EP Report on the future CAP: a step in the right political direction

Today, the Agricultural committee of the European Parliament adopted the report prepared by MEP Herbert Dorfmann (IT, EPP) on the future of the Common Agricultural Policy. This report is a clear call for a strong common policy framework at EU level, aiming to « secure farmers’ income and more effectively meet the expectations of society as a whole ». The committee emphasizes the needs to secure the direct relation between the EU co-legislators and the beneficiaries – the farmers – and not transferring most of the first pillar management to the Member States.

Securing the direct link between the EU and its farmers, would address to a large extent the concerns expressed by Farm Europe following the presentation, in November 2017, of the Communication on the future of the CAP and the new delivery mechanism by the European Commission.

This would be the guarantee that all farmers are treated equally on the same market, even with an appropriate level of flexibility, for example with maybe different agronomic measures in the details, but with guarantees that these measures have an equal level of ambition to a EU baseline.

European agriculture is facing common challenges that could only be tackled effectively if Europe stands together, especially when it comes to environmental issues. Excess level of subsidiarity and flexibility, the fragmentation of the policy framework, together with a reduced level of ambition when it comes to the CAP budget, are all elements that could transform the EU agricultural market into a battlefield. Such a trend, which has been rejected by the agricultural committee, would only accelerate the on-going restructuration process of EU agriculture – meaning less farmers – and raise serious question marks on the capacity to deliver when it comes to reducing the environmental footprint of EU food systems.The MEPs adopted instead a balanced approach, calling for a « reasonable level of flexibility within a strong common framework of EU rules, basic standards, intervention tools, controls and financial allocations agreed at EU level by the co-legislator to guarantee a level playing field for farmers ».

Furthermore, Farm Europe welcomes the request of the MEPs to maintain the budget allocation of the CAP in constant prices – this is key to improve and achieve an in-depth revision of the EU policy framework toward a greater resilience of EU farms and enhanced sustainability as requested by the MEPs. Farm Europe is also pleased by COMAGRI’s call for “coherence and complementarity” between the two CAP pillars (Direct payment and Rural development), with a clear baseline of environmental measures in the 1st pillar – driving a common dynamic all across Europe – and tools to foster further green initiatives in the 2nd pillar.

Additionally, to cope with market uncertainty, the risk management toolbox should become a central feature in the next CAP, as rightly underlined by the agricultural committee. Nevertheless, this should not reduce the responsibility of EU institutions when it comes to crisis management. A strong and effective set of tools at EU level should be kept and strengthen with a proper financial reserve, in order to secure and intervene in case of major crisis such as the ones faced recently by the milk sector. This financial reserve should be able to: (i) strengthen and enhance the risk management toolbox, which was modernized recently via the CAP Omnibus regulation, (ii) trigger when appropriate innovative market measures such as the reduction scheme deployed in 2016 for the milk sector. Complementarity tools for sectorial programmes should be adopted in parallel for the sectors that are in need of new dynamics or facing specific challenges. And, last but not least, the capacity of market observatories should be developed even further in order to speed up policy decisions at EU level in case of serious market disturbance.

Such a common policy framework would offer a truly European added value, and set the foundations of a farming sector that is able to deliver environmental and economic performance.

The Commission proposes a drop of almost 15% of direct payments by 2027

Updated with final figures presented by the European Commission

The European Commission has presented, today, its proposals for the multiannual budget framework for the 2021-2027 period. This budget project lacks 43 billion (constant euros) in the Common Agricultural Policy (CAP) budget to maintain support for farmers at their current level, 27,4 for the first pillar (direct payments and market expenditures) and 16,2 for the second pillar (rural developpement).

This proposal, if accepted by the Member States and the European Parliament, would reduce the CAP budget by 11,7% over the next 7 years and be a decrease of 16% in 2027.

The impact on the direct payments would be considerable, with a shortfall for farmers of nearly 10% over the period, and about 15% in 2027. For the second pillar, this would be a 21% decrease over the period. The agricultural budget would thus not only assume the full CAP-Brexit bill (18.9 billion). But, in addition, it would contribute 24,2 billion euros to the deployment by the European Union of other policies.

In the end, the CAP would only represent 30.4% of the European budget.

Despite the ambitions displayed, the Commission has decided not to increase the overall scope of the Community budget by limiting the effort required to the Member States to 1.08% of GDP. On the other hand, the proposed cut for the Common Agricultural Policy is much more severe than that announced by the Commissioner for the Budget, Günther Oettinger during these various interventions.

8,15% drop in farmers income

In an uncertain political and economic context – where almost all agricultural sectors are in crisis – this proposal is very worrying for the future of European industries and the economic sustainability of many farms across the European Union.

According to Farm Europe’s simulations taking into account the share of direct payments in final farm income, the Commission’s budget proposal would have an immediate impact with a 8,15% drop in European farmers’ income in 2027, without changing parameters of the current CAP. The decline would reach 26,4% in Denmark and 13% in the Czech Republic – countries where the share of direct payments is the largest. In Germany and France, agricultural income would fall by around 6,5% in constant agricultural policy and by around 3,5% in Italy and Spain.

