Reviews changes in the objectives and instruments of EU's Common Agricultural Policy and discusses future perspectives

1. The EU’s Common
Agricultural Policy
- Historical overview and future perspectives
ALAN MATTHEWS
PROFEESSOR EMERITUS OF EUROPEAN AGRICULTURAL POLICY
TRINITY COLLEGE DUBLIN, IRELAND
Presentation to the Dynamic Economics, Growth and
International Trade DEGIT XXIV Conference,
Syddansk Universitet Odense
23 August 2019

2. Overview
Challenges
Responding to
challenges –
how the CAP’s
objectives
have changed
over time
Instruments
Is the CAP up to
the job? –
how the CAP’s
instruments
have changed
over time
CAP post 2020
Future
perspectives –
how should the
CAP change to
be more
effective,
efficient and
equitable?
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3. The food security imperative
Immediate post-
war food
shortages...
... were quickly
overcome
Now debate is
around whether
Europe should
help feed the
world
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Source: FAOSTAT, own calculation

4. Structural transformation ....
The Irish
example
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5. ... accompanied by lagging incomes ...
Source: Commission, Communication on the Future of Food and Farming, Nov 2017
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6. ....combined with income instability.... 6

7. ... reflected in the CAP’s objectives in the
Treaty of Rome
 to increase agricultural productivity
 thus to ensure a fair standard of living for the agricultural
community
 to stabilise markets
 to ensure the availability of supplies
 to ensure that supplies reach consumers at reasonable
prices
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8. Income support and stability were main
objectives of the classical CAP
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Guaranteed
minimum price
Peu
Pw
Variable
import levies
Variable
export refunds
World market World market
EU market
Price

9. Food safety concerns arrived on the
agenda...
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10. ... followed quickly by growing
environmental concerns ...
 Water quality – Nitrates
Directive
 Biodiversity habitats – Birds
and Habitats Directives
 Air quality – Gothenburg
Protocol ammonia emissions
 Soil health – [Soils Directive]
 Climate mitigation and
adaptation – Paris
Agreement
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Indicator Direction Outlook
Surface water
quality
Status habitats of
European interest
Gross nutrient
balance -nitrogen
Abundance and
distribution of
selected species
Source: European Environment Agency,
State of the European Environment 2015

11. ... and increased social questioning of
the food system inc. production methods
 Growing concentration in the food chain
 Diet quality, obesity and health
 ‘Small is beautiful’ – opposition to ‘industrial farming’, to farm
consolidation, in favour of short supply chains
 ‘Natural is good’ – opposition to use of external
inputs,’unnatural’ technologies, support for agroecology
 Impact of EU agricultural production and policies on
vulnerable developing countries
 Globalisation backlash – opposition to free trade, ‘food
sovereignty’ justifies protectionism
 Implications of planetary boundaries – criticism of meat, food
vs. fuel
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12. .. leading to ever-widening CAP objectives 12
Specific
objectives
proposed
for CAP
post 2020

13. Reflections on the challenges facing
agricultural policy
 Inevitable trade-offs between food production, nature
conservation, land-use mitigation, and energy production
 Uses of land are afflicted by a huge number of missing or
imperfect markets, making policy intervention imperative
 The ever-widening number of objectives – is Tinbergen’s
Rule still relevant?
 Setting the regulatory baseline – implementing the principle
‘polluter pays, provider gets’ – another area of conflict
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14. The changing policy instrument mix... 14

15. .. has reduced importance of trade-
distorting policies
Source: DG AGRI, Ensuring viable farm income. CAP Specific Objectives Explained, Brief No. 1
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Ratio between EU and world prices: % gap where 100% implies prices are equal

16. How CAP
budget is
distributed
among the
specific
objectives
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Source: Pe’er et al, Science,
2019
... but income
support
remains by
far the
dominant
CAP
objective

17. Reflection on CAP reforms to date
 Per hectare direct payments continue to take up around
two-thirds of total CAP budget – ineffective yet critical
element in farm incomes
 Attempts to ‘green’ CAP spending have been watered
down and of limited effectiveness
 Effective reform requires compelling external
circumstances (budget ceilings imposed by Finance
Ministers, trade commitments) plus an entrepreneurial
Agriculture Commissioner able to overcome ‘status quo
bias’ of agricultural interests
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18. The CAP post 2020 – Commission
Proposal and the New Delivery Model
 Ambition for greater environmental and climate focus
 Shifts policy focus from compliance to performance in
achieving results against common CAP objectives
 Rebalances responsibilities between the EU and the
Member State level with more subsidiarity
 Built around strategic planning, broad policy
interventions and common performance indicators
 Creates POSSIBILITY for member states to pursue more
effective policies but worrying lack of INCENTIVE
MECHANISMS to encourage good practice
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19. The CAP in historical review and future
perspectives
 Achievement of a single agricultural market underpinned by
‘level playing field’ rules (environmental, food safety,
competition and state aid rules)
 A successful reform process that has (largely) eliminated the
most trade-distorting forms of agricultural support....
 ... but most EU farms still heavily dependent on public income
support
 Widening range of policy objectives (especially environment
and climate) has led to a more politicised debate around the
CAP
 CAP post-2020 debate to date shows the powerful hold of the
status quo bias in policy-making
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20. “
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THANK YOU
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