This document provides an overview of EU agricultural policy, including:
1. The main EU institutions involved in agricultural policy formulation and their roles.
2. The evolution of the Common Agricultural Policy (CAP) from its establishment in 1962 to current reforms.
3. Key issues for agricultural policy like trade agreements, Brexit, and climate change and the policy responses in these areas.
2. Project No: 2017-1-IE01-KA202-025711
This project has been funded with support from the European Commission.
This publication reflects the views only of the author, and the Commission
cannot be held responsible for any use which may be made of the
information contained therein.
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3. What’s in this Module
Agricultural Policy
• EU Decision Making
• The Common Agricultural Policy
• Trade Policy & Brexit
• Climate Change and Agriculture
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4. Aim: add text here
Objectives: By the end of this session you will be able to:
Aims & Objectives
• EU Decision Making: Understand the responsibilities of the main EU institutions when it comes to
the formulation of agricultural policy in the European Union
• Common Agricultural Policy: Review the CAP, understand its evolution from its establishment in
1962 to the present day.
• Trade Policy & Brexit: Assess the implications of Brexit, and identify the challenges and risks
associated with trade agreements.
• Climate Change & Agriculture: Identify the policy response in the area of climate change and
agriculture.
6. European Commission
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• 28 Commissioners (including 1 President, Jean-Claude
Juncker, and 7 Vice-Presidents) and 33,000 civil servants
in 33 Directorates-General
• Phil Hogan is the current Commissioner for Agriculture &
Rural Development, 2014-2019
• Independent, Collegial & Accountable
• Exclusive right of initiative: proposes/drafts legislation
• Executor of EU legislation: monitors implementation
8. • Composed of specialised councils attended by
government ministers from each Member States (e.g.
Agriculture & Fisheries, Environment, Competitiveness)
• The priorities are set by the Presidency, which rotates
among member states every 6 months (currently
Slovakia). Ireland was last president from Jan-June 2013.
• Council amends and adopts legislation, and has
budgetary power, together with the European Parliament
• Qualified Majority Voting: 55% of Member States (16 out
of 28) + 65% of EU population needed for approval
Council of the European
Union
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10. European Parliament
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• 751 MEPs – 11 Irish MEPs, 7 political groupings. Martin
Schulz (DE/ Socialist) is the President.
• 22 Parliamentary Committee’s including the Committee
on Agriculture consisting of 45 members- 3 Irish MEPs
• Influence has grown since adoption of the Lisbon Treaty
• Powers: Legislative & budgetary together with Council, as
well as executive oversight- approval of Commission &
power of censure.
European Parliament, Strasbourg
11. The Common Agricultural Policy
• The CAP is one of Europe’s
oldest public policies
• The Treaty of Rome in 1958
established the Common
Market
• The CAP was formally
approved in 1962
• Food Security in Post War
Europe was a major
concern
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The Treaty of Rome was signed by France,
Germany (W), Italy, the Netherlands,
Belgium and Luxembourg
Ireland joined the EEC in 1973, with Denmark
and the UK
12. The Common Agricultural Policy
The Objectives of the CAP
1. To increase agricultural
productivity
2. To ensure a fair standard of
living for farmers
3. To stabilise markets
4. To ensure the availability of
supplies
5. To ensure reasonable prices for
consumers
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1st EU Agriculture
Commissioner & Fmr
Dutch Farm Minister
13. The Common Agricultural Policy
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The Early Years (1960’s to 1980’s)
• Market and price supports
• Improvements in productivity
• Over production
• Exploding expenditure and budget pressures
• Cause of international friction
• Results in supply management measures – for example,
milk quotas were introduced in 1984
14. A key objective in the early CAP was to manage markets
through the following:
1. Setting a target Price for milk
2. Public Intervention and Private Storage Aid
3. Export Refunds
4. Import Tariffs
5. Subsidised Consumption
6. Production Quotas
CAP Objective – to stabilise markets
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15. A growing surplus of milk
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Increasing levels of Public intervention stocks prior to the
introduction of Quotas
16. The Common Agricultural Policy
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The Reform of the CAP (1992 to 2003)
McSharry Reforms 1992
GATT Agreement 1994
Agenda 2000 & Decoupling in 2003
17. The Common Agricultural Policy
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The Reform of the CAP (2003 to 2013)
CAP Health Check 2008
CAP Reform 2013
What’s Next???
