The CAP health check initiated by European Commissioner for Agriculture Mariann Fischer Boel has inspired much debate throughout the agricultural and industrial spheres. Although individual positions on the subject can vary, the fact remains that voices today are nearly unanimous in underlining the strategic role agriculture plays in the global economy, research and food security.
Most reports that address the CAP reform, however, are significantly lacking due to a gap between the stated goals and the means proposed for achieving those goals, most often due to a flawed and segmented view of the realities in the agricultural field.
It is for this reason that an article written by Nadège Chambon, Project Leader with the think tank Notre Europe, captured our full attention and has been reproduced here in part. In addition to providing a view into the realities of the agricultural sector, the article repositions the CAP reform as an issue of international scope and fusing the three major areas of economic efficiency, environmental conservation and development - notions that momagri has placed at the core of its efforts since 2006.
Reforming the cap for a brighter future: what is at stake
Several major developments are currently affecting agriculture; the rise in world prices is only one of them. To understand the shape of farming after 2013 – end of the 2003 compromise – we must analyse these changes.
The first issue for European agriculture is production. Rising incomes and changing consumption patterns in emerging countries are already boosting demand for meat and dairy products. Biofuels have created a new demand for land for energy-generation purposes. These long-term trends are an invitation to Europeans to contribute their share of supply to the world agricultural market. But if European agriculture finds itself in an unusual situation due to the rise in commodity prices, can we be sure that this period will be used for long-term thinking about agricultural policy? It would be perilous to rely on recent trends as justification to do away with safety nets and the EU’s capacity to intervene in the agricultural domain. The particular features of the sector call for prudence; the CAP’s history shows that correction of imbalances in agricultural markets will always carry a risk of overproduction followed by penury. Europeans must therefore preserve instruments for regulating markets in time of crisis, while encouraging the competitiveness conducive to participation in the world agricultural market. The instruments must remain compatible with the multilateral rules of world trade, or – in the eventuality that the Doha round breaks down – with bilateral trade agreements.
A second imperative for European agriculture will be the need to respond to societal demands, in an open economy and with a constraint budget. Consumers and citizens have been deeply affected by the food-safety crises of the 1990s and by environmental scandals (for instance, nitrate pollution). They would like the CAP to guarantee both security of food supply and respect for the environment – that is, water quality, protection of natural habitats and the like. The CAP must also take into account the nascent demands of a newly urbanised population and a growing ignorance of the realities of rural life on the part of Europeans. Doing so will be essential at a time when consumers are mostly disconnected from producers and the slightest rumour can shake their trust. In order not to further undermine this trust in a production system supported by the EU, new factors must be seriously considered: in particular animal welfare, food quality and diversity, organic farming, and questions of ethics. However, it remains uncertain to what extent limitations on fertilisers and pesticides, bans on GMOs, rules of eco-conditionality and other such measures are compatible with competitive agriculture in an open economy.
A further major factor will be the need to make the CAP compatible with the EU’s other policies. Several inconsistencies can be cited. Firstly, agriculture’s particular need to emphasise differences such as traditional or geographical “appellations” might be threatened by health regulations (the tightening and harmonisation of rules on production processes) or the competition imperative (standardisation of labelling to distinguish brands). Discussions should take into consideration this aspect of food and agriculture, which remains important to Europeans, as well as the need to bring measures into line with competition policy. Cartels and barriers to market entry are currently encouraged in sectors of high added value, such as the “appellations d’origine”. At the same time, other measures attack any production cartel which seeks to limit the impact of price falls in times of crisis. Finally, the CAP reform must take care to limit inconsistencies with cohesion policy, now the EU’s most important area of action. There is a strong probability that the farming sector will contradict objectives of cohesion policy once it is exposed to the forces of the market. Competition and the productivity imperative create an incentive for farms, as well as industries, to concentrate. In practice this means a relocalisation of production sectors (for example, sugar) into a handful of zones. More generally, the CAP must be considered in parallel to structural and cohesion policy, in particular in the case of new member states. It remains possible that this harmonisation of the CAP with the EU’s other policies will result in new budgetary architecture and a reform of the CAP’s functioning, which might no longer be managed directly and exclusively by a single sectoral administration and its associated bodies.
To anticipate the responses to this new agricultural context and to make the CAP coherent once again, the opportunity of negotiations chaired by France, followed by the Czech Republic and Sweden, must be seized in order to redefine thoroughly the common agricultural policy.
For a new common agricultural policy
It is vital for the EU to maintain a common policy in agriculture. Talk of the benefits of the CAP is no longer audible, drowned out by criticism. Yet it was this policy that got post-war European agriculture onto its feet and made the EU one of the most important green powers in the world. However, this debate is less about the historical record than on how European countries will face major challenges in the medium and long term.
Even if the sector contributes only 2.5% of the EU’s GDP, agriculture is inescapably a strategic factor in the sustainable development of societies. Food supply, security, the quality and diversity of produce, town and country planning (80% of the Union’s territory is rural and here farmers are the principal actors), the environment, the dynamism of rural areas: the CAP is closely involved in all these questions. Action is needed in many of these areas, and a common project allows collective responses. Undermining the CAP by giving way to the siren calls of economic “modernism” would neglect these questions. The Union must bring a response to these questions of economics, health, society, planning and the environment; issues which were once settled “naturally” by a myriad of small landholdings, but which today risk being ignored in a context of more rarefied agriculture.
Only a “new” common agricultural policy, ambitiously reformed, will strengthen the EU. After half a century the CAP still adheres to objectives set out in the Treaty of Rome. Adaptations and reforms have made the policy particularly complex and unclear. A revision of fundamental aims is needed to make the CAP coherent once again. Three missions seem necessary:
> To ensure the continued existence of European agriculture which is productive, competitive and diverse, while maintaining both market-regulation instruments – as security nets – and standards in safety and quality.
> To promote agriculture which respects the environment.
> To guarantee economic and social development in rural areas, by financing different rural actors including those not directly related to farming.
This clarification of the CAP’s aims – or rather, this definition of a new common agricultural project – must precede negotiations over the instruments and the budget of the policy. Without this exercise of reflection, the CAP risks reform by budgetary trade-off rather than by political ideas. France, the Czech Republic and Sweden must ensure that this debate on first principles takes place either before or during the budget negotiations, and that the CAP’s contribution to the EU’s strategic direction is properly defended.
1 Propositions de notre europe pour une réforme de la PAC