The equation proposed by the European Commission is deeply questioning the ability of the European agricultural sector to meet growing societal expectations. Even though the establishment of young farmers is a priority, the proposed guidelines would lead to an acceleration of the restructuring of the agricultural sector, particularly in the milk, field crops and beef sectors. This would lead to an expansion of the farms and a search for intensification.

In the context of rising societal demands and the need to invest to ensure the transition of agronomic systems towards more resilient models both economically and environmentally, the decline envisaged by the Commission appears untenable and is the relevance of the CAP reform guidelines presented last November.

At a time when some Member States might be tempted to find direct or indirect measures to compensate for the fall in the European budget, more than ever, the European Union should put in place a genuinely common policy, at European level, allowing to boost the competitiveness of European farms, their ability to invest and transform, avoiding any distortion of competition.

BREXIT: which impact on the CAP budget and on farm incomes?

Press Release  

Against the backdrop of the ongoing negotiations concerning the UK withdrawal from the European Union, the European Commission will present on May 2ndits Budget proposals for the period 2021-2027.

Farm Europe analyzed the financial consequences of the departure of the United Kingdom on the budget of the Common Agricultural Policy and on farm incomes.

The actual net cost of the UK departure from the EU is €2.7 billion per year in constant euros -5% of the CAP budget, and -6.5% if the entire decrease would be affected to the 1stpillar (direct aid).

With the current Common Agricultural Policy, the immediate impact on European average farm income would be significant. It would stand at at least -3.6%, and with considerable disparities among Member states and sectors:

–      6 Member States would face a decline bigger than 4.5%, including Slovakia and Denmark, which with decreases in average agricultural income of over 10% would be the most affected;

–      14 Member States would face decreases of between 2% and 3.5%;

These average rates of decline in farm incomes, however, mask the disparities between production sectors, with specific impacts, which are concentrated on field crops, meat and milk sectors, and therefore this means much larger decreases for these productions. These sectors, which are already quite weakened today, cannot be able to absorb such declines without major impact in terms of jobs.

Facing a fall in the CAP budget, representing 50% of the net deficit due to the UK withdrawal – an amount of 1.35 billion euro – would already be a challenge in itself, with an immediate impact on the average agricultural income of around 1.8%, again, concentrated on few sectors.

In this context, the challenge of the forthcoming reform of the CAP will be to both: secure its budget, and increase the efficiency of every euro invested in European agriculture, in order to revive the sector and heading it towards a positive, economic dynamic.

This new CAP will have to valorize economic efficiency combined with environmental efficiency, as a key objective. In other words, it means (i) putting the double performance of European agriculture at the core of the CAP, (ii) delivering efficiency for both European farmers and territories, and (iii) firmly rejecting too technocratic systems and projects which go against the European spirit and the European single market.

The full report is available at the following link:

http://www.farm-europe.eu/wp-content/uploads/2018/04/Financial-impact-of-Brexit-FINAL.pdf

Background:

Due to the relevant quantity of parameters to be taken into account, the study developed by Farm Europe was based on scenarios presented by the European Commission and by some Member States. This initial analysis gave rise to the thorough study of 9 different situations. The baseline data refer to the period 2010-2016, covering the specific patterns of expenditure related to the end and the beginning of the EU financial years.

The estimated cost of UK departure from the EU budget results from the following factors:

  • the loss of UK net contributions to European budgets (€6.6 billion from the EU budget, and €2.7 billion from the CAP budget; average 2010-16);
  • the loss of own resources from UK (customs duties collected on imports to the UK – €2.8 billion/year, average 2010-16), this loss being able to be compensated, at least partially, in the EU-UK negotiations, through a payment by the UK to access the EU27 single market;
  • the Commission proposal to finance 20% of the EU’s new priorities (defense, migration, youth mobility, etc.) from existing policies; an issue of €2.5 billion/year, of which €1.2 billion would be taken from the CAP budget);

Given these declines in EU resources and increase in budget needs, three scenarios were analyzed and presented:

  • to increase national contributions to the EU budget with the aim to maintain the level of CAP aid received by the Member States;
  • to reduce CAP expenditures by 2.55 billion €/yearin constant eurosto compensate for 50% of net deficit caused by the withdrawal of the UK from the CAP budget and to finance up to € 1.2 billion/year of new priorities (EC proposal);
  • to reduce CAP expenditures by the total net cost of the UK withdrawal from the CAP budget, i.e. € 2.7 billion/year in constant euros (5% of the total CAP budget, 6.5% of the 1stpillar budget).

The study also details the consequences of the scenarios analyzed on the average farm income of each of the 27 Member States, one by one. These consequences are, in fact, quite similar in the case of Scenarios 2 and 3.

Finally, it is relevant to note that any changes in the CAP budget must be evaluated in constant euros. This is the only credible position, which could ensure the financial value of commitments that policymakerswill take with respect to the economic sectors concerned. The decision to reduce the CAP budget by 5%, in current euros, corresponds in reality with a 20% decline of CAP aids budget in the next budget period, which would be strictly unsustainable.

Proteins and Renewable Energy: One and the same challenge

Press release – Brussels, 26th March 2018

Despite 30 years of efforts and no less than 5 “protein plans”, the European Union still suffers from a considerable chronic deficit in plant proteins: more than 30 million tonnes of soybean crops were imported during 2016-17. This figure comes under the spotlight in the analysis presented today, with a report entitled: Proteins and Renewable energy – One and the same challenge together with Farm Europe’s Protein Independence indicator.

