.'   One can but hope for the latter.

“Business as usual, be it economic, social or environmental, is not an option,” said the report.. “Bold and swift action at all levels is needed” to tackle the “multiple crises” affecting farmers, including increased impacts from extreme weather such as drought, from inflation and from low-cost global competitors.

Among other proposals of the report are schemes to encourage consumers to cut their meat intake, including through tax incentives and labelling, and to help farmers move away from livestock farming, including a controversial suggestion to introduce voluntary buyout schemes for farms in areas with high levels of intensive animal farming.

The most significant recommendation is a major overhaul of the EU’s CAP subsidy scheme, which was first launched in 1962 and consumes a third of the bloc’s multiannual budget. Instead of allocating direct support to farmers according to the amount of land they own and linking that to mandatory environmental standards, the report recommends that subsidies should go to “the active farmers who need it most” based on their “economic viability”.

The report proposes that farmers receive incentives within the CAP to green their practices, as well as from a “Just Transition Fund” that is outside the CAP budget and is dedicated to longer-term changes such as converting farms to “regenerative” or organic methods. There should also be a loan package of up to €3bn from the European Investment Bank that prioritises young farmers.

The continuing power of the farm lobby

Behind the scenes the agricultural lobby is a sprawling, complex machine with vast financial resources, deep political connections and a sophisticated network of legal and public relations experts, argues the Financial Times in a Big Read analysis. “The farm lobby has been one of the most successful lobbies in Europe in terms of relentlessly getting what they want over a very long time,” says Ariel Brunner, Europe director of non-governmental organisation BirdLife International.  Industry groups spend between €9.35mn and €11.54mn a year lobbying Brussels alone, according to a recent report by the Changing Markets Foundation, another NGO.

Food systems are responsible for between 21 and 37 per cent of greenhouse gas emissions depending on what is included, according to the Intergovernmental Panel on Climate Change. Over half of those emissions come from animal faming alone. Yet agriculture remains one of the last sectors in developed countries still to face binding limits on its carbon emissions. It is one of the few industries not covered in the EU’s emissions trading system, although proposals are under discussion.

The regular meetings between Copa-Cogeca, the umbrella body for farming unions and co-operative bodies across the EU, and the bloc’s officials show that the reach of the agribusiness lobby has been “institutionalised”, says BirdLife’s Brunner. Patrick Pagani, acting secretary-general of Copa-Cogeca, counters that lobbying is normal practice and “transparent” because the body publishes videos of its presidents’ main points.

Farmers in Europe say they are being strangled with red tape at a time when many are struggling with rising input costs following the Covid-19 pandemic and the war in Ukraine, which inflated energy and fertiliser prices. The EU’s Green Deal climate law, drafted in 2019, set out proposals to cut pesticide use and improve food systems, as well as reduce emissions from industrial-scale farms.

In the EU, lobby groups are already staking out positions ahead of the next major revision of the Common Agricultural Policy, which will take effect in 2028. The present iteration has been criticised by farmers for its attempts to tie payments to better environmental performance and cuts to pesticide usage. Following widespread protests, European Commission president Ursula von der Leyen has pledged that the next CAP will be “targeted” and find “the right balance between incentives, investments and regulation”.

Who benefits?

Research suggests that big farms and landowners reap far greater benefits from subsidy packages than small-scale growers, even though the latter are often the public face of lobbying efforts.

That has led to some tensions within the sector.  It has been suggested that the agricultural lobby “hijacked” the spring protests and put the emphasis on deregulation, which served the interest of the biggest industrial farms and agribusinesses, when the main concern of ordinary farmers was insufficient incomes.

FNSEA, France’s largest farming lobby has been accused of having ‘ no interest in securing income for farmers” but “a huge interest” in driving pesticide usage, because FNSEA is headed by Arnaud Rousseau, chair of agro-industrial company Avril.  At the EU level, Marion Picot, secretary-general of CEJA, the bloc’s main body for young farmers, says its members often feel drowned out by more dominant voices in Copa-Cogeca. “We are trying to make sure that young farmers are visible in other farming groups.”

