Strategic priorities

In Poland, rural and agricultural areas occupy 85% and 52% of the country, respectively. Rural areas are inhabited by approximately 15 million people, 38% of Poland’s total population. There are approximately 1.4 million farms throughout the country. The main sectors are dairy, cereals, pigs, poultry and horticulture. Agriculture in Poland is characterized by a large share of farms of small economic size and there are significant income disparities. The Polish Strategic Plan of the Common Agricultural Policy will support sustainable development of farms, the processing sector and improvement of living and working conditions in small rural areas. The NSP will support as well, sustainable, climate and environmentally friendly farming methods that protect water, soil and air, and biodiversity. It will encourage sustainable energy production and use. Economic diversity will be enhanced, including the bioeconomy. Scientific and innovative solutions, including digital solutions, will be disseminated and implemented, removing barriers to development in rural areas.

The budget for the strategic plan in Poland is more than €25 billion for 2023-2027, of which more than €17 billion is allocated to direct payments after the transfer of 30% from the second pillar. The allocation of the second pillar is about 8 billion euros. Since the “tools that improve farmers’ income are direct payments”, the Polish government decided to strengthen it by transferring funds from Pillar II to Pillar I.

Basic Income Support and Redistributive Payment

Approximately €8 Billion is planned for Basic income support for 2023-2027 which accounts for 47.36% of the direct payment envelope.

Estimated rate is approx. 118 EUR/ha. 

Payment reduction (capping) will not be applied. 

In the case of Poland, priority in supporting agricultural activity under the Strategic Plan is given to small and medium-sized farms with an area of up to 25-30 hectares. Therefore, the redistributive payment is intended for farms with an area of up to 50 hectares, but support will be paid up to a maximum of 30 hectares – i.e. farms with an area of 30 hectares will benefit most (in terms of average payment per hectare on a farm) from this type of payment. A total of approximately 2 billion euros is planned for the redistributive payment between 2023 and 2027, representing 11.57% of the direct payments envelope. Estimated rate approx. 44 EUR/ha. Maximum rate approx. 48.5 EUR/ha.

The green architecture 

The green architecture of the Polish NSP establishes a number of measures in both pillars to encourage farmers to adopt pro-environmental farming practices. Most significantly, in Pillar I, eco-schemes are voluntary payment schemes for farmers who implement environmentally and climate beneficial practices that go beyond the requirements established by cross-compliance. This tool is designed to realize environmental benefits to the greatest extent possible, while encouraging farmers to actively engage in the implementation of environmental and climate protection measures.

In the Polish NSP, it is estimated the payment values of each eco-scheme per hectare, through an estimate of how many farmers will be interested to join each eco-scheme. Obviously, the figure may change depending on the number of adherents. In the Polish NSP, the planned eco-schemes are:

– Mixing manure on arable land within 12 hours of application Estimated rate: 89,44 Euro/ha.

– Application of liquid manure by methods other than splashing Estimated rate: 65,39 Euro/ha.

–Maintenance of mid-field afforestation Estimated rate: 560,45 Euro/ha.

-Maintenance of agro-forestry systems It is estimated that approximately 3.9 thousand ha will be covered by the support.

-Simplified farming system The aim of this eco-scheme is to support conservation tillage, to preserve natural resources while achieving satisfactory yields. Estimated rate: 125.62 Euro/ha.

-Winter catch crops/intercrops Estimated rate: 176,63 Euro/ha.

-Water retention on permanent grassland Estimated rate: 63,15 Euro/ha.

– 7% of the farm’s land to non-productive areas Estimated rate: 19,10 Euro/ha.

-Organic farming (Different estimated rates depending of crops, for example: Berry crops, 560,67 EUR/ha, Extensive orchard crops: 297.98 EUR/ha).

-Diversified cropping pattern Estimated rate: 76,18 Euro/ha.

– System of Integrated Plant Production Estimated rate: 292,13 Euro/ha.

-Development of and adherence to a fertilization plan Estimated Rate 28,99 Euro/ha.

-Biological crop protection Estimated rate: 89,89 Euro/ha

-Areas with melliferous plants Estimated rate: 269,21 Euro/ha.