The review of all policy measures adopted by the EU since 1992 to reduce its dependence on imports of animal protein from Latin America, shows that two measures have had a significant impact in recent years – measures on which the protein independence of the EU depends today:

  • On the one hand, the development of the biofuels sector. Thanks to the co-generation of 13 million tons of Protein-rich products per year, it is the largest “protein plan” in terms of its size and capacity to reduce substantially European dependence on soybean imports. Specifically, Farm Europe’s Protein Independence Indicator highlights that biofuels produced in the European Union have increased the level of EU independence from 18% to 34% over the period 1994-2014.
  • On the other hand, more recently, the greening of the 2013 CAP and in particular the measure authorizing nitrogen-fixing crops on the so-called Ecological Focus Areas (EFAs) doubled the volumes produced in Europe of field peas, broad beans and soy beans (+40%), this represents 2,3 million tons of protein rich products, “Made in EU”.

It is however unfortunate to note, that these positive dynamics, which are able to reduce the plant protein dependence of the European Union, are yet both challenged by recent initiatives already discussed or being currently negotiated by the European institutions.

On one side, as part of the recast of the REDII Directive, the European Union proposed a “phasing out” of the so-called first generation biofuels, without taking into account the fact that part of the production, coming from European raw materials, contributes to about 52% to the EU’s protein independence. The co-generation biofuel/protein and the link with industrial activities make a single chain. The protein production activity would not withstand a lower European ambition for biofuels. This is confirmed already by the negative evolution of the Protein Indicator which went down from 34% to 31% between 2014 and 2017. The positive dynamic has been stopped by  the reduction of 2.2 million tons of colza production due to the fierce competition of biofuels produced from palm oil since 2012-2013. This competition showed that less biofuels from oilseeds means less proteins for Europe.

On the other side, to give pledges on the greening the CAP, the decision taken by the Commission to abandon flexibility in the use of pesticides on Ecological Focus Areas is likely to have environmental counterproductive effects, by reducing the areas devoted to EFAs and particularly for protein crops. These effects are indeed likely to be felt from the next sowing.

It is therefore urgent, in order to develop a real European protein strategy by 2020, to build on the efforts made in recent years, not by destabilizing the European biofuel sector but, on the contrary, enhancing and valuing the protein dimension of the co-generation of green energy by taking the opportunity of the ongoing RED2 review. Moreover, it is necessary to re-establish at European scale, a solid and coherent green architecture for the future CAP combining environmental and economic sustainability.

 

EUROPE MUST HAVE A STRATEGY FOR ITS AGRICULTURE

Presentation of the outcomes and recommendations of the Global Food Forum 2017

Opening speech of Michel DANTIN, MEP. 

Mr. President,

Dear colleagues and friends,

I am pleased to welcome you here today at the European Parliament and to present the recommendations of the 2017 Global Food Forum, which brought us together in Italy last October.

We had just completed negotiations for the Omnibus Regulation, the famed CAP Health Check, undertaken as a trio with Albert DESS and Paolo DE CASTRO.

But that seems a long time ago now and the reform, the much talked-about reform of the CAP, is now underway following the publication of Commissioner Phil Hogan’s Communication on the 29th November last.

The European Parliament is already hard at work with tireless effort from Herbert DORFMANN and Clara AGUILERA, and the Council is preparing conclusions with the aim of commencing work next June.

You’ll be aware of the Commissioner’s opening gambit: a new delivery mechanism, new green architecture, and a retargeting of directs payments are the main measures on the table.

While reading through the Communication, a thought occurred to me: 30 years after the MacSharry reform in 1992, is this anniversary an opportunity for a genuinely root and branch reform?

Speaking in historical terms, is the forthcoming reform truly a far-reaching one? Or is it an evolution, rather than a revolution, a technical tweak, rather than a new departure for policy?

Is it, finally, a minimalist’s reform that ducks the real challenges or, as is more likely, a clever way of coping with the administrative reform of DG AGRI and future cuts to the agricultural budget ‒ combined with a new way of getting Europe and Member States to cooperate?

As is often the case in Europe, the devil is in the detail, and sometimes the details can be expensive.

The context of the reform

We are all aware that the European Union is going through a series of unprecedented crises. Crises whose impacts on the EU’s budget, on its trade, on its politics, and on its administration will have profound consequences for the CAP. These crises go by the endearing names of BREXIT, SECURITY, DEFENSE and MIGRATION.
The departure of the British will leave a gaping hole in the European budget. The Chairman of the Budgets Committee, Jean ARTHUIS, will correct me if I’m wrong… this hole is equivalent to a net loss of not less than 6 to 10 billion.

Protecting the CAP’s budget in this context is going to require unswerving determination. In addition to new spending priorities, the percentage loss to the CAP from Brexit currently stands at between 5 and 10% of its funding, that’s between 3 and 5 billion Euros. This will likely lead to a percentage fall in European agricultural revenue of between 6.5 and 10.4%.