In farm policy, it often seems that benefits go to those already doing well.

Alan Matthews sets out his views on the future of EU agripolicy in the light of the European Parliament elections here: https://www.europenowjournal.org/2024/08/15/thinking-the-future-of-agrifood-policy-in-light-of-the-eu-parliament-elections/

CAP deal looks like business as usual

After months of difficult negotiations, a compromise was agreed on the next phase of the Common Agricultural Policy, but inevitably not everyone is happy, not least in France: https://www.euractiv.com/section/agriculture-food/news/france-still-has-mixed-feelings-over-compromise-cap-deal/

The new five year framework starts on 1 January 2023.  Direct payments to active farmers will account for 70 per cent or €192bn of the budget which still amounts to over a third of the overall EU budget.  However, at least 25 per cent of this support should be spent on eco schemes such as organic farming or integrated pest management.   Worthy those these schemes may be, do they represent any kind of strategy for tackling agriculture's contribution to climate change?

There is also a €450m a year reserve to bail out farmers in times of market crisis.  This is a substantial sum and it will be interesting to see how it will be triggered.

For all the bells and whistles such as member states being able to impose caps and reductions on direct payments to larger farms, this does look very much like a 'business as usual' settlement despite claims of a fairer, greener and simpler CAP: https://ec.europa.eu/commission/presscorner/detail/en/IP_21_2711.  Farm organisations have given it a lukewarm reception which suggests that it is not all that bad for their members.

Farmers in Britain are concerned that their competitors will continue to receive direct payments just as they are phased out in the UK.  Their continental counterparts will not be exposed to trade deals that facilitate cheap imports.

The CAP and farming resilience

What contribution does the CAP make to farming resilience? An in depth report on the subject: Resilience Assessment

The resilience of farms and farm systems has become more of a concern in agricultural policy-making. In recent years, European farming systems have generally experienced more pronounced and overlapping challenges: on the one hand, a build-up of shocks such as more frequent extreme weather events, increased price volatility on liberalised markets or unpredictable political interventions to trade policies.

These are accompanied by significant long-term stresses, such as changing consumer preferences, climate change, rural outmigration or the lack of skilled labour. The accumulation of these overlapping environmental, economic, social and institutional challenges could render many farming systems in Europe vulnerable and threaten their functions, i.e. the production of food and fibre as well as the provision of public goods.

The analysis reveals that the CAP and its national implementations do enhance the resilience of most farming systems in the case studies. However, there is a clear bias towards a robustness-cum-adaptability orientation. The main reason for this is that the bulk of resources go into payments that provide buffer resources for farms and enable the continuation of otherwise less profitable business models, thereby stabilising the status quo.

Fewer resources are funnelled into measures that enhance adaptability; this occurs mostly through rural development programs and in some cases producer organisations. An open question is whether the relatively ample support for robustness creates disincentives for adaptation or transformation and therefore impedes these other resilience dimensions.

The need for resilience

Participants in the panel on Brexit and agriculture

The Agricultural Economics Society conference in Dublin in the earlier part of this week attracted a number of interesting presentations and a speech by EU agriculture commissioner Phil Hogan.

One point that he made was that any free trade agreement with the UK would have to cover food standards, food quality, food safety, animal welfare and environmental issue. The aquis wold have to be imported into a FTA. The UK could not be used as a backdoor mechanism for inferior goods.

One theme that emerged from the conference was the need for farmers to show 'resilience' in the face of changing conditions and uncertain circumstances. However, that may not be a quality they all have.

One poster presentation by Niall O'Leary investigated the personality traits of farmers. It showed that 'independence' was the most common trait, in the sense of 'I'll do it my way.'

Agricultural economist Alan Swinbank said that high tariffs were a relic of a 1980s CAP when there was a fear that imports would undermine the intervention price. If one lowered tariffs to ten per cent that would still give more protection than enjoyed by other sectors.