 -Animal Welfare Estimated rate varies greatly depending on practices and animal

–Density of grassland animals Estimated rate: 188,31 Euro/ha.

Pillar II multi-year pro-environmental commitments are the most ambitious element of the Polish CAP’s green architecture. The requirements for these actions go beyond cross-compliance and relevant national and EU legislation and do not overlap with the range of practices covered by ecoschemes. They will be voluntary for the farmer.

The planned multi-year agro-climatic-environmental interventions are, among others: Protection of valuable habitats and endangered species in Natura 2000 areas ; Preservation of valuable habitats and endangered species outside Natura 2000 areas ; Extensive use of meadows and pastures in Natura 2000 areas ; Preservation of orchards of traditional varieties of fruit trees ; Multi-year flower strips; Conservation of plant genetic resources in agriculture,Conservation of endangered animal genetic resources in agriculture ; Young orchards of traditional varieties. Other interventions that will meet environmental and climate objectives will be the interventions on forests and woodlands. These will be investments that help mitigate climate change and maintain and improve the ecological stability of forest areas, linking, among other things, fragmented forest complexes into compact and continuous landscape structures, the so-called ecological corridors. The creation of afforestation, tree plantations, and agroforestry systems will have a significant impact on water retention in the soil profile and improved water quality. It will also contribute to increased biodiversity in rural areas, as trees and shrubs provide habitat for many organisms and a food base for, for example, birds and pollinating insects. 

Coupled payment

The Polish NSP provides the maximum rate for coupled payments, which is 15%. The sectors that will receive the coupled payment are: Cow; young cattle; sheep; goat; sugar beet; hops; flax; fibre hemp; strawberries; tomatoes; starch potatoes; fodder crops; grain legumes.

Young farmers

The strategic plan provides investment support for start-ups under Pillar 2 and up to five years of support for young farmers’ farm acreage under Pillar 1. 

Although the age structure of farmers in Poland is favorable compared to other EU member states, the share of young farmers in the total number of farm managers is declining, as in other EU member states. A total of approximately €185.3 million is planned for Pillar I payments between 2023 and 2027, representing 1.07% of the direct payments envelope.

Strategic priorities

The French NSP seeks to improve the sustainable competitiveness of the agriculture sectors, the creation of value, the resilience of farms and the sobriety of inputs in the service of food security.

Basic income support will be distributed to beneficiaries with payment entitlements in a more equitable manner, with a progressive convergence reaching 90% by 2026. France has chosen to target support to sectors in difficulty, which are essential to the resilience of the territories. Thus, 15% of direct payments are devoted to coupled aids, mainly in the livestock sector, as well as a significant increase in the envelope devoted to protein crops to increase the autonomy. The ICHN is maintained and remains targeted on the productions most adapted to territories with handicaps, including mountains, namely grassland breeding.

In terms of the environment, the NSP is in line with European trajectories. It will represent 25% of direct aid as of 2023 and environmental expenditure in the 2nd pillar will exceed 40%. The environmental architecture aims to reduce the specialization and intensification of production, by encouraging diversification of crop production and the search for synergies between livestock and crops, favorable to resilience and sobriety in inputs. Reinforced cross-compliance and the eco-regime aim at a large-scale implementation of practices favorable to climate control, protection of natural resources and biodiversity.

At the territorial and social level, to meet the challenge of generational renewal, the funds dedicated to the installation of young farmers are strengthened, with a total of just over €200 millions mobilized for support dedicated to young farmers on both pillars.

The green architecture 

Eco-schemes are new schemes that will account for at least 25 percent of the total allocation of Pillar I support. Eco-schemes impose practices on farmers that go beyond cross-compliance requirements, which already include green payment criteria, and thus correspond to a higher level of environmental ambition than the current green payment. 

In French NSP, 1.684 billion per year (8.420 billion for the entire 2023-2027 programming period) are allocated for the eco-scheme. 

The eco-scheme as conceived in the French NSP is intended to support as many farmers as possible in their transition, with the aim of massively increasing agro-ecological practices throughout the country, in an inclusive system. 