Brexit will hit trade: how hard will depend on the new trading arrangements that are agreed on, but exports to the UK will be impacted: I am thinking of French fruit and vegetables, Irish beef, or Italian Prosecco.

And politics is reeling. The shockwaves from the British referendum and the rise of nationalisms and populisms in Europe have reached the 13th floor of Berlaymont. The Commission’s plan to save Europe is to give the appearance of passing the baton to Member States and to promote cooperation with them based on a sort of vigilant subsidiarity. And the Commission must also address the loss of staff from traditional policy areas, now committed to the new challenges of (European) security, defense, and migration.

To address these challenges (the Commission) must come up with a magic formula that:

  • on the budget – makes savings from administrative & implementation costs;
  • on trade – helps affected sectors to adapt, via a flexible agricultural policy, and lastly,
  • on policy – passes the baton to Member States, so that they commit to delivering on agriculture and shoulder the responsibility if implementation problems occur or if targets are not met.

Does the (Commission’s) Communication satisfactorily address these challenges? I’ll let you make up your own minds.
And all of this begs another question. Do we have the time?

The reform timetable

Despite the importance of these challenges, I would point out that the CAP has already seen numerous reforms over the last 20 years.

Farmers are crying out for a period of stability, but also for a fresh status, one which allows them to hold their heads high as businesses and function as creative entrepreneurs.

However, the Commission is unlikely to be able to put forward a legislative proposal in time to allow the Council and the European Parliament to reach agreement before the European elections in 2019.

This leaves us with only 8 months to complete a reform of the CAP and with only two weeks for the trilogue negotiations. You’ll recall that we needed 22 months between 2011 and 2013. By this yardstick the timetable is unrealistic!

In the current very challenging situation, I do think we need to take the time that is needed!

And we must be careful not to underestimate the impact of Brexit on the agricultural sector; which will mainly be in terms of trade.

We need to work together to address the genuine challenges that European agriculture is facing today.

And we need to work together on a root and branch reform immediately following the 2019 elections. Such a reform will have to provide a robust and realistic response to the competitiveness and environmental challenges facing European agriculture ‒ and it will have to strengthen the resilience of our production systems and rural territories.

High stakes

Bearing all this in mind, allow me to share with you a deep-felt conviction:

Europe needs a strategy for its agriculture.

Europe is an old continent, with human development in virtually every corner, and we have a duty to maintain activities in our rural areas and keep them open. To help our rural areas navigate the transformations underway and the challenges of our time, we need a strong, sustainable, and creative agricultural sector.

To respond to the challenges of globalisation, of food security, of climate change, and of the increasing demands of our citizens, European agriculture is going to have to produce more with less ‒ and increasingly so ‒ and we need a CAP to do this!

We also need a CAP to ensure the economic viability of our farms, to meet the economic and social challenges of rural areas, and to respect the European union’s climate and environment objectives.

With Commissioner HOGAN’s proposals as a starting point and following a timetable that we will decide in the Parliament and the Council, we have a duty ‒ and must have the courage ‒ to put forward a new framework, and we must neither be too complacent nor too easily satisfied.

The proposal to introduce a new delivery system will only be deemed to have been a good one if it genuinely simplifies, not only for DG AGRI and the Member States, but also for farmers.

Similarly, I am not opposed to Member States drawing up strategic plans, because these are essential to ensuring coordination between the CAP’s goals for agriculture and food and other national level goals such as spatial planning, social policy, or environmental challenges.

I would like to stress, however, that the CAP is and should remain a common policy. The CAP ensures that the internal market in agricultural products functions as it should, and that all Europe’s citizens have access to a healthy and balanced diet. Any form of renationalization is out of the question.

Moreover, in this new architecture, the European Parliament and the Council must still be able to determine common rules and basic standards, as well as determine the instruments of policy and appropriate financial allocations. Member States may be given some room for manœuvre, as long as this is done in the respect of internal market rules.

The operative expression here is ‘common rules’ and it constitutes a ‘red line’.

But everything I have discussed so far concerns the how of policy delivery. It is also necessary to discuss what the CAP needs do to support agriculture.

So, what should the next CAP do?

Resilience

The CAP will have to provide the means to ensure the resilience of Europe’s different agricultural industries so that they can continue to ensure our food security in a context of market and price volatility, rising production costs, and climate and health risks.

In this respect, direct payments are legitimate both as a basic component of farm income and as remuneration for the provision of certain public goods that only farmers are in a position to supply to society.

Direct payments must be maintained. This is a red line. Any proposal that advocates co-financing for Pillar 1, whether mandatory or voluntary, would cross this line. Any such measure would constitute the end of European solidarity, and thereby the end of the common dimension of the CAP. It would seriously risk fragmenting the single market.

Herbert would like to see a debate about historical references and the distribution of funding resources, and let’s be honest about this, this is a debate we should have had a long time ago.

Likewise, the issue of the convergence of support between Member States is one we cannot avoid. But it continues to be important today that we look at this issue with a sense of fairness, which means bearing in mind that countries have different living and production costs.

Direct payments must also be supplemented on a voluntary basis ‒ but on an increasing scale ‒ let’s assume this is the direction of travel for policy ‒ with risk management or insurance-based tools in order to cover growing climate, health, and market risks. A first step in this direction was taken by the Omnibus Regulation, and it would seem sensible to take this further.

