My presentation at the recent EAAE Seminar in Budapest discusses the implications of shifting the CAP towards performance

1. The proposed shift of the CAP from
compliance to performance:
challenges, impacts and opportunities
for a knowledge-based EU agriculture
162nd EAAE Seminar
Budapest, 26-27 April 2018
Tassos Haniotis
Director
DG Agriculture and Rural Development
European Commission
#FutureofCAP

2. Agriculture and
Rural Development
The essentials of the shift towards performance
The challenges for a knowledge-based agriculture
The potential impacts from a knowledge-based agriculture
The opportunities of a knowledge-based agriculture
The implications for Ag Economists
Outline

3. Agriculture and
Rural Development
EU Specific objectives
Set of common Indicators
EU
Broad types of interventions
Identification of needs in MS's CAP Plan
Tailor CAP interventions to their needs
Implementation / Progress towards targets
MEMBER
STATES
The new delivery model for the CAP at a glance

4. Agriculture and
Rural Development
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The new Green architecture of the CAP

5. Agriculture and
Rural Development
Streamlining the present set of indicators
 16 impact, 41 result, 24 target (EARDF), 85 output, 45 context indicators
Suitability of the indicators for monitoring purposes
 e.g. policy relevance and causality, periodicity …
Overlapping in the reporting obligations
 e.g. data reported both for audit purposes and RD Annual Implementing Reports…
Issues with the reliability/quality of some data
 e.g. different sources, different reporting periods, control and correction methods…
Issues and lessons learnt from the current CMEF

6. Agriculture and
Rural Development
• A single set of Specific Objectives for the whole CAP
• Link of CAP Strategic Plans to these objectives
• A single set of Indicators under a single legal basis
• A single Monitoring Framework under the CAP Strategic Plans
• Streamlining of the Reporting Obligations
• A unified Evaluation Framework for 1st and 2nd pillar
Towards a unified performance framework for the CAP

7. Agriculture and
Rural Development
A performance-based policy implies two distinct, but interconnected processes …
 … that of assessing the policy and that of assessing the policy implementation
A meaningful assessment of policy performance can rely on the manner by which …
 … specific targets are achieved, especially with respect to specific objectives
Reliable policy assessment requires a selection of a set of indicators reflecting how …
 … the supported intervention contributes to achieving the specific objectives
Policy performance is assessed multi-annually based on a combination of methods …
 … while policy implementation requires closer monitoring at an annual basis
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Focus on performance

8. Agriculture and
Rural Development
The rationale of future indicators
Common Impact Indicators
CAP Policy Performance
Impact indicators are used to
evaluate policy performance at the
level of overall objectives (mid-
term and ex-post).
Common Result Indicators
CAP Plan Performance
Result indicators are used for
target setting in CAP plans and
monitoring progress towards
those targets ("Annual
Performance Review")
Common Output Indicators
CAP Assurance
The output indicators serve the
purpose of linking expenditure to
output. They are used for annual
performance clearance.
Context Indicators
General context
Context indicators reflect relevant aspects of the general
contextual trends in the economy, environment and society and
are likely to have an influence on performance

9. Agriculture and
Rural Development
EU Objectives
Income
Climate change
Environment
Competitiveness
Food chain
Landscapes
Generational renewal
Rural areas
Food and health
Impact indicators
Assessing CAP performance

10. Agriculture and
Rural Development
• Upgrade information needs
• Need for comprehensive, complete, timely and reliable information
• Existing data sources will be adapted and strengthened:
• FADN data base: coverage to be expanded
• On-going modernisation of agricultural statistics
• Further development of data quality
• in particular of the impact indicators linked to agro-environment
• Cross-linking existing data sets
• New sources of data
• satellite monitoring (Copernicus)
• big data solutions, cooperation with specific data providers…etc.
Data/Sources of information

11. Agriculture and
Rural Development
An example of an economic objective (competitiveness)
1. EU Specific objectives
3. Objectives from EU legislation
2. EU Impact indicators
4. Identification of needs in MS’s
CAP plan
5. Contribution of MS’s CAP plan
to EU objectives
• Competitiveness
• Article 39 TFEU (CAP objectives): to increase agricultural productivity by promoting technical progress and
by ensuring the rational development of agricultural production and the optimum utilisation of the factors
of production, in particular labour
• Increase farm productivity/ indicator: Total factor productivity (progress in TFP compared to base
year)
• Current CMEF: TFP I.03 and C.27
• Data sources: based on EAA and FADN
• The ex-ante assessment helps to identify the specific needs to increase farm productivity
• The CAP plan shows how it will contribute to increase farm productivity
• Setting of result targets: Share of farmers with support for advice, training and knowledge exchange related
to economic performance; Share of farmers with investment support to restructure and modernise; Share
of farmers with improved access to precision farming technology through CAP
• Selection and definition of interventions: decoupled support, coupled support, Investment support,
Advisory services, Basic services in rural areas (ICT), measures aimed at increasing carbon storage, uptake of
precision farming etc.
6. CAP and MS’s plan
performance
• Evaluation of policy performance based on impact indicators
• Progress monitoring towards set targets based on result indicators
E
U
M
S