The aid is a decoupled payment of a fixed amount at the national level paid on all eligible hectares of the farm and is divided into three non-cumulative access channels and a supplement (“hedge bonus”) that can be cumulated with the access channel for practices or environmental certification: 

– the “practices” pathway is for farmers who commit to agroecological practices on all areas of the farm that are conducive to pesticide reduction, biodiversity and carbon storage. The requirements in terms of practices are different for arable crops, permanent grassland and perennial crops and must be applied to the entire area of the farm; 

– the “environmental certification” pathway is aimed at farmers whose entire farm is certified as Organic or as High Environmental Value (HVE); 

– the “biodiversity-friendly elements” pathway targets farmers who maintain or create agro-ecological infrastructure or set aside land on their farms;

– the “hedge bonus” remunerates the presence of hedges and their sustainable management; this bonus can be combined with the practices or the certification pathway, allowing to improve the overall effect on biodiversity (association of hedges and crop mosaic, or hedges and grasslands, or hedges and biological land management). The presence of hedges is associated with a requirement for sustainable management of these hedges verified by a certification (e.g. the existing “Label Haie”). 

There are two levels of requirements for each of the access routes: a basic level and a higher level for farmers who engage in more ambitious practices.

In addition to the eco-scheme, green architecture is based on Pillar II environmental measures, specifically agri-environmental and climate commitments (AECMs) and support for conversion to organic farming. Most of the AECMs need to be adapted at the local level. The level of ambition pursued by these measures is higher than that required in the practices of eco-scheme.

The budget for agri-environmental and climate measures is increased by +10 M€ to reach 260 M€ on average per year (compared to 250 M€ paid in 2019 and 2020).

The French NSP will contribute to the achievement of a target of at least 18% of French UAA in organic farming by 2027, i.e., nearly 4.8 million hectares of agricultural land, with the ambition of reaching the 25% targeted at the European level by 2030. 

To support this doubling of organic farming areas by 2027, an average of €340 million per year will be devoted to aid for conversion to organic farming which corresponds to an increase of €90 million per year compared to the €250 million per year paid in 2019 and 2020, which covered not only aid for conversion (€220 million) but also aid for maintenance (€30 million).

Coupled payment

In order to take into account the challenges and difficulties faced by certain sectors and to support the increase in areas cultivated with protein crops, with the objective of improving the protein autonomy of the French farm and thus reducing the dependence on protein imports, in particular soy, France devotes 15% of its direct aid to coupled aid, i.e. 5 billion euros. 

The budget devoted to coupled aid for plant proteins will increase by 15% as of 2023 (reaching 2.3% of direct payments) and then grow each year by 0.3% until it reaches a budget of €236.8 million in 2027, an increase of 75% (3.5% of direct payments). Over the whole of the future programming period, an additional €100 million will therefore be devoted to coupled aid for plant proteins compared to the current programming period.

Coupled support will go to: sheep; sheep for new producers; goats; cattle; calves under the mother’s milk; grain legumes and dehydrated fodder legumes or for seed production; fodder legumes in lowland and piedmont areas; fodder legumes in mountain areas; durum wheat; starch potato; rice; hop; grass seed; hemp; Ente plums for processing; Bigarreau cherries for processing; Williams pears for processing; Pavie peaches for processing; veg farming; tomatoes for processing; small ruminants in Corsica; cattle in Corsica.

Risk management

Support for risk management tools under the NSP is part of a dual perspective of continuity with 2014-2022 programming and strengthening of existing tools. 

Regarding climate risks, the NSP strengthens support for multi-risk crop insurance, with the aim of covering more farms and a larger agricultural area against these risks by 2027. The scheme is expected to increase from €156 million in EAFRD funding in 2023 to nearly €216 million in 2027, in anticipation of an increase in the number of insurance contracts in the coming years. 

The agricultural catastrophe scheme, a national solidarity instrument that covers climate risks considered uninsurable, will be profoundly revamped to allow for better coordination of the various instruments to compensate for losses caused by climate risks. 

Thus, the French government drafted a bill at the end of 2021 on the reform of multi-hazard climate insurance and the revision of the agricultural disaster system. This law is based on the principle of a three-tier risk management architecture (low, moderate and catastrophic). Moderate risks will be covered by the insurance system, whose contribution is still expected to be partially covered by the PSN, while catastrophic risks will be covered by national solidarity, paid by the State. To make it easier for the farmer to take on the risk, a one-stop shop for compensation is planned, regardless of the source of coverage. 