But risk management tools aren’t a magic wand that can be used to cover all risks. The Union needs a more effective means of responding to crises that can affect agriculture. It needs a crisis or emergency reserve that can be deployed easily and that would not be subject to the principle of budgetary annuality.

This reserve could be based on an ambitious reform of the present crisis reserve, whose severe limitations have been exposed.  Terms of use would need to be established, but why not also deploy it as a reinsurance mechanism?

A final way to increase the resilience of Europe’s agricultural industries is to ensure that farmers obtain more of their revenue from the market – today, on average, less than 50% of farm income comes from the sale of production…Is this sustainable? Is it responsible?

One of the reasons, although it is not the only one, is a misfiring supply chain. This is a long-standing debate…and some hard-won solutions have been obtained via the Omnibus Regulation… I am referring to competition law and to PO; and there’s more to come thanks to the determination of Commissioner HOGAN with his proposal for legislation to tackle unfair trading practices and improve market transparency. We are making progress.

Competitiveness and sustainability in the agriculture sector

The CAP must also strengthen the competitiveness and sustainability of the agricultural sector. The aim is to build today and prepare for tomorrow.

Let’s accept a simple truth, and one we all agree on: that the CAP is first and foremost an economic policy! The CAP cannot solely be an environmental policy, because if agriculture and the rural territories in which it thrives are unsustainable in economic terms, then farmers will not be able to meet our environmental and climate objectives.

The CAP should become, once again, a policy that’s about investing, investing in scientific progress, investing in research and innovation. It should be about access to finance for farmers. The CAP needs to enable farmers to meet the economic and environmental goals that society expects them to. Why not allow Member States to pursue sectorial strategies as part of Pillar 2’s rural development policy! In this respect, the Wine programme and the Fruit and Vegetable programme can be a source of inspiration.

To unlock the agricultural sector’s economic potential and also enable it to play an ambitious environmental role, the CAP must also cease to be prescriptive.

A CAP that gives its farmers more freedom is a CAP that enables its farmers to express their innovative potential!

The CAP must therefore take a different approach to how it achieves its environmental goals. The complexity of the CAP’s greening measures and the prescriptive nature of its instruments have destroyed the farm manager’s ability to innovate and has led to all round distrust!

I believe that it is crucial to place the farmer at the heart of this policy. The green payment needs to be simplified and attuned to local circumstances. It should give more scope to innovative methods and be results-oriented, but it should not imperil the common nature of the CAP in the name of unfettered subsidiarity.

We need to expand the use of certification and equivalence measures. These could relate to a list of environmentally virtuous practices agreed at European level as basic common standards.

I am also convinced that new technologies, precision agriculture, and the European programme Copernicus can contribute to the competitiveness and sustainability of the agricultural sector. We would do well to support a technology roadmap for our agriculture that makes use of these assets.

And finally, the CAP should continue to ensure the development of Europe’s rural territories and generational renewal.

In this respect, the Cork 2.0 declaration for a dynamic rural development policy and the calls for more ambition in relation to managing generational renewal, should guide our action.

This is how I am approaching the forthcoming reform and these are the thoughts that I wanted to share with you before giving the floor over to the President of the Global Food Forum.

Thank you.

Europe needs a common vision for the future of its agri-food systems

PRESS RELEASE

Brussels, 7 March 2018.

On March 6th 2018, Farm Europe presented at the European Parliament in Brussels the results and recommendations of the Global Food Forum 2017, which draws on a year of consultations and discussions among stakeholders.

We need a truly common European approach to build a shared ambition, to secure the integrity of the internal market and to ensure solidarity between territories”, stressed Massimiliano Giansanti, President of Confagricoltura and of the GFF 2017.

The GFF2017 report highlights 5 key actions that needs to be included in the future CAP (full report available here Report Global Food Forum 2017 FINAL) in order to boost the economic and environmental performance of EU agri-food systems:

  1. A six-years action plan for economic & environmental performance, focusing on the precision and digital green revolution ;
  1. A coherent set of complementary tools to strengthen the resilience of EU farms with a proper tool box of risk management tools associated with a renewed crisis reserve for crisis management ;
  1. A territorial balance of agriculture secured by sectorial integrated strategies supported by investments levers;
  1. A cooperation spirit within the food chain via proper competition law ;
  1. And overall a fair, simple & direct relation between the CAP and farmers with a clear EU legal framework associated.

On this occasion Michel Dantin, MEP hosting the debate stated:

“We must have the courage to propose an adaptation of the current framework. The proposal to put in place a new delivery model will only be a good proposal if it ensures a real simplification, not only for DG AGRI and the Member States, but especially for farmers. The CAP must provide answers to ensure the resilience of the agricultural sectors. The CAP is not meant to be just an environmental policy, because without economic sustainability of the sector and territories, farmers will not be able to meet our environmental and climate targets. The CAP must therefore renew its support to investment, scientific progress, research and innovation and access to finance”.

