The document discusses factors that will influence the debate around reforming the Common Agricultural Policy (CAP) after 2020. It outlines the European Commission's process for developing proposals, including public consultations. Survey results showed most respondents want the CAP to address challenges like climate change, environmental protection, and generational renewal. The Commission is considering scenarios that shift support towards rural development, innovation, and risk management. Prospects for the CAP budget are uncertain due to new EU priorities and Brexit. Cuts may fall disproportionately on certain member states or policy pillars. Political constraints could complicate reaching agreement on reforms by 2020.

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TOWARDS SUSTAINABLE AGRI-FOOD SYSTEMS:
B A L A N C I N G B E T W E E N M A R K E T S A N D S O C I E T Y
XV EAAE Congress | August 29th – September 1st 2017
Reflections on the CAP post 2020
Contribution to Organised Session
The Economics and Politics of the CAP after 2020
XV EAAE Congress, Parma, Italy
28 August- 1 Sept 2017
Alan Matthews
Professor Emeritus of European Agricultural Policy
alan.matthews@tcd.ie

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Positive or normative approach?
• What should be in the CAP
after 2020?
(already discussed in RISE
Foundation report)
versus
• What are the factors likely to
influence the CAP 2020
debate?
(basis for this presentation)
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Where are we now?
• Oct 2016 Commission 2017 work programme launched initiative on
modernising and simplifying the CAP
• Feb 2017 Commission Inception Impact Assessment
• Feb-May 2017 Public consultation
• July 2017 ‘CAP – Have Your Say’ public conference
• Impact assessment by DG AGRI services
• End 2017 Commission Communication
• First half 2018 Commission legislative proposal?
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Simplifying and modernising the CAP – why?
• The Commission’s proposal on the next MFF
• Due end 2017, may be delayed
• Dissatisfaction with outcome of the 2013 reform
• Complexity
• Greening
• New challenges
• Paris Agreement (climate action)
• SDGs
• Competitiveness and innovation
• Market volatility/risk management
• “Societal concerns”
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Parallel processes
• Omnibus Regulation on financial simplification (Sept 2016)
• Commission – more flexibility for MS re active farmers, allow ‘decoupling’ of VCS
during market crises, remove hectares limit on young farmers aid and require
business plan, introduction of sector-specific income stabilisation tool
• Council – largely focused on simplifying rules, national assistance for producer
groups in regions with below average coverage
• Parliament – requirements for EFAs, risk management tools (subsidised premiums
for income insurance, lower threshold for indemnities from 30% to 20% of losses
while increasing threshold for public subsidy from 65% to 70%, voluntary supply
management), food chain issues (strengthened powers for producer groups) ,
extension of RDPs
• Initiative to improve the food supply chain (July 2017)
• Public consultation opened
• Outcome on whether to present legislative or non-legislative proposals Spring 2018
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Results of public consultation
• Having asked participants to state the most important challenges for
EU agriculture and rural areas, they were asked:
• Majority of respondents in each of three groups (individuals in
farming, non-farmers and organisations/companies) replied
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Commission impact assessment scenarios
• 1. Maintaining the EU’s farm rules as they currently stand
• 2. No policy, full liberalisation
• 3. Programming with implied shift from area-based payments
towards rural development, innovation & risk management tools
• 4. Build on area-based payments to further leverage economic &
environmental benefits in a simplified way
• 5. Strong redistribution of support inc. capping, focus on small-
holders, environmentally-friendly farms & local food
• Source: Own interpretation based on Commission, Inception Impact Assessment for a Communication on Modernising
and Simplifying the Common Agricultural Policy, Feb 2017
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Source: Matthews, A., capreform.eu
0
20
40
60
80
100
120
140
160
180
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Billioneuro
Trends in EU-28 farm income aggregates 2005-2016
Factor income Entreprenurial income Fac.Inc. average 2005-16
Ent. Inc. average 2005-2016 Subsidies on production Subsidies on products

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Prospects for the CAP budget
• The actual context
• New EU priorities
• Brexit
• The Brussels rumour mill
• Commission Reflections Paper on Future of EU Finances
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Commission Reflections Paper
• Options under heading ‘Reforming the Common Agricultural Policy’
• Focus further on the provision of public goods
• Target direct payments more effectively by reducing payments for largest
farms
• Introduce “a degree of national co-financing” for direct payments
• Risk management tools to deal with crises
• Rationalise action of different structural funds in rural areas, eliminate
overlaps
• Put more emphasis on incentivising farmers to deliver environment and
climate public goods through contracts
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Commission Reflections Paper
– 5 ‘illustrative scenarios’
No. Scenario EU budget CAP share Agricultural policy priorities
1 Carrying on Stable Lower Better targeting of support on farmers with
special needs and risk management,
investment in RD (especially agri-environment)
2 Doing less
together
Smaller Lower Support only for farmers with special needs
and risk management tools
3 Some do more Stable+ Lower As in Scenario 1
4 Radical
redesign
Smaller Lower As in Scenario 1
5 Doing much
more together
Increased Higher amount Not specified
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Prospects for the CAP budget
• The actual context
• New EU priorities
• Brexit
• The Brussels rumour mill
• Commission Reflections Paper on Future of EU Finances
• Statements by net contributor countries
• Statements by Budget and Agriculture Commissioners
• Assuming a smaller CAP budget, where should the cuts fall?
• Pillar 1 or Pillar 2?
• Member State distribution
• Further movement towards external convergence?
• Even greater flexibility to shift funds between Pillars, assuming Pillars continue?
• Prospects for a performance reserve?
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Denmark
UnitedKingdom
Netherlands
Belgium
France
Germany
Spain
Ireland
Greece
EU-28
CzechRepublic
Sweden
Cyprus
Hungary
Italy
Luxembourg
Bulgaria
Lithuania
Poland
Latvia
Finland
Romania
Slovakia
Estonia
Austria
Slovenia
Portugal
Croatia
Malta
Relative importance of direct payments and rural
development funding by Member State, 2015-2020
Pillar 1 Pillar 2
Source: Own calculations based on DG AGRI data
Note: Figures prior to transfers between Pillars

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Political and scheduling constraints
• Can co-legislators agree within 12 months of Commission publishing
legislative proposals?
• Will European Parliament agree to draft its opinion before it knows the
outcome of MFF negotiations?
• Will European Council attempt to red-line particular CAP issues which are
the prerogative of co-decision as on last occasion?
• How will elections in key Member States in 2017-18 affect AGRIFISH
Council perspectives?
• If no agreement by March 2019, given need for lead-in time for paying
agencies to adjust systems, will there be a ‘CAP-light’ reform with slight
tweaks with major reform postponed to early 2020s?
• What might be impact of a radically different agricultural policy taking
shape in the UK post 2020 on future CAP design?
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Which direction for CAP after 2020?
Support for products
Support for
producers
Preventive supply management
Raise safety-net intervention prices
Counter-cyclical payments
More coupled support
Innovation
Climate mitigation and adaptation
Reduced chemical inputs, efficient water use,
improved soil health, habitats for biodiversity
CAP reforms 1992-
2008
Support for production methods
2013 CAP reform
CAP post 2020??
Return to product-related
interventions?
Further emphasis on how
food is produced

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More detail
• CAP – Thinking of the Box report
• RISE Foundation
• http://www.risefoundation.eu/publications
• capreform.eu
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