An appraisal of the leaked communication from DG Agriculture
The communication from DG Agri that prepares the CAP community for the legislative proposal next summer and which aims to channel the debate has leaked. Its title reads ‘The CAP towards 2020: Meeting the food, natural resources and territorial challenges of the future’, though ‘The eternal CAP: stagnation, inertia and waste’ would be more fitting. If the legislative proposal will be based on this communication, and subsequently be watered down by farm protests and the haggling within and between the Council and the Parliament, the 2013 reform will not deliver a green, equitable and efficient CAP. Something must happen. We must make something happen.
Less than one year ago, agricultural economists from across Europe called for an ambitious CAP reform. Here is a comparison between the communication from DG Agri and the expert declaration. The contrast couldn’t be more stark.
Some striking flaws in the DG Agri communication that deserve to be singled out:
The communication incorrectly mixes up farm income and food security. In reality, these two concepts are only remotely related: food supplies can be plentiful and farmers can still be poor, and food can be scarce but farmers well-off. See also a recent article in the EUobserver on why food security is not endangered in the EU and therefore should not be a key theme of CAP reform.
The communication quotes shocking numbers on the low level of farm income: ‘After a decade of mere income stagnation, agricultural income dropped substantially in 2009 adding to an already fragile situation of an agricultural income significantly lower (by an estimated 40% per working unit) than that in the rest of the economy, and income per inhabitant in rural areas is considerably lower (by about 50%) than in urban areas.’ But, as Berkeley Hill and Jean-Christophe Bureau have argued, we lack sound data on farm income (and DG Agri has been conspicuously complacent in remedying this shortcoming). As Berkeley Hill puts it, ‘perhaps it is the fear of the light that worries the EU agricultural policymakers and their statisticians. Though there is a lack of comprehensive information, fragmentary evidence suggests that, far from being a disadvantaged sector of society, EU farm household as a group have relatively high incomes compared to the rest of society and are of even higher wealth.’
The communication pays ample lip service to environmental protection and climate change mitigation. But it is almost silent when it comes to concrete policy instruments to promote these objectives. It does not admit that there is competition for money within the CAP: every Euro that is spent on untargeted farm income support cannot be spent on more efficient measures.
The communication upgrades ‘territorial balance’ to one of the explicit key objectives of the CAP. This creates the possibility for even more spending of the social-and-regional-policy kind that should neither be centralized at EU level nor be part of agricultural policies.
The communication endorses the existing two-pillar-system. Apparently, the first pillar shall continue to be fully financed by the EU. This ignores the need to make member states participate in the costs of the CAP subsidies spent in their respective territories more directly, so as to enhance financial responsibility. Worse, the less favored area payment that is currently part of the co-financed second pillar shall be moved into the first pillar.
The communication presents three extremely differentiated reform options, likely to make its middle-of-the-road approach look good. However, these sketches – only a few lines long – do not contain any serious analysis, indeed they are mere window-dressing. When DG Agri dismisses the ‘more radical reform’ option, it argues that spending more money on targeted environmental measures would lead to land abandonment and thus harm the environment. This is an embarrassing absurdity as targeted environmental measures could easily keep land in extensive agricultural production where appropriate.
The communication fails to mention export subsidies. Praising recent EU intervention in the milk market, it seems that EU exports shall continue to be dumped on foreign markets. Another form of distorting subsidies – coupled support based on fixed areas, yields or number of heads – shall remain at the voluntary disposition of member states, again as part of the fully EU-financed first pillar.
A personal note: I felt downbeat when I first read this communication. How can the European Union succeed if it cannot escape its past, if it cannot muster the courage to face vested interests, cast aside a dysfunctional system and start afresh? But we must not give in. We will fight even harder.