FICHE

ENVIRONMENT AND AGRICULTURE

• The EU has pledged to reduce its greenhouse gas emissions by 40% by 2030. Agriculture and agro-forestry have an important role to play to sequester and store carbon, and there is scope to reduce emissions using more efficient and sustainable production methods.
• Also reducing water pollution, soil erosion and preserving biodiversity can greatly benefit from these new production methods.
• Better farming systems that efficiently use nutrient resources exist, enhancing not only soil carbon but also biodiversity and improving resilience of farming to climate change itself. These measures typically increase productivity, reduce input needs, and other environmental pressures such as eutrophication and air pollution.
• Digitalisation and smart technologies are the basis for precision farming and precision agriculture optimising fertiliser and plant protection products application.
• The EU needs a “Marshall Plan” to encourage its farmers to shift to precision and digital agriculture through an ambitious program for investing in a double performance (environmental and economic) farming system – under the Pillar I Eco-Scheme in the CAP reform proposal.
• The new European Parliament should seize this opportunity to craft the new Eco-scheme to include support for farmers to move towards more sustainable production methods that reduce the environmental footprint, whilst at the same time improving economic performance. This dual performance production methods provide a brighter outlook for farmers and the environment.

FICHE

AGRICULTURE ECONOMIC CHALLENGES

Farmers’ incomes, productivity and investment

• The agriculture sector is facing severe headwinds. Farmers’ incomes have stagnated, and according to the European Commission forecasts they are bound to drop by a staggering 14% (in real terms) in the next decade, taking into account the European Commission initial Common Agriculture Policy reform proposals.
• Productivity is also on the way down, by 10% on capital and input productivity; only labour productivity is increasing as a result of lower employment in agriculture.
• The sector faces increased international competition and without significant productivity gains exports of agri-food products will suffer.
• One of the key problems is lack of investment, in particular on investment that boost productivity and leads to increased farmers’ incomes; on top of that the adoption of new technologies is slow, and the EU is lagging behind its main competitors in smart and precision farming, using digital and other new technologies, which reduce the environmental footprint whilst increasing productivity and incomes.
• The new Common Agriculture policy should be an opportunity to support farmers willing to make the transition towards smart agriculture, by providing incentives to invest in smart farming in both pillars: in the “eco-scheme” chapter of the first pillar, and devoting a wring fenced share of the second pillar to support these double-performance new type of investments.

The resilience of the sector to cope with market and climatic crisis

• Agriculture faces a repetition of crisis, including sustained very low prices, high volatility and extreme climatic events, but the Common Agriculture Policy is not adequately tooled to provide adequate responses and increase the resilience of the sector.
• To build on the recent progress made to support income stabilization tools and climatic insurance, the new Common Agriculture Policy should integrate a new Crisis Fund with a two-fold mission: to quickly finance, in the event of a crisis, exceptional market measures and intervention measures, as well as to automatically take over risk management measures of the income stabilization tools, as soon as indicators have reached pre-defined thresholds.
• The new Crisis Fund should replace the current reserve fund, which is not really operational, building on its 400 million euros allocation to reach 1.5 billion euros (either by a single initial financial allocation or by recourse to annually un-used and recovered funds).

