CAP reform: a renationalisation project that would cost 20% of farmers’ income

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The European Commission has put on the table all the elements of its agricultural strategy for the period 2021-2027: the budget proposals, presented on the 2ndof May; and the proposals for reform of the Common Agricultural Policy (CAP) officially unveiled today.

Both proposals would cumulatively result in a drop in European farmers’ income between 16 and 20%. On one hand, the impact of the 12% drop in the CAP budget would lead to a fall of more than 8% on average in the Community, with particularly strong negative effects for the field crops, milk and meat sectors, according to the study presented by Farm Europe on the 2ndof May. On the other hand, according to the European Commission’s own impact assessment, the reform proposals presented on the 1stof June would lead to an additional reduction of agricultural income between 8% and 10% depending on the options chosen by the Member States in this scenario of broad renationalisation of the proposed CAP.

Such a strategy, with negative economic consequences and uncertain environmental impacts, would inevitably lead European agriculture towards a massive restructuring, causing the exit of many farmers with the abandonment of certain territories and the intensification elsewhere, as well as a race to expansion of holdings, despite the proposals for degressivity and capping. It would go against the transition of European agriculture towards more sustainable models in both economic and environmental terms. In addition, it would slow down investment capacity and generational renewal, despite the tools for young people that could not offset such a decline in income.

No guarantees for a simpler CAP, major risk of fragmentation  of the internal market

Despite the warnings, particularly of the Dorfmann report, adopted by a large majority by the European Parliament on the 30thof May, the European Commission has persisted in its desire to propose a strong renationalisation and bureaucratization of the Common Agricultural Policy, which constitute central elements of its proposal through the “New Implementation Mechanism”.

Of course, the European Commission has finally proposed a common basis for direct aid through the principle of a super-conditionality that would integrate the current 30% of green aid. But the exact modalities of this super-conditionality are largely left to the free choices of the Member States.

In fact, this proposal in no way constitutes a simplification for farmers: everything would depend on the potentially divergent implementation that would be made by the Member States, if this project was adopted as it stands.

Moreover, although seeking to put forward an environmental touch, the proposal offers absolutely no guarantee in terms of the environment, since the key parameters would be defined not at the European level, but at the level of the Member States or even by the regions. This is as well the conclusion of the Commission’s impact study.

Worryingly, such an evolution would put strong competition in the regulatory frameworks of the different Member States with, naturally, advantages in terms of competitiveness for the less-ambitious in environmental frameworks. It should be noted that the “Eco-Scheme” proposed as a “new greening” undefined at Community level is essentially an agro-environmental measure as they already exist in the context of rural development, with the difference that it would be possible for the Member States to make these supports incentive, and not only “compensatory”.

Interesting principles for some economic tools, but mainly as declaration of stance at this stage

On the economic side, the Commission poses three interesting principles: the obligation for Member States to put in place risk management measures, the establishment of operational programs to structure the sectors and the reform of the crisis reserve to make it pluriannual and therefore more efficient. However, these guidelines are at this stage declarations of intent more than real steps forward. No sufficient means are provided for these three tools: either the Member States remain free to mobilize symbolic or effective financing, or the financial proposal limits the effectiveness of the proposed approach as it is the case for operational programs.

Moreover, beyond the fact that the proposal put the internal market at risk as already raised by Farm Europe last November, the new ergonomics of the New Delivery Mechanism, adds a proposal for a shift from the CAP from a “policy” towards a “program” mainly managed technocratically, in a bilateral relationship between the national agricultural administrations and the services of the European Commission. The latter intends to obtain the power to validate all the choices of each Member State and of each region, both for the use of the first and second pillars. The European Parliament and the Council of EU Agriculture Ministers, as institutions, would be deprived of most of their prerogatives. Even the elements adopted in the basic acts of the CAP by the co-legislators would be subject to the approval of the Commission services in the context of its systematic right of scrutiny for national strategies.