Member states to do more on CAP, EU institutions less

Interesting blog post recommended by Professor Alan Matthews: https://capreform.eu/institutional-reform-will-shape-the-next-cap/

This authoritative post is well worth reading in its entirety.   The conclusion is: 'We can expect the trend already visible today to intensify, widening disparities between countries, resulting in very divergent emphases within the CAP, not always because of different structural needs, but because of different political priorities.  Meanwhile, the big questions, how the CAP contributes to climate and biodiversity, the future of livestock, the prospects for young and small/remote farmers, will remain only half-answered. Dissatisfaction will not vanish. The main difference is that Member States will now carry more responsibility for better policy and progress, while EU institutions bear a little less.'

The Commission's view of the CAP 'facts'

Professor Alan Matthews writes: 'The Commission has published a Fact Sheet on "The CAP post-2027" in the next EU budget' which includes, for the first time, an Annex showing how the minimum ring-fenced amount for CAP income support interventions will be allocated among Member States (this will eventually become Annex XVIII in the proposed NRPF Regulation). These minimum ring-fenced amounts per MS are based on their relative shares in the total CAP envelope for 2027. 

Farmers and commentators should not fall into the trap of comparing the current national Pillar 1 and Pillar 2 envelopes with these minimum amounts as countries are free to add additional resources from the non-ringfenced amount in the NRP Fund. The Commission also highlights that the budget proposal has higher mandatory minimum amounts of national contributions (co-financing) which, in its view, will create a larger financial volume for CAP support, though the precise impacts will depend on the relative shares of expenditure on interventions that require national contributions and those that do not. Overall, the total CAP budget in a Member State can go up or down (in nominal terms). The eventual amounts cannot be known until draft National Plans are submitted and approved, optimistically in 2027.'

Read what the Commission has to say: https://agriculture.ec.europa.eu/common-agricultural-policy/cap-overview/cap-post-2027-next-eu-budget_en#national-and-regional-partnership-plans

My personal view is that any formula is always subject to political bargaining which means that policy instruments become less attuned to their stated objectives.

National state aids on the up but hard to track

National aids to agriculture have increased, but they are difficult to track and more transparency is needed: http://capreform.eu/greater-transparency-needed-in-national-aids-to-agriculture/

Alan Matthews estimates that national state aids led to additional transfers of €9 billion to farmers.   He forecasts: 'It is likely that relying on Member States to provide national aids will continue to be a feature of future crises.'

He notes: 'This is an extremely murky area as, despite the obligations on Member States to report State aid and other aid to farmers, there is no central registry which keeps track of these amounts.'

Agricultural policy outside the EU

Whether or not the UK will leave the European Union remains to be seen, but it is a sufficiently serious prospect for it to be worth thinking about its implications for agricultural policy.

What one would probably have is a continuation of a version of the CAP at the national level. One of the constraints here is that the UK would still be a member of the World Trade Organisation and any agricultural subsidies it provided would have to be compatible with WTO rules. Indeed, it could be argued that recent changes to the CAP have been driven too much by the need to provide subsidies in a form that can demonstrate that they are compatible with the 'green box'/non-trade-distorting requirements of the WTO. Hence, the policy instruments may have been influenced too much by that requirement.

Within the discussion of the 'balance of competences' review of the CAP, one issue is how much 'renationalisation' there has been of the CAP. Certainly, there has been quite a considerable amount of recoupling which gives quite a lot of discretion to member states or their regional governments, but the basic principles of the CAP remain intact.

In any case, some would argue that the term 'renationalisation' is an inappropriate or old fashioned one. What has happened rather is the maintenance of a common policy design with national flexibility in policy implementation. Some argue that as the goals of the CAP have become more complicated, and in particular taken on a greater public goods/environmental emphasis, there has been a recasting of the form of the CAP (although it is possible to exaggerate the extent of this). What this requires is policy instruments that allow diversity of implementation in member states (but not to an extent that would satisfy Eurosceptics). It is, however, worth bearing in mind that a lot of policies affecting agriculture are nationally determined, particularly taxation and inheritance law and planning regulations.

It may be that the CAP can be characterised as a means of tackling the market failures associated with land management (but arguably a rather inefficient means of doing so). However, for some member states the occupation of land could be a key objective to prevent rural depopulation and secure the ecosystem benefits of farmed land.

One also comes up against the problem of a low level of competence in effective policy design and delivery. That is not a problem confined to the CAP, but is a general challenge for the EU and for member state governments, but it is particularly evident in relation to the CAP.