To encourage as many farmers as possible to take out insurance, compensation will be higher for insured farmers than for uninsured ones. In addition, the new system is expected to generate better protection against risks and adaptation to climate change on farms, particularly by developing individualized insurance pricing that takes into account the means of protection used by the farmer, and by providing strong incentives to propose and deploy insurance contracts with a deductible at the farm level, which will encourage more diversified, and therefore more resilient and cheaper farms in terms of inputs. 

With regard to health risks and environmental incidents, support for the National Agricultural Fund for the Mutualization of Health and Environmental Risks (FMSE), created in 2013, in the absence of an insurance market comparable to the one that exists for climate risks, will be continued, with potential changes related to the evolution of the categorization of health and phytosanitary risks at the European and national levels, the emergence of new diseases, and the articulation between state and fund intervention. Thus, the NSP provides for the mobilization of the EAFRD up to 1.5 million euros per year to finance compensation for losses that can be covered within this framework. 

Regarding income risks, an experiment of a common fund covering income variations (income stabilization tool) will be launched by the Grand-East region for the sugar beet sector. It should make it possible to appreciate for the first time the operation of a risk management tool that compensates for variations in margin, whether attributable to a climatic, health or environmental event or a change in the market. The Region has planned to dedicate 2 million euros of EAFRD funds to this project each year. 

Young farmers

The NSP reinforces the targeting effort undertaken in the current programming, by providing additional income support for young farmers up to 1.5% of the direct payment envelope (€101 million), compared to 1% today. This additional support represents half of the total effort requested of 3% of the NSP for young farmers. 

In order to no longer link this payment to the area of the installation and to no longer support installations on the largest exploited areas more than others, the additional income support for young farmers will now intervene in the form of a uniform flat-rate amount per farm (with the application of GAEC transparency), and always for a maximum support period of 5 years. The programmed amount of the lump sum is around 3885€ per farm per year, leading to a total of cumulated support over 5 years that should reach more than 19 400€ for beneficiaries between 2023 and 2027, compared to a cumulated amount of 12 500€ for 80% of beneficiaries between 2015 and 2020.

Internal convergence

The convergence choices will allow France to reach, via two successive stages in 2023 and 2025, more than 85% internal convergence of basic decoupled aid to income in 2026. In 2023, an intermediate ceiling will be introduced to fully finance a floor at 70% of the average value of 2023 entitlements; this ceiling should be around €1350 (value to be confirmed based on the actual situation in 2023). In 2025, the ceiling will be lowered to 1000€ per PBO and a floor of 85% of the target value will be introduced. Entitlements above the 2026 target value (evaluated at €129 in 2026) will be subject to a reduction of 50% of the difference with respect to this target value. However, in order not to destabilize farms that still benefit from a payment value per hectare that is much higher than the average value, in geographical areas and with very specific production models, sometimes intensive in terms of employment, a ceiling on individual losses greater than 30% has been introduced. However, this limitation of losses cannot lead to a payment right exceeding the ceiling value of 1000€. 

Thus, 96% of farms will benefit, from 2026 onwards, from payment rights between +/-10% of the average value (compared to 69% in 2019 and 29% in 2015). In other words, no farm should have payment entitlements whose value is less than 90% of the average (compared to 41% in 2015 and 21% in 2019), and 4% of farmers will retain payment entitlements whose value is greater than 110% of the average (compared to 10% in 2019 and 30% in 2015).

Pillar 2: Funding Allocation and Priorities

Thanks to the transfer of €2.742 billion from Pillar I to Pillar II (7,53%), France can count on €10 billion in the FEADER fund for the entire 2023-2027 programming period.

A large part of this budget, as much as 3.586 billion, is dedicated to the compensatory allowance for permanent natural handicaps (ICHN) as it plays an important role in reducing income disparities between territories. The ICHN is mainly targeted at livestock farming, and is aimed in particular at the most extensive farms by maintaining appropriate stocking rate ranges, corresponding to resilient, more autonomous livestock farming and a source of important environmental amenities: maintenance of permanent grasslands, maintenance of conditions favorable to biodiversity, carbon capture and well-being of the animals grazing there. 

