The report adopted under the Strategic Dialogue has a different assessment for everyone. The report is given particular weight by the fact that COPA, COGECA, CEJA, ELO and Eurocommerce, have signed it, while on the other side, organisations that would previously have been unthinkable to be on the same platform as agricultural organisations have also signed it. Seen in this light, the report is a breakthrough and a huge success.
However, if we place it in the current political and economic context and follow its own principles, it is going to dismantle the CAP. These recommendations would also lead to further increases in the price of products and the gradual decline of medium and large farms.
As war requires three things: money, money and money, so money is the basis of agricultural policy. And this is where the problems start, because nothing concrete is said about this. The report has been written as if all the resources in the world were available, and it has not addressed the question of how much money is needed for each objective and intervention, at least in relation to the current level, nor how the changes will affect the competitiveness of EU agriculture on the world market. In other words, can we continue to maintain our position as a net exporter or will the changes mean that we will be handing over our own internal market to our competitors?
Of course, we can talk about what a beautiful world we dream of, but if we are not clear about the costs, who will finance it and on what basis, it is all a pipe dream. The report is also a pipe dream, and worse than that, because if we look at the past budget negotiations and the current political priorities of the Member States, the report is likely to reduce rather than increase the CAP budget. If we analyse realistically the CAP’s position among EU policies, taking into account, for example, the Draghi report, the increase in defence spending, we have to admit that there is little chance that the Member States that finance the Union will, as a result of the report, say, double the CAP budget. (In fact, we don’t even know how much it would cost to achieve the report’s objectives.) It is more realistic that the heads of state and government would adjust the level of funding for inflation and perhaps add a few percent on top of that, just to say they understand their farmers. In this case, if we follow the ideas of the report, only small farms (undefined size), farmers in areas with natural handicaps, mixed farms, young farmers and new entrants would be eligible for the basic CAP payment, and would remain in the CAP. If we understand them correctly, they would be covered by the national CAP strategic plans together with the eco-schemes, agro-environmental measures. It also follows that, if there is no substantial increase in resources, the resources hitherto allocated to this group would be kept in the CAP and the rest (direct payments, rural development) would be transferred to the two new non-CAP funds, to varying degrees depending on the Member State.
The million dollar question: what happens if medium and large farms are excluded? Why would they want to invest in sustainability themselves? If they are obliged to do so, they will either have to pass on the costs to consumers, which would otherwise make them less competitive with producers in third countries (e.g. Ukraine, Brazil, Canada, USA, Russia), or they would have to be subsidised. Two funds outside the CAP would be responsible for this. All farms, from small to large, would have to draw resources from these two funds (the Agricultural Just Transition Fund (AJTF) and the Natural Restoration Fund (NRF)). The AJTF, as we know, would be semi-market based, finances by EU, Member State and market actors. This could even be forward-looking, but as these funds would be outside the CAP, they would (because of their purpose) naturally be the responsibility of DG Climate and DG Environment within the Commission (and we have seen in recent years how farmer-centred their proposals are). It could also affect a significant part of the CAP funds currently allocated to medium and large farmers, their ecos-schemes and agro-envi allocations and rural development funds. This is, of course, speculation based on MFF practice over the last few decades. There are serious concerns about the extent to which these new funds will help investments that will enable our farms, already disadvantaged by the effects of climate change, to compete on the world market against farmers in third countries with less stringent regulatory frameworks. Now is the time for medium and large farms to decide on risky and long-term investments, such as crop rotation, irrigation, investments in response to epidemics and animal welfare rules. And we have not even mentioned the impact of politically sensitive Ukrainian products and production on the agricultural market. In this situation, farms and farmers should feel that there is a safety net behind them, but instead the signatories of the report, and therefore their representatives would take away the support what they have had so far.
So who is this report for?
| Positive | Negative |
| For the NGOs who, with the new institution (EBAF), will have a greater say in the lawmaking process | For those who look at agricultural policy from the perspective of a deal between farmers and consumers |
| For environmentally conscious consumers with higher-income, | For price-sensitive consumers |
| Young farmers, small farms, farmers in disadvantaged areas, mixed (livestock and crop) farms, because they receive more attention and presumably slightly more support | Medium and large farms, because they face a serious reduction in support |
| Member States where mixed farms and small farms are prevalent and/or in a good position in state aid competition | Typically the former socialist countries, and some Southern countries where monoculture farming and large farms are typical. |
| Third countries, as the EU’s competitiveness is declining and they have easier access to markets. | Those who think CAP should be for the lower- income consumers as well. |
In short, the report will divide both Member States and interest groups and will undermine the CAP and farmers’ ability to express their interests. In principle, stakeholders could call on their representatives to withdraw their support for the report, but they would be likely to be told that the above is speculation and that they can protest later. This will put them into a one-way, ever-narrowing street from which they will not be able to turn back, as they will be bound by the report.
The CAP reform rules will be so far advanced by the end of the MFF negotiations, and there will be so little time for any adjustments to the reform, that the principles will be unchangeable. And if the resources do not increase substantially, farmers will still have to face the new system and further restrictions. The key message is: that the game is just beginning and it will be a long process to get to the end.