FICHE

BIOFUELS AND AGRICULTURE

• Biofuels produced from EU feedstock (mostly from colza, maize , sugar beet and wheat) generates at least 6.6 billion euros of direct revenue for EU farmers.
• In addition, the bioethanol industry is said to have created 70 000 direct and indirect jobs since the EU introduced its biofuels policy, while the biodiesel sector has generated 220 000 direct and indirect jobs in the EU biodiesel production
• European sourced biofuels have not displaced food and feed production, and have had no real impact on prices. On the contrary, biofuels have helped in limiting the adverse effects of the food markets U-turn, offering some economic stability to struggling EU farmers.
• There is another very important positive impact of biofuels production in the EU – the production of protein feed as a by-product. Europe is still dependent for 70% of soybean meal imports to meet its growing livestock demand. The EU biofuels industry processing rapeseed and cereals now produces approximately 13 million tons annually of high protein meals that otherwise would be imported from the Americas.
• EU origin biofuels reduce greenhouse gas emissions now by over 60%, and the savings are to increase in the upcoming years. They achieve this important environmental goals without any negative collateral effects – be it on deforestation, or on food and feed production.
• EU origin biofuels are thus clearly different from palm oil, whose expansion has been a main driver for deforestation and peat land degradation in South East Asia.
• The EU has just adopted a revised Renewable Energy Directive (RED2) that aims at curbing deforestation due to the production of high risk biofuels like palm oil for use in EU biofuels. It establishes a freeze and then a phasing-out of these biofuels.
• However the revised RED2 also allows certified low-risk palm oil to get into the EU biofuels. The Commission has adopted a Delegated Act that has still too many loopholes, the risk being that palm oil use in EU biofuels will continue to grow. The main loopholes are loose criteria for “small holders”, lack of guarantees on checking fraud, and no link whatsoever to actual deforestation.
• The new European Parliament should ask the Commission to close these loopholes by an implementing regulation, and closely monitor the evolution of imports of palm oil and of deforestation in the exporting countries.

CAP reform

In view of the Commission’s proposal,

6 safety-cones to secure a more efficient and truly common CAP

A CAP reform proposed by Commissioner Hogan centered on a new governance that confuses flexibilities and renationalization…

The reform proposal presented by the Commission on the 1^stof June 2018 is above all a proposal for an administrative reformof the CAP. However, the proposed new implementation model would have very strong policy implications by splitting the CAP into 27 national agricultural policies(or more with regionalized agricultural policy strands), by simplifying management for Commission services but increasing the burden for the Member States without any simplification for farmers.

The Commission proposal proposes to each Member State to build its own agricultural policy by defining the eligibility rules, the requirements linked to the different measures that the CAP can fund, its control and penalty policy, as well as its levels of ambitions – essentially environmental – to reach. On this basis, the Commission would have the power to approve or reject these national policies, taking over most of the powers of the co-legislators in terms of guidance and construction of the CAP without, however, being able to withstand the will of strong governments.

While Member States would have full discretion on how to use 98% of CAP funds, two farmers with similar farms in border regions would face different economic environments and ecological requirements, whereas today the CAP establishes a common base of rules but also use of almost 2/3 of the funds of the 1st pillar of the CAP (direct aids). Agricultural markets would quickly become a battleground within the European Unionto the detriment of the single market. For some, the reduction of environmental ambition would be a temptation to offer an economic advantage to their sectors.

With this proposal, the Commission says it wants to encourage the Member States when drafting their national agricultural (political) strategies to make more consistent use of the support of the first pillar of the CAP and the second pillar (rural development) and move from a ‘compliance policy’ to a ‘performance policy’ based on achievements and outcome indicators.

While these two objectives are laudable, the presented proposal however does not make it possible to achieve them: the first will be subject to the good will and priorities of various governments, the second would be to be in a position to measure both the economic and the environmental impact of the implemented measures within the framework of the CAP and not – as proposed by the Commission – to be limited to only counting the number of hectares or farmers concerned by such or such a measure without their impact being otherwise assessed in upstream.

… 6 safety-cones for a more effective and truly common PAC.

Given the societal, economic and environmental challenges to be met, the European Union needs a CAP that is strong, effective, common and adapted to the realities of a European Union rich in its diversity.

1       Put in place key parameters in basic actsat a common level: minimum level for basic income support

2       Give a European dimension to the ”Eco-Scheme”, concentrating the measures to be proposed by the Member States on the promotion of innovative tools and practices able to encourage the environmental and economic transition of European agriculture

3       Promote the economic dimension of the CAP with a minimum financial objective for risk management tools and for economic and environmental performance investments

4       Define a European reference environmental basisfor the ‘super’ conditionality with the possibility for Member States and farmers to propose equivalent measures where it is more appropriate

5       Build an effective and well-financed crisis reserve with guarantees that the European Commission will react without delay in the event of serious market disruption

6       No approval process by the European Commission on the elements agreedby the co-legislators and included in the EU legal framework

In recognition of the important issue of deeply rectifying the Commission’s proposal, the Members of the Agriculture Committee of the outgoing European Parliament (Comagri) adopted a large number of amendments in order to put in place these 6 safety markers and start to give them life in the draft CAP regulations.