12. Agriculture and
Rural Development
50
70
90
110
130
150
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
EU-15 EU-N13 MS1 MS2
Evolution of TFP (2005=100)
C
A
D
y/x
f
f'
0
Quantity
of
outputs y
Quantity of inputs x
Allocative
efficiency
B
• Innovation, investment and
technological change
• Horizon 2020, EIP-AGRI, … (A  B)
• Efficiency gains through better
farm management
• RD programs (C  A)
• Decoupling (A  D)
• Efficiency changes from
regulations
• Environmental requirements
• Nitrate directive, SUD, …
• Enabling rural environment
• RD programs
• Structural change
• Decoupling
• Climate change
• Environment-climate requirements,
cross-compliance
Examples of policy impact on productivity gains
The policy links of competitiveness

13. Agriculture and
Rural Development
1. EU Specific objectives
3. Climate objectives from EU
legislation
2. EU Impact indicators (e.g.)
4. Identification of needs in MS’s
CAP plan
5. Contribution of MS’s CAP plan
to EU objectives
• Climate change mitigation & adaptation
• Reduction of greenhouse gas (GHG) emissions by 30 % by 2030 in the non-ETS (emission trading
system) sectors, including agriculture, pursuant to the 2030 Climate and Energy Framework
• Reduce GHG emissions from agriculture / Indicator: GHG emissions from agriculture
• Current CMEF: Impact indicator I.07, context indicator C.45
• Data sources: European Environment Agency
• The ex-ante assessment helps to identify specific needs in relation to reducing GHG emissions
• The CAP plan highlights the link to the existing climate legislation (2030 Climate and Energy Framework,…)
• The CAP plan shows how it will contribute to reaching the reduction of GHG of 30 % in non-ETS sectors by
2030
• Setting of result targets (e.g.): share of UAA receiving income support and subject to conditionality; share
of livestock units concerned by support to reduce GHG emissions; share of farmers receiving advice related
to env/climate performance
• Selection and definition of interventions (e.g.): maintenance of permanent grassland; feed-related Pillar II
measures; training
6. CAP and MS’s plan
performance
• Evaluation of policy performance based on impact indicators
• Progress monitoring towards set targets based on result indicators
E
U
M
S
An example of a climate objective (cut in CGH emissions)

14. Agriculture and
Rural Development
CGH emissions from agriculture

15. Agriculture and
Rural Development
1. EU Specific objectives
3. Objectives from EU legislation
2. EU Impact indicators
4. Identification of needs in MS’s
CAP plan
5. Contribution of MS’s CAP plan
to EU objectives
• Generational renewal
• EU Youth Strategy – Initiatives in the areas of employment and entrepreneurship, social inclusion, education
and training, creativity and culture, etc.
• Attract young farmers / Indicator: Number of new farmers
• Current CMEF: not covered at impact level (no data); context indicator C.23 – age structure of farm
managers
• Data sources: potentially Eurostat (depending on final version of Integrated Farm Statistics currently in
Trilogue)
• The ex-ante assessment helps to identify the specific needs to attract new entrants and foster
generational renewal in agriculture, including specific aspects on land mobility and access to credit. It also
highlights how national instruments, e.g. taxation, inheritance law, regulation of land markets or territorial
planning, interplay with EU-supported interventions in relation to generational renewal
• Corresponding context indicators: age structure; farms, land and output by age class; training levels by age
group, etc.
• The CAP plan shows how planned interventions will contribute to attract new farmers and facilitate
generational renewal
• Setting of result targets: Number of new farmers setting up a farm with support from the CAP.
• Selection and definition of interventions: Young Farmer Payment top-up and / or EAFRD installation
grants; priority for young farmers for investments, AKIS, cooperation (land mobility schemes) etc.
6. CAP and MS’s plan
performance
• Evaluation of policy performance based on number of new farmers (impact indicator)
• Progress monitoring towards set targets based on result indicators
E
U
M
S
An example of a social objective (generational renewal)

16. Agriculture and
Rural Development

17. Agriculture and
Rural Development
A shift in approach requires a shift in mentalities…
 …the "entry" point" for assessing the policy will be the list of its specific objectives
Impacts will mainly be on administrations (EU and MS)…
 …assessing the relevance and progress of strategic plans towards specific targets
Risks of backtracking have been identified in the public debate…
 …but remedies exist, and transparency in information (underestimated) will weigh big!
Opportunities stem from linking modernisation to simplification…
 …thus opening the door for a new role for knowledge, innovation and advice
Challenges, Impacts, Risks and Opportunities

18. Agriculture and
Rural Development
Economic dimension: the untargeted debate of targeted support
 Is there still need of income support, and what for? Based on land, farm or product?
Environmental/climate dimension: the need for solid evidence
 Political correctness still dominates factual correctness, despite progress on the ground
Social dimension: farming and its link to jobs, growth, poverty
 The WB study helps to refocus the debate, and to link it to other policies
Modernisation, simplification and Farming 4.0
 Old perceptions, new technologies and digital realities (full spectrum of pros and cons)
What role for Ag Econ in this?

19. Agriculture and
Rural Development
Reports and data available at:
https://ec.europa.eu/agriculture/index_en.htm
https://ec.europa.eu/agriculture/policy-perspectives/index_en.htm
https://ec.europa.eu/agriculture/policy-perspectives/impact-assessment/index_en.htm
https://ec.europa.eu/agriculture/markets-and-prices/index_en.htm
https://ec.europa.eu/agriculture/events/2016-outlook-conference_en
https://ec.europa.eu/agriculture/statistics_en
https://ec.europa.eu/agriculture/cap-indicators_en
https://ec.europa.eu/agriculture/consultations/cap-modernising/2017_en
https://ec.europa.eu/info/news/future-cap-whats-cooking-next-cap_en
Thank you for your attention!
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