Building a Strategic Roadmap for Agriculture at a Crossroads

Posted on - Posted by Farm Europe

European agriculture is facing a triple performance challenge:

  • Regaining economic competitiveness, which has declined for over two decades, and addressing the crisis of new farm business;
  • Achieving an ecological transition that benefits both agriculture and European society as a whole;
  • Addressing the social challenge, providing a balanced, high-quality diet for all Europeans, but also enhancing the value of agricultural occupations and the strong link between farming activities and the dynamics of rural areas.

Attempting to tackle these challenges only partially while neglecting the others will inevitably lead the European Union to a dead end.

In this respect, the Draghi report is very clear, backed up by in-depth analyses:

  • The European Union will not be able to achieve a successful transition of its economy and remain a major world player if it does not at the same time address its competitiveness, and if this does not become a priority. This also applies to the agricultural economy.
  • The Draghi report stresses the need to significantly increase investment in the economy in order to boost competitiveness and meet the challenges of climate change. This also applies to agriculture.
  • The Draghi report calls for a genuine simplification of regulations to reduce costs and remove obstacles to economic development. This also applies to agriculture.

These aspects emerge as the main weaknesses of the conclusions of the Strategic Dialogue launched by the European Commission in response to farmers’ protests:

  • None of the three key findings of the Draghi report are really developed into proposals for effective action. The conclusions do not provide any quantified analysis of the situation of agriculture or of European sovereignty in its various dimensions (economic, environmental, social, bio-economy).
  • Although the discussions taking place within the Strategic Dialogue were supposed to renew the dialogue between the various parties involved, in the end it mainly concerns the people selected intuitu personae and falls back on the shortcomings of the Farm to Fork strategy.
  • The conclusions push for a reorientation of CAP resources towards greater environmental ambitions, without seriously addressing the economic ambition that is nonetheless essential to this transition.
  • They call for a fund to be set up outside the CAP, the creation of which is subject to debate at a time when the European priorities – defence in particular – still lack adequate financing. Instead, we suggest maintaining the ambition of an integrated CAP, which would be able to meet all the challenges in a coherent and simple way for farmers.
  • While the report calls for more innovation, it does not specify the means to make it a reality in agriculture. On the other hand, it stresses the need to deal more effectively with climate and market risks and crises, and takes up the European Parliament’s 2019 proposal to overhaul the agricultural crisis reserve to turn it into a reinsurance tool for climate insurance and mutual funds for managing such risks.

The previous Commission’s proposal to implement the Green Deal in the agricultural sector focused above all on achieving environmental objectives by imposing standards and constraints, without managing to combine this approach with the pursuit of profitability in agriculture or real incentives.

This imbalance is compounded by a CAP whose resources are in substantial decline: as a result of inflation, the economic value of CAP subsidies has fallen by 30% in 20 years, and by 18% over the period 2021-2027, while the promise of a move upmarket on European markets never became reality. Price remains the main factor in consumer purchasing decisions, and the current economic crisis is unlikely to reverse this trend in the medium term.

Despite these considerations, the objective to reinforce European sovereignty through its agriculture remains an imperative.

This will only be possible if European policies are rooted in reality and prioritise concrete means of progress over prescriptive costs, and if they embody a genuine strategic vision of the real opportunities that this sector has to contribute to the transition of the European economy as a whole.

The EU’s agricultural sovereignty depends on its ability to supply 20 to 25% more biomass by 2050, without which the ecological transition of our economy will not be possible or will be dependent on imports. The European Union would simply be exchanging dependence on fossil fuels for other forms of dependence as is currently the case with the explosion in imports of bio-sourced energies in the absence of any proactive encouragement to produce them in Europe.

Concerning sovereignty in all its dimensions (production, economy, food and nutrition, environment, bio-economy):

  • The European Union remains a leading producer, thanks to the dynamism of Eastern EU countries, which has so far offset the downturn in many EU-15 countries;
  • European consumers have access to quality food, but are spending an ever smaller portion of their income on it;
  • progress on environmental issues (carbon, biodiversity, water, reduction of inputs) was taking place before the Green Deal was put on the table, albeit with differences between countries. It needs to be pursued and achieved through an EU-wide dynamic.
  • On the other hand, the European agriculture has three major weaknesses:
    • Profitability in the agricultural sector has been collapsing for two decades, undermining the ability to invest and plan for the future;
    • The bio-economy is developing but heavily reliant on imports;
    • The EU’s ability to meet global market demand is diminishing, posing a geostrategic risk for both the EU and third-country importers, particularly in Africa and North Africa.

Agriculture should be central to Europe’s priorities in food security, health, environment, energy transition and trade. The EU’s ability to make sovereign decisions about its future depends on maintaining a vision rooted in its shared European culture.

In this context, all European policies must be aligned with the EU’s agricultural policy. The European Commissioner for Agriculture must have the authority not only to oversee but also to co-decide on all matters related to agriculture and agri-food.

In this respect, the key issues to be negotiated between 2025 and 2027 include:

The multi-annual budget and the CAP budget in particular, which should at the very least be re-indexed to inflation;

  • Reforming the CAP to ensure that triple-performance agriculture continues to grow, and that efforts to improve the environment are genuinely rewarded by ensuring consistency between environmental measures and consumer claims;
  • Establish a robust European risk and crisis management strategy through a crisis reserve commensurate with the issues at stake and a truly common approach at European level to the challenges of farm resilience;
  • Revamping environmental initiatives (input management, well-being) as part of a systematic approach combining economic and environmental performance;
  • Developing an incentive-based approach to climate/agricultural carbon policy (sequestration and reduction of emissions, incentive-based mechanisms rather than an initial polluter-pays principle that hinder all progress). ETS must fully recognise the specific characteristics of the agricultural sector by excluding agriculture from the arrangements for polluting industries, and as the Draghi report emphasises, must not exacerbate the costs arising from the difference in environmental ambition with our main competitors;
  • Advancing innovative tools, particularly NGTs;
  • Aligning the taxonomy, an essential element for investment, with the green section of the CAP and rejecting an ideological approach to the CAP;
  • Safeguarding progress on the reciprocity of international trade standards, in particular in regards to the legislation on deforestation. For this, a very limited adjustment should be made to the simplified procedure so that data collection is limited to the origin of the country when the product comes from a low-risk area, to avoid data collection and disproportionate costs.
  • Moving forward decisively in the bioeconomy, exploiting the potential of biorefineries (European sovereignty in the bioeconomy) and bioenergy, but also of all the opportunities that agriculture offers to decarbonise the rest of the economy (construction, textiles, chemicals, energy, etc.). These new demands can be a driving force for the sector’s economic health and its positive contribution to the environmental challenges of the EU economy as a whole, in addition to providing quality food.

Ultimately, the Next European Commission must discard the notion that transitions are inherently bad news for agriculture, and start working seriously on a positive strategy for its agriculture. This will be the only possibility to reinforce the sector’s attractiveness, while also responding to the growing need for agricultural raw materials with a lower environmental impact.