It will be up to the next Parliament and its elected representatives to build this efficient Common Agricultural Policy, which is the driving force behind the establishment of dual performance agriculture across the entire European territory in order so that:

• the European Union resumes its place in the ‘world concert’,
• European citizens find themselves in their agriculture and in the CAP,
• farmers find a strength of ambition and a protective environment with the European Union.

The amendments adopted by the outgoing Comagri go in the right direction. They are a first step.

The next Parliament will be responsible for deciding on the CAP that will guide the agricultural sectors for the next decade.

To put European agriculture back in a position to successfully project, the work of this Comagri will have to be deepened so that:

• the CAP can be a tool of real incentive to investments of double – environmental and economic – performance,
• and that transition to these new modes of virtuous production, notably based on digital and new technologies, being a central element of the “eco-scheme” measure of the 1st pillar and investments of the second pillar.

Analysis of the flexibilities proposed by the Commission

Functioning of the CAP:

• Functioning of the current CAP:

• Commission’s proposal for a new operation of the CAP:

Common Agricultural Policy

Which CAP for the European Union in the 21st century?

The Common Agricultural Policy was founded to respond to the challenge of food sovereignty in Europe, on the basis of the fact that a pooling of financial means and the definition of common political guidelines are more effective than the sum of potentially divergent national initiatives.

This investment policy of Europe in its future has met the expectations in terms of agricultural production, both in quantity and in quality.

Food security remains today the prerequisite for an area to have a strong and credible political strategy in today’s multipolar world.

In a globalized world where food security for all should be guaranteed, the European Union is also responsible for ensuring the sustainability of a stable presence in global food markets.

At the same time, the CAP has evolved to respond more to the challenges of vitality in Europe’s rural areas and to the preservation of the environment with the fight against climate change.

As a base for developing rural areas, managing 75% of Europe and our natural resources, European agriculture is a key factor in this area and farmers are the only reliable relays for effective action.

Today, the CAP must aim to meet the objectives of:

• Ensuring the food security of Europeans and enabling European citizens to have access to quality food at affordable prices
• Ensuring a correct level of income for farmers even as the volatility of agricultural markets have increased considerably since the mid-2000s under the combined effect of climate change and the globalization of these markets
• Preserving the environment, soil, air and water while contributing to the fight against climate change
• Keeping the European Union as the world’s largest exporter – the EU is also the world’s largest importer of agricultural and food goods,
• Maintaining a strong agricultural network, a basis of territorial development of agro-food activities and local economic development in all European regions

Through its successive reforms, the CAP has sought to respond to its challenges one after the other but ultimately treating them separately from one another.

For the lack of a sufficient vision, the societal challenges have been partially addressed by normative stacks while the economic challenges have largely been left fallow.

The challenge for those who will have to decide on future European policies having an impact on agriculture and rural areas of the European Union, is not only to reconcile societal expectations and economic challenges but to put them in synergy by focusing the CAP on the challenge of the dual performance of our agriculture: no economy without more environmental, no environment without economic benefit.

For this, the CAP must become again an investment policy of the European Union in its future and centered its actions on:

• the investments and innovations in farms and the food chain; agricultural sectors need to seize digital opportunities quickly both for their relationships with consumers and their economic and environmental performance.

• the incentive for a transition of European agriculture towards dual performance agricultural systems such as integrated agriculture, digital agriculture, organic farming or conservation agriculture,

• securing European farmers against risks and crises by combining basic direct aid, support for climate risk insurance tools and mutual funds for income stabilization and an effective European crisis management reserve

• the promotion of a quality European food model, diversified for all European citizens.