Despite the reduction in the EAFRD funding rate provided for in the strategic plan regulation for this measure (65% of EAFRD mobilizable in 2023-2027 vs. 75% in 2015-2022), France guarantees to maintain the total envelope at €1.1 billion and undertakes to cover the additional cost of €100 million induced by the change in funding rate. The EAFRD thus freed up will make it possible to finance the increase in the budget for conversion to organic farming. 

Indeed, the FEADER resources for organic farming amount to a total of 980 million, leaving 1.832 billion for investments and 988 million for agro-environmental climate measures (AECMs).  

To be noted that on top of the implementation of the CAP, the Dutch government plans to implement a national program providing each year twice the Dutch CAP budget, financed by national budget, to incentivise the transition of the agricultural sectors to more sustainable ones. National financings will support innovation and investments, some will be devoted to extensification. 

Dutch CAP Strategic priorities

For decades, Dutch agriculture and horticulture have been highly innovative, creating prosperity and improving the quality of life in rural areas. However, agricultural production for years has focused primarily on reducing costs and increasing production at the expense of biodiversity, drinking water quality, and landscape diversity. 

A transition in agriculture is therefore necessary. In the Netherlands, farmers are already working on this. The new CAP focuses on supporting farmers who actively contribute to the desired transition in agriculture. If farmers are rewarded for their efforts and are supported in their developments and investments, they will be able to provide solutions. This can be done by helping farmers make changes on their farms, but also by allowing farmers to work together in their area, chain, or sub-sector to find solutions.  

The new CAP supports farmers by rewarding their public services to the climate and environment with subsidies for public goods. Through the eco-scheme, a farmer can choose from a list of about 25 eco-activities that fit their business and interests and the climate and environmental goals. The more effort a farmer is willing to put in, the higher the compensation.

The green architecture 

The green architecture -or the “Green-blue architecture” (GBA) as the Dutch Government prefers to call it- plays a major role in the Dutch NSP. A better network of green and blue interweaving in the landscape will help Netherlands to achieve climate and environmental goals. With the basic premium and cross-compliance in which the majority of farmers participate, there is an improvement in the living environment, biodiversity, climate change, and broader water quality. Through the eco-scheme, each farmer can make extra efforts. Interventions under the second pillar, complement this. Measures can be agreed upon over several years and targeted in an area-specific approach to the most pressing challenges. But other interventions such as investments, sector programs, knowledge and innovation also contribute directly or indirectly.

In some areas of the Netherlands, the environmental challenges are particularly severe. Through the CAP, the Netherlands is investing in business support in these areas. There will be subsidies for integrated area plans, innovations and area processes where the water level is raised and farms are extended. The same goes for farms near Natura 2000 areas, which emit nitrogen near sensitive wildlife. Urgent challenges in areas such as climate, nitrogen, and biodiversity require specific interventions, particularly in the second pillar. To meet these new needs, funds are being transferred from Pillar I to Pillar II. The transfer to EAFRD will be 15% in 2023 and will gradually increase to 30% in 2027. 

In 2023, the 25% of the Pillar I budget that remains after the transfer is dedicated to eco-scheme. The amount available is maintained at this level throughout the CAP period. Since the percentage is calculated after the transfer, this means that the percentage after the transfer increases to about 30% (after the transfer) in 2027. This means that for basic income support, an amount of € 447 millions is available in 2023 after the transfer of 15% to the second pillar (and the budget for the eco-scheme is € 152 million). This amount drops to € 339 million in 2027 (with always about 152 million for eco-scheme).   

