March 2021 Abstract This paper aims to cast a light on the nexus between the profitability of rural livelihoods and biofuels within the EU. In doing so, it focuses on putting the deep and structural relationship between rural labour and biofuels into a data driven perspective to highlight what is rarely discussed: the low wages […]
The 2014 reform has consolidated the ‘public goods’ component of the Common Agricultural Policy. However, the economic reform of this policy, which remains the primary aim of the common European policy, is still to be finalised. Economic reform is a matter of meeting the most pressing societal challenge: sustainability of production, or, in other words, the long term ability of agriculture to meet the needs of the planet and of the responsibility which the EU must assume in this regard.
In responding to this issue, all actors are confronted with a number of challenges:
- the challenge of sustainable and consistent agricultural and industrial investments
- the challenge of integrating innovation with efficient technologies
- the challenge of market volatility, and ensuring that it does not disrupt the sustained growth of production.
In the EU, agricultural productivity has declined for over two decades. Income per unit of agricultural work has stagnated since the mid-90s in the EU-15, despite the restructuring of farms and the decline in the AWU: the efforts made by the agricultural sector seem to be consumed by the constant decrease of public aid (CAP) in real terms and the transfer of value added towards other links in the chain. Today, many sectors find themselves in urgent need of investment, in order to ensure their competitiveness.
A thorough understanding of the inseparability and mutuality of the two components – environmental sustainability on the one hand, and economic sustainability on the other – seems to be the primary condition for ensuring sustainable development and effective public policy. In this context, three key words emerge: Resilience, Sustainability, and Investment. How does the current CAP provide adequate responses in that respect?
In other words, a main question happens to be how the EU can overcome two decades of decline in competitiveness in the Agri-food sector, while answering to citizens’ demands of food security, increased sustainable environment and more growth in the EU?
In that respect, a major problem (to solve) occurs to be the lack of investments in the European agri-food sector and the need to focus more public incentives to productive investments, able to achieve all across the EU what can be either called a double competitiveness (economic and environmental) or a double sustainability.
In the context of the post-Brexit referendum and the current crisis which affect most – if not all – agricultural sectors across the European Union, the Common Agricultural Policy is at a crossroads. Will it goes down the path of a more “à la carte” policy, diverting more and more from a Common policy or will it take up effectively the challenges of investments all across the EU offering real responses to farmers needs and legitimate expectations?
Taking into account the urgent need for a wake-up call when it comes to the European dimension of the European policy, Farm Europe held a one day high-level event on the CAP in Bucharest on the 8th of July 2016, under the patronage of the Romanian government to address the key question : how to overcome the challenges of a Common policy to boost investments and confidence in the future of the agricultural sector?
The event gathered key political decision-makers of the European Union and high-level representatives of key economic actors, who are willing to recall their ambition for a strong European Policy.
The discussion focused on the following issues:
- Investments of competitiveness needed :
- Should the CAP establish greater means of support for investment? If yes, is there a need for a European plan for competitive investment in the agricultural sector in order to stimulate a technological leap towards precision farming?
- Which kind of investments would have to be incentivised ? And, in which sectors and which scale of amounts are at stake in the different member states? Which incentives to make them happen in a short-term period ?
- Efficient investments of sustainability and how to reconcile sustainability and competitiveness which are, truly, two sides of a same coin:
- Both the greening measures and measures of the 2nd pillar are criticised due to their complexity and/or their questioned efficiency. For the future, could we work on a strategic approach making full use of innovation to respond to the challenge of providing public goods at the European level, allowing economic actors to decide and to mobilise the most appropriate means of achieving this ?
- Sustainability of our environment, sustainability of our food and sustainability of our rural areas require all the existence of a vibrant farming sector as ground for any action. How can it be achieved all across Europe and notably, how can we address the structural lack of competitiveness of a region or of a specific sector in a particular region ?
- How to invest in a context of volatile markets and crises, whereas all our world’s competitors have chosen to implement public policies encouraging agricultural productions via strong market management tools, either based on insurance schemes or prices protection ?
- Confronted with market crises, the new CAP arrangements remain, to this day, rudimental (schemes for income stabilisation in 2nd pillar) or have proved to be ineffective in face of recent crises (emergency measures and markets measures of the single CMO).
- In this context, and given the new economic environment of increased market volatility and the need for investment, do the tools available to the European farming sector to create a favourable environment for investments require adjustment?
- Insurance “income loss, margin loss”?
- Incentives to individual or sectorial (mutual) savings
- Bank guarantees
- Public support via the CAP
- Role of the EIB, commercial banks, and insurance companies