MEP Paolo de Castro, co-hosting the debate concluded that:

“We have to rebuild a common sense around the idea of Europe, and this cannot disregard agriculture. Not only the historical and central role that agriculture has played in the process of European construction, but, more importantly, for its crucial relevance in the future. Decisive challenges pass through agriculture, such as food security, environmental sustainability, but also economic growth and employment. For the future, I expect a strong Common Agricultural Policy, although different from now, but still able to support the socio-economic function of the agricultural sector, which remains essential”.

The second edition of the GFF was held in October 2017, with a series of preparatory events across Europe (http://www.farm-europe.eu/news/a-window-of-opportunity-for-eu-agriculture-has-opened-up-‒-can-we-seize-it/). The overall process gathered around 600 economic and political leaders from 13 Member States with the aim to discuss the future of agri-food systems and EU policies towards them.

The Forum was an opportunity to identify and flesh out the most effective policy levers to boost the economic and environmental performance of the EU’s food supply chain ‒ to go beyond the conflict between these goals.

Next Edition, the Global Food Forum 2018, will take place this year on the 6th and 7th September.

“The future of agriculture and food” deserves better

 

PRESS RELEASE

29 November, 2017

“The future of agriculture and food” deserves better than a technocratic discussion about a proposal to renationalize.

The “New Delivery Mechanism”, which is central in the European Commission’s communication on the future of the Common Agricultural Policy (CAP), presented on 29 November, would pave the way for a lesser role for Europe, greater complexity for national administration, competition distorsions for economic actors and less efficiency when it comes to climate and environmental ambition. However, “the future of agriculture and food”, and the challenges facing the European food industry as a whole, instead require Europe to deliver a new and ambitious CAP, which in turn requires the Commission to fulfil its responsibility, not shirk it.

Pushing subsidiarity to its limit would simplify matters for the Commission only. It would transfer the policy burden to Member State administrations. It would threaten farmers’ livelihoods by removing the existing level playing field and exposing them to internal economic and environmental dumping. It would turn the clock back on environmental ambitions because Member States would be able to sacrifice standards to gain in competitiveness.

Farm Europe will continue to be a source and standard bearer for innovative and ambitious proposals for a European agriculture that leads the world by pioneering simultaneous economic and environmental performance ‒ in particular by harnessing the digital revolution. In the coming weeks and months, the campaign “Keep the C” will contribute to highlight the importance of a truly common and efficient European policy. If it is to meet the challenges of tomorrow, agriculture needs more Europe, not the abandonment of all collective ambition.

 

The “New Delivery Mechanism”, what is being proposed?

  • The current situation. Today, 70% of the CAP budget – the 1st pillar – is devoted to community measures, with eligibility criteria that apply to all Europe’s farmers (in particular for basic aid, green aid and coupled payments). This support functions as a coherent whole, both economically, by supporting farm incomes, and environmentally, by ensuring the use of environmentally sound agricultural practices. The whole of Europe is subject to a common core of environmental standards, which all farmers abide by. The room for manœuvre available to Member States is limited and governed by common European rules that are agreed ex ante (i.e. prior to implementation). In addition, 30% of the CAP budget (2nd pillar) is administered by Member States using a flexible programmatic project-based approach. The aim is to take local characteristics and the diversity of local contexts, such as environmental or investment factors, into account.
  • What is being proposed? With the “New Delivery Mechanism”, the European Commission is envisaging giving Member States individual discretionary power to determine the rules for allocating and managing both Pillar 1 and Pillar 2 aid. 100% of the CAP budget would be managed nationally, instead of under a common European framework. The Commission’s role would be limited to supervising national strategies and, where applicable, imposing penalties in cases where a Member State fails to meet its main targets as set out in national performance indicators. Member States or regions would be accountable for the use of funds. They would devise their own strategies as well as the eligibility criteria for obtaining CAP funding – including economic and environmental criteria. The CAP would resemble an ‘agricultural and rural cohesion policy’, with 27 different, even divergent, agricultural strategies.

What would be the implications of the ‘New Delivery Mechanism’?

The economic implications:

  • Under the guise of subsidiarity, this idea means, in reality, a transfer of the CAP’s reactor core to the national level, and as such would constitute a significant step towards a renationalizationof the CAP. Why?
  • In practice, negotiations at community level would be limited to agreeing on a few macro objectives that individual Member States would need to meet in order to access the community budget. Europe’s policymakers would agree on overarching performance indicators for the CAP as a whole.
  • In practice, the distribution of the bulk of funding between sub-sectors and between farmers, and in particular the ‘direct payments’ envelope would no longer be managed at community level ‒ decisions would be taken either nationally or
  • A genuine risk: each Member State or region would be free to concentrate its CAP envelope on a handful of priority sub-sectors in order to try to weaken the competition in other Member States and get the upper hand in a target market using directly or indirectly subsidized prices ‒ thus undermining value creation.
  • A question: Who could believe that a European civil servant undertaking an ex post analysis of a strategy adopted after a democratic vote in a national/regional assembly would have sufficient political weight to block a project, even if it conflicted with the general European interest? As experience with the Cohesion Fund has shown, the Commission is only able to obtain marginal adjustments.
  • A question: A substantial proportion of the CAP budget is currently used to support farmers’ incomes. Arrangements for this are based on European criteria. Considering the diversity of territories, sub-sectors and types of farm, is a single farm income target level realistic (a Treaty objective)? Would there be equitable treatment on a European scale? Would there be punitive clearance of accounts and penalties for those Member States in which agricultural income fell? Could the latter ever be credible? We might be forgiven for thinking that the architects of this proposed Mechanism have not studied its implications with sufficient due diligence.