Land-based eco-scheme for climate and environment 

The eco-scheme includes the following eco-activities :

Main crop :

1 Permanent crops as main crop at least 1 in 3 (parcel)

2 Early variety of uprooted crop (harvest < 1 September)

3 Early variety of grub (harvest < 1 November)

4 Protein crops as main crop

5 Arable crops, crop from list of permanent crops is on field for more than 18 months

6 Long standing grassland (> 5 years)

7 Buffer strip with herbs

8 Grass/clover

9 Grassland with herbs

10 Strip cultivation, at least 10 strips in a combination of at least 3 crops in strips of at least 3 and maximum 24 m wide

11 Wet cultivation

12 Mange cultivation

13 Small-scale plot (< 2 ha) more than 60% enclosed

Bottom crop :

14 Underseeding catch crop

15 Keeping plots covered (including non-productive rest crop) until 1 March. 

16 Under-working sward (without using glyphosate herbicides).

17 Permanent green cover (direct sowing in green manure, covered until harvest of main crop)

Cultivation measures :

18 Biological control (sterile males, nematodes)

Livestock measures :

19 Maximum 1.5 LU per farm (grassland)

20 Extended pasture grazing 1500 hours

21 Extended pasture time 3000 hours

Non-productive agricultural land :

22 Wooded element (hedge, hedgerow, thicket) is maintained

23 Woody element is present (other woody elements)

24 Water element ecologically cleaned. The element has been cleaned 25% to 75% after June 15

25 Non-productive field (edge) minimum 12 months (edge minimum 3 m)

Sustainable farm :

26 Organic farm 

The list of activities can be modified after testing and practical experience later, optimization can occur based on annual monitoring and mid-term evaluation in 2025. 

The climate and environment eco-scheme has three entry criteria:

1 Farmers or groups of active farmers

2 Eco-activities take place on agricultural land,

3 The farmer or group of farmers has carried out sufficient activities to meet the points system applicable to their area. 

Indeed, the eco-scheme is programmed as a point system for all farmland in the Netherlands with area-specific emphases. There is virtually 100% overlap at the farm level between basic income support hectares and eco-scheme hectares. The tasks for the climate, soil/air, water, biodiversity, and landscape objectives are different for each region. The choice of a national point system with regional accents ensures consistency and balance in terms of objectives, actions and their evaluation. The weighting factors for regional accents are landscape type, industry, soil type, specific urgencies in relation to European climate and environmental regulations, spatial location, and coverage. 

The eco-scheme is used to promote change toward future-proofing agriculture and to encourage the implementation of agricultural practices that contribute primarily to five sub-goals: climate, soil/air, water, biodiversity, and landscape. Payment rates depend on the use of the scheme. The projected uniform “unit amount” per hectare is 106 euros per year, based on the assumption that 80% of eligible farmers use the scheme. The actual payment is made at the bronze, silver and gold levels with corresponding unit amounts. The payment level is determined based on the eligible value of the assets after meeting the entry criteria, including the point system. Organic farming automatically receives the gold level for farmland that is certified as organic. 

Redistributive income support

To support smaller and medium-sized farms the funds available for the Basic Income Support are redistributed from larger to smaller farmers. A higher basic premium is provided for the first 60 hectares, to meet the obligation to redistribute at least 10% of the direct payments. The Netherlands will aim for the minimum compulsory 10% because it does not want to artificially maintain companies that are not viable and therefore have no future prospects. In that respect, Dutch Government thinks that targeted support through investments and knowledge acquisition is better for making small and medium-sized companies stronger and more future-proof than a higher basic premium. 

Coupled payment

The Netherlands does not apply coupled income support. 

Risk management

Through the Action Programme on Climate Adaptation in Agriculture, the Dutch government is promoting – with national resources – the preparation of the sector to face consequences of climate change. The Netherlands is also working to make the soil and water system more robust (through the National Soil Strategy) and to promote knowledge of risk management and preventive measures. The CAP will also be used to promote knowledge in this sector. Funds from the Investment intervention can be used to take preventive measures. Insurance is seen as the final element in risk management. For the (residual) risks of extreme weather, the Netherlands will use the Broad Weather Insurance (to be co-financed with CAP support) Indeed, without financial support, this insurance is still too expensive and is not taken out enough to keep the weather risks of open crops on the market. 

This intervention is a premium subsidy to active farmers who insure any crop damage caused by extreme weather. The annual grant budget is paid on a pro-rata basis at a maximum of 63.7% of the cost of the insurance premium.