There was considerable discussion of ecosystem services, although I was still left uncertain about how this concept could be operationalised. In policy terms it was seen as a means of challenging the 'agriculture first' element in policy. The objective would be to promote the total social value of rural land resources.

It was uncertain whether we had identified all ecosystem services. How could a balance be achieved between marketed and non-marketed services? There was the question of trade offs between different ecosystem services. Local environmental governance organisations (LEGOs) could be a mechanism for coordination at a local level.

Thinking about the unthinkable

Fifty years ago saw the start of the Cuban missile crisis. It was a frightening time if you were fifteen years old, as I was, and whatever else one says about Jack Kennedy, one has to admire the way he managed the crisis and resisted the calls of the hawks for early military action. Now it's all old history and it was announced today that two of the Cold War missile sites have been given listed status.

Nuclear war strategy was referred to then as 'thinking about the unthinkable'. Perhaps we also now need to start thinking about another kind of unthinkable, Britain leaving the European Union and what sort of domestic agricultural policy might replace the CAP. Whatever one thinks of British membership of the EU, few would mourn leaving the CAP, but British farmers would be worried about what would take its place. No doubt some contingency thinking is already being undertaken.

My hunch is that if there was a straight yes-no choice, the majority of British voters (although perhaps not in Scotland) would vote to leave. There is some evidence to support this. Peter Kellner of YouGov has written an interesting contribution on underlying attitudes for the LSE European Politics blog: Kellner

In essence the message is that there are three attitude clusters in the electorate in terms of attitudes to the outside world and only one of those could be largely relied on to vote in favour. Kellner thinks that fear would shape a lot of decisions. Of course, that could be fear of the consequences of staying in or fear of the consequences of leaving. Much would depend on the campaign.

Of course, we may never get to a yes-no vote. Dave Cameron does not like the EU, but he does not want to withdraw. His favoured scenario is to 'renegotiate' after the next election when the Conservatives might have an overall majority. He would then put the renegotiated deal to the electorate. Harold Wilson took the stance of 'no entry on Tory terms' before the 1975 referendum and got a few goodies out of the EU, but essentially we stayed in on the terms agreed by Ted Heath. Dave would probably get some concessions out of the EU, but they would fall short of what Eurosceptics wanted.

Hence some Eurosceptics are calling for a yes-no referendum at the time of the next election. Conservatives are worried about a UKIP victory in the 2014 European Parliament elections, a more than likely scenario, and then losing votes to them in the following general election.

How this will all play out depends on a wide range of different factors affecting Conservative Party politics. If Labour wins, there is a different scenario (although if they were dependent on Lib Dem support, there would be another one again). Ed Miliband always jumps on any bandwagon that comes along, although usually what he does is call for a public inquiry rather than a referendum. There wouldn't be any judges left to staff the courts if all his requests were granted. However, Miliband could promise some sort of referendum, although its timing and nature would probably be left vague.

Anyway, the point is that Britain leaving the EU is a sufficiently serious possibility to start thinking what we would do then and that is what I plan to do over the next few months, starting with the nature of agricultural policy betweeen the end of the Second World War and our accession to the EU.

Amid the wreckage

Alexander Stubb, Finland's EU affairs minister, is quoted in the Financial Times as saying. 'The worry I have in the whole European debate - and we have seen it in the French presidential elections, we see it in the Netherlands, we have also seen it in Finland - is that some fundamentals of European integration are under attack. They include Schengen, the ECB, the euro, the internal market and trade policy. And you know, if we take them away, what's left?

The short and unfortunate answer is the Common Agricultural Policy which still dominates the EU's budget. There is a certain irony in the possibility that among the wreckage of European policies, the CAP would be left standing. Arguably it is the most dysfunctional of the EU's policies.

Stubb, by the way, is a self-confessed EU nerd. Intrigued by his English-sounding name, I found that he went to high school in Daytona Beach, Florida, took his first degree in the States and has a PhD from LSE. Read more here: Stubb