The environnemental implications :

  • In agriculture, the environment is a key factor in farm competitiveness, a fact which has in the past led to an overuse of natural resources, especially in the 80s and 90s. Climate change and environmental goals are going to take centre stage among the challenges that tomorrow’s agriculture must meet ‒ so if Europe were to abandon the ambition of common standards, what would the consequences be?
  • In practice, abandoning the acquis of a common set of rules at the European scale – i.e. the greening of the CAP – would amount to abandoning the clear framework that creates a level playing field for all Europe’s farmers, while ensuring the sector as a whole meets its environmental responsibilities. And it is currently possible for farmers to go further by participating in rural development programmes that offer positive and complementary project opportunities.
  • In practice, by abandoning the principle of a common set of rules that condition access to CAP funding, the European Commission is abdicating its responsibility to ensure that European agriculture develops and grows in a more sustainable way on the scale of the Continent. Deviations in sensitivity to these issues would inevitably lead to divergences in the degree of ambition and competition would lead to a vicious circle of policies bidding down environmental standards.
  • An example: in order to meet overarching European targets, Member States would be able to concentrate their efforts on a handful of high value (in terms of target figures) natural areas – natural parks or Natura 2000 protected areas – and use this as cover to reintensify (production) elsewhere. The point being that the quality of the environmental cannot be reduced to an arithmetic average of national or regional indicator values.
  • A question: the digital revolution currently forging ahead offers an opportunity to combine simplification with environmental ambition. Why not seize this opportunity ? Do we really want to squander a chance to jointly devise and implement an intelligent CAP, one which is genuinely innovative, and which combines environmental sustainability with economic competitiveness for the benefit of all Europe’s territories?

 

A window of opportunity for agriculture has opened up ‒ can we seize it?

TAN_3241This weekend, the 2nd edition of the Global Food Forum, organised by Farm Europe in partnership with Confagricoltura, brought together around 200 economic and political leaders from 13 Member States in Susegana (Italy) in order to discuss the future of food systems and EU policies towards them.

The Forum was an opportunity to identify and flesh out the most effective policy levers to boost the economic and environmental performance of the EU’s food supply chain ‒ to go beyond the conflict between these goals.

The consensus among participants was that a genuine European approach is needed to build a common and shared ambition, to secure the integrity of the internal market and to ensure solidarity between territories.

Once it has been definitively adopted, the new ‘agricultural Omnibus’ (1) ‒ which was unanimously welcomed by the participants ‒ offers Member States an immediate opportunity to build such an approach, which they must seize. The new provisions on competition rules and risk management offer a chance not only to strengthen agriculture’s ability to cope with climate and market risks, but also to rebalance the food supply chain.

Direct payment must continue to play an important role and new financial tools such as insurance and mutual funds need to be further developed. But in addition to these short to medium term dynamics, the Forum concurred that the European Union should take the opportunity of the next reform of the CAP and of the discussions on the post-2020 Multi-Annual Financial Framework to develop enhanced crisis management mechanisms so that agriculture is fully prepared for even the most devastating events that may occur in the future. The creation of a strong pluriannual crisis reserve should be considered in the context of the up-coming budgetary discussions.

The Forum also explored how to meet sustainability goals. In this regard, economic stakeholders are willing to contribute to the environmental challenge with practical solutions for reducing the footprint of food production and contributing to climate change mitigation. If we are to move forward in unison and achieve tangible results on the ground the solutions will need to be based on a renewed confidence in science and innovation, and on investments.

The development of precision and digital farming as well as technologies such as New Plant Breeding Techniques should be encouraged and, in the meantime, the emergence of the EU bioeconomy should not be undermined by political decisions that depart from scientific evidence and guidance ‒ including on very concrete issues such as EU-sourced biofuels, which should be part of the EU’s sustainable energy mix.

TAN_1850To make this possible the EU needs to propose a clear and comprehensive policy architecture, including via the Common Agricultural Policy. But the EU needs to be careful : subsidiarity and flexibility should not lead to a weakening of the level playing field between farmers, and any additional distorsion of competition in the internal market must be avoided, in particular when it comes to environmental regulations. The first pillar of the CAP should continue to play its role as a fully integrated tool, providing a clear framework for all farmers across Europe.

The final report of the 2nd Global Food Forum, which draws on a year of consultation and discussion among stakeholders, will be presented to EU decision-makers at the European Parliament in February.

(1) Based on the basis of the inter-institutional agreement agreed on October 12.

Omnibus: a significant step forward for the Common Agricultural Policy

The compromise reached yesterday between the 3 institutions of the European Union on the agricultural component of the Omnibus regulation is a significant step forward for the Common Agriculture Policy. It is the equivalent of a mid-term review of the CAP and a demonstration that in a European Union whose political gears are in motion and which is closer to the reality on the ground, the European Parliament plays a central role by inspiring new policy directions. This progress has been achieved thanks to the ability of key Members of the Assembly to table strong and well-designed proposals – in particular Michel Dantin (EPP) and Paolo de Castro (S&D) on this issue, building on the positive initial proposal tabled by Commissioner Phil Hogan.

