Common Agricultural Policy: the cap on growth

Civitas, 27 October 2011

By Scott Benson

Last night’s Eurozone summit may have provided a plan to help solve the immediate sovereign debt crisis but the competitiveness of European industries still remains a cause for concern.  This is particularly true in agriculture where EU policy-makers struggle to reconcile the demands of the industry with environmental sustainability.

The Common Agricultural Policy (CAP) currently comprises around 40% of the EU’s budget and, in ‘the age of austerity’, this is one area where MEPs should be looking to make expenditure cuts.  However, under proposals put forward by Dacian Ciolos, the EU’s commissioner for agriculture, spending on farming will remain at the current level of €53 billion in order to protect farmers from market volatility, climate change and resource scarcity.  The Commissioner’s plan to maintain current spending levels, however, is highly optimistic as the EU’s member states, which must approve the budget, face domestic political pressures to reduce spending and ease the financial burden faced by taxpayers. This sentiment has been echoed by the UK’s Environment secretary Caroline Spelman who has highlighted the need to satisfy farmers, taxpayers and the environment.

When the Agriculture Committee scrutinized the new reforms on Monday, MEPs were presented with tension between sustainability and competitiveness. The EU’s objective to generate new jobs, protect the environment, produce secure food supplies and facilitate a competitive agricultural sector, may be admirable but achieving them together will be extremely difficult. With food prices at a record high and demand set to increase by 70% by 2050, the EU has a vital opportunity to reduce farmers’ dependence on subsidies. The current proposals, however, will tie 30% of direct payments to meeting new environmental criteria and require arable farmers to leave 7% of farmland fallow. These measures have attracted criticism from the EU’s largest farming union, Copa-Cogeca, which has argued that the reforms will constrain European agriculture by increasing farming costs and reducing total output.

Furthermore, there are concerns that ‘greener’ farming measures will lead to an increase in red tape and reduce the amount of time farmers spend working in fields or barns. Albert Dess of the European People’s Party Group has argued that cross-compliance rules, which relate to agricultural conditions, the protection of the environment and public, animal and plant health, should be simplified to help farmers be more productive.

On the other side of the debate, environmental groups have also expressed concerns about the ineffectiveness of the proposed reforms. The World Wildlife Fund (WWF) has condemned the Commission for undermining promises to change farming practices and provide a sustainable CAP.  On its website, WWF has criticised the reforms as insufficient and suggested that 100% of direct payments made to farmers should be linked to greening measures rather than the 30% which has been proposed:

“We need to make sure that each European farmer implements a meaningful crop rotation, devotes at least 10% of its land to biodiversity, and stop converting pastures into arable land that destroys our landscapes and increases carbon emissions. Today’s proposal is far from achieving these changes.”

The European Union, therefore, faces a very difficult juggling act between the sustainability of agricultural practices and the competitiveness of the industry. Whilst clearly attempting to please both sides of the debate the EU needs to be careful not to produce a budget which fails to meet any of its CAP objectives effectively. The combination of a rising population and record high food prices should convince the European Union to lower the costs incurred by its agricultural industry, reduce farmers’ dependence on subsidies and facilitate a more competitive industry.