Total budget 2023- 2027: € 87,5 million (€17.5 million per year)

Young farmers

Generational renewal is supported in various ways. The supplement to the basic support for young farmers will be a fixed amount. It is expected that around 3,500 young farmers will be entitled to the top-up, which will therefore be more targeted for the new group of young farmers thanks to the link with the setting-up aid. Young farmers will receive a higher subsidy than under Pillar II. This means that only young farmers who receive establishment support in Pillar II will be eligible for additional, so-called “top-up” support.  The total budget for this additional support is 10 million per year. The top-up is a fixed amount of 2,800 euros on an annual basis. 

Young farmers who have already received a full top-up previously in the previous CAP period, i.e. the entire five-year period, are not eligible again. For young farmers who have not yet fully utilized the five-year period during the previous CAP period, transitional rules will be provided.

IFPRI REPORT ON REPURPOSING AGRICULTURAL POLICIES AND SUPPORT

February 2022

The World Bank has just published a study, with the International Food Policy Research Institute (IFPRI), entitled “REPURPOSING AGRICULTURAL POLICIES AND SUPPORT”.

In the study different scenarios were analysed. From a business-as-usual scenario, to modelling the impact of restructuring support (maintaining support for agriculture at the current levels but restructuring it either by moving to uniform rates of assistance for all products, or by favoring low-emission products), or introducing conditionality (making support conditional on reducing emissions), or repurposing for green innovation(which would redirect a part of domestic support toward targeted investments in technologies that are both productivity-enhancing and emissions-reducing).

Some of the reports key findings speak for themselves:

“The report finds that greenhouse gas emissions would increase substantially in the future if current policies are untouched. Simply rearranging or even removing current support would not bring about the changes needed for sustainability.” “Given a ‘business-as-usual’ scenario of unchanged support, GHG emissions from agriculture would increase by 58 percent, and 56 million hectares would be converted to agricultural land between now and 2040”. 

Ending current support would not be a good option either: “The current farm-support regimes were not designed to reduce poverty or to improve diets, but their abolition would likely increase food prices, contributing to more poverty (albeit marginally) and raising the cost of healthy diets”. 

“Policy conditionality tying support to the adoption of environment friendly but lower-yielding farm practices could potentially reduce emissions, but would entail tradeoffs for people, nature, and economic prosperity with lower agricultural production, higher poverty, higher agricultural land use and an increase in the cost of healthy diets”. 

“Both changes in incentives and investments in innovations that simultaneously pursue productivity enhancements and greenhouse gas emission reductions are needed in order to deliver broad and long-standing wins”. “Simulation results suggest that investments in innovations designed to lower emissions and raise productivity by 30 percent could reduce emissions from agriculture and land use by more than 40 percent, returning 105 million hectares of agricultural land to natural habitats, while delivering substantial gains in poverty reduction, nutrition, and the overall economy.” 

“The repurposing option, which would redirect a part of domestic support toward targeted investments in technologies that are both productivity-enhancing and emissions-reducing, appears to hold the potential to deliver “triple wins” for a healthy planet, economy, and people. Productivity-driven growth reduces poverty and makes nutritionally adequate diets more affordable. In this scenario, global extreme poverty would fall by 1 percent, while the cost of a healthy diet would drop by a substantial 18 percent.”

This report from a well-known and respected international organization lends additional clout to those reports and analyses that show that the Commission F2F and Biodiversity approach – the “conditionality” scenario in the World Bank/IFPRI report – would be detrimental to agricultural production, poverty, and healthy diets, and likely lead to increased deforestation.

The preferred scenario according to the report is “repurposing for green innovation”. The key policy change in this scenario is a re-allocation of support to investments that lower emissions and raise productivity at the same time. Or, as Farm Europe has phrased it, dual-purpose investments.

The World Bank/IFPRI report extensively uses modelling, and a number of assumptions, which can always be questioned; and the quantified outcomes are a function of these assumptions and the model used. For instance the report assumes “…an international consensus, under which all governments would repurpose support toward common global objectives”, which can be overly optimistic.

Having said that, the issue at stake is not so much the magnitude of the results, but their direction – and the report is crystal clear that shrinking agriculture production is not the right path, on the contrary.

The proposed shift of public resources to dual-purpose investments, to foster sustainable productivity growth, comes well in line with the current USDA thinking, as expressed by the US Secretary of Agriculture. This shows that the Commission approach finds little resonance outside the EU, and on the contrary is giving rise to a building body of criticism and alternative proposals.