The Omnibus agreement will secure important improvements via competition policy and offer a vision of the future of the EU’s agricultural sector based on both economic realities and strategic goals. It paves the way for a substantial rebalancing of power within the EU food chain by extending the 2010 milk package to all agricultural sectors. Farmers will get the right to have contracts that set prices and volumes clearly. They will be authorised to join forces to sell their products together, setting the quantities and quality standards within producers’ organisations, thus acting as a single economic entity like other players in the food chain (processors & retailers). In addition, the dialogue within the food chain will be enhanced by new prerogatives for Inter-Branch organisations, in particular for discussing the share of added value, whether markets are going up or down.

The enhanced dialogue and competition rules should put an end to the current “battle field” situation and create the conditions for more solidarity among the players in order to better cope with market volatility.

On the resilience and risk management side, the provisions in the Omnibus offer a paradigm switch for the CAP. The package will enable a more credible and improved management of climate risks at European level, which is an absolute necessity in the context of climate change. It will now be up to the Member States all across Europe to take the measure of this opportunity and dedicate adequate resources to climate insurance ‒ the condition for making these schemes more attractive.

The European framework will offer the possibility of triggering insurances at 20% losses and the co-financing of the premium at 70%. These schemes are cost effective: impact assessments have shown that helping farmers all across the European Union to be effectively protected against frost, drought and floods would not require more than 5% of the current CAP budget, which should be set against the massive improvement in the protection of farmers against one of their principal and constant risks.

When it comes to market risks, the improvement of the sectoral Income Stability Tools initially proposed by the European Commission will open the way for specific sectors (producers and related processors) to develop schemes that protect farm incomes in the event of a crisis and in a pragmatic way. These schemes will be based on indexes, which enable a rapid response, they will target the specific activity (sugar, milk, etc) covered by one fund at farm level, not the entire activities of the farms with thresholds at 20% losses, and there will be CAP co-financing for annual contributions. It will be incumbent on economic actors to build these new stabilisation tools and up to Member States to foster their deployment via their rural development programmes.

It should be noted that, in the European Union, 1.1 million farms (20% of all EU farms) produce more than 88% of our food – most of these farms are family and medium to small-size farms. This figure (20% of EU farms) include all the farms in Europe over 19 hectares. These farms, connected to the local, regional, European or global markets, have seen a sharp decrease in their competitiveness over recent years. They urgently need to get back on the right track so they can invest and get ready to cope with future challenges, including when it comes to environment protection.

A truly common “risk management-oriented CAP” will have a decisive role to play in the coming years, offering farmers – as entrepreneurs who are more and more Live Science Managers as well – all the tools they need to enhance both the economic and the environmental sustainability of their farms.

The package now needs to be adopted in the broader context of the Financial Omnibus later this year, in order to be implemented from the 1st January 2018. Then, it will be up to the Member States to adapt their national programmes and to all relevant stakeholders to seize the opportunities offered by the new EU framework.

A promising step forward in the debate on the Renewable Energy Directive

Farm Europe’s Green Energy Platfrom welcomes the opinion approved yesterday by the agricultural committee of the European Parliament on the Renewable Energy Directive. This opinion, going beyond ideology and traditional political barriers is a clear recognition of the capacity of the European Agricultural sector to act as a sustainable energy provider. It’s a positive signal for both, EU citizens that must be in a position to rely on a forward looking farming sector, able to cope with climate change, and EU farmers that must be recognised as a cornerstone of the emerging bioeconomy.

A decade ago, the European Union set regulatory measures to tackle climate change and EU dependency on fossil fuels, via minimum targets, which allowed the development of a biofuel sector in Europe, without any EU subsidies. At that time, the assumption was that the traditional oil companies which are in direct contact with EU consumers would never give room for this source of renewable and cleaner energy without a clear mandate established by law. This assumption remains valid today.

The societal benefits from biofuels made from EU feedstocks (cereals or oilseeds) are well established and documented. These biofuels have a positive impact on the environment – a reduction of minimum 50% GHG emissions in comparison with fossil fuels, to say the least ; on rural economies, generating more than 290.000 jobs ; and on trade balance, saving more than 10 billion euros of imports of both fossil fuels and animal feeds.

A solid analysis of facts shows that during its main development period (2000-2015), the biofuels sector, in Europe, had no negative effect neither on food availability and prices, nor on agricultural land. Without being the culprit for increasing food prices, biofuels strengthened the resilience and profitability of the EU agricultural sector and rural communities, especially in the less competitive agriculture areas, offering a stable demand and increased revenues to a struggling sector.

Moreover, these biofuels contribute to enhance global food security by allowing the development of a credible EU high-protein feed supply chain – 13 million tonnes of feeds “made in Europe” every year.

Therefore, RED II should clearly differentiate biofuels that are made from EU feedstocks and that contribute to the supply of the EU market with both feed and fuels, from other and more controversial biofuels, and secure a specific mandate for the highly sustainable crop-based biofuels (HSCB), as proposed by the Agriculture Committee of the European Parliament.