18. EU Budget (Multi Annual Financial Framework
2014 to 2020)
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Key Facts:
• Total Budget is €960bn
• Agriculture allocated €373bn or
38.8%
• Agreed every 7 years
• Annual budgets approved within
this framework
• CAP budget in 2016 worth €62bn
20. • Public Intervention & Aids to Private Storage
• Are they adequate tools to support farmers and co-ops?
EU Safety Net Tools
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21. EU Budget: 2021 to 2027
• Total CAP budget of €365 bn; inc. €286bn for DP & €78,8bn for RD (28.5%)
• €10 Billion for agri-food research and innovation
• Corresponds to a 5% cut to the CAP budget at current prices
• 12% cut to the CAP budget (accounting for inflation)
• Reduction due to Brexit and new priorities
• CAP Reform proposals announced alongside budget proposals
• Commission seeking an agreement with EU Parliament and Council on the
budget and CAP reform in 2019
EU Budget and CAP Proposals
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22. • CMO Regulation is unchanged
• New delivery model w/ National CAP Strategic Plan
• Direct Payments
• Reduction of payments above €60,000; capping at €100,000.
• Support redistributed to smaller farmers
• 2% of DP budget ringfenced for younger farmers.
• “Genuine farmers” to receive support.
• Reinforced environmental link
• Cross compliance & green direct payments scrapped, but mandatory measures
• Voluntary "Eco-Scheme“ in Pillar 1
• 30% of Rural Development Measures to address environment & climate
CAP Legislative Proposal
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23. • Tariffs
• e.g. ordinary customs tariffs.
• Non Tariffs Barriers
• e.g. sanitary and phytosanitary (SPS) measures, pre-shipment barriers, rule
of origin.
What are trade barriers?
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24. • WTO established in 1995, as a successor to GATT
• The Doha Development Round launched in 2001
• But, progress has stalled to date
• Amber, Blue and Green Boxes
• One recent success - WTO 10th Ministerial Conference
held in Nairobi, Kenya in 2015
• Agreement to phase out export subsidies
WTO – Multilateral System
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26. Trade is a key focus of the Commission
• Commission carries out an impact assessment
• It then receives a mandate from the Council to negotiate
with countries/regions outside the EU
• Final approval is required from the Council and the
European Parliament
• EU Member States do not negotiate their own trade
agreements
• But they do lead their own trade missions across the
world to help promote their food sectors
EU Trade Policy – how it works
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27. EU BilateralTrade Negotiations
• USA
• Canada
• Japan
• Australia
• New Zealand
• Mercosur (South America)
• Vietnam
• Thailand
• Turkey
• Mexico
• Philippines
• Indonesia
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Economic assessment by the EU’s Joint Research Centre
has identified both opportunities and threats
28. Brexit – Article 50 Reminder
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• On 29 March 2017, the UK notified the European Council of its intention to
withdraw from the European Union.
• Art 50 (2) “The Union shall negotiate and conclude an agreement with that State,
setting out the arrangements for its withdrawal, taking account of the framework
for its future relationship with the Union”.
• Art 50 (3) “The Treaties shall cease to apply to the State in question from the
date of entry into force of the withdrawal agreement or, failing that, two years
after the notification…unless the European Council, in agreement with the
Member State concerned, unanimously decides to extend this period.
29. • The draft “Withdrawal Agreement” currently states:
• UK will honour its share of all financial commitments
• EU Citizens living in the UK before 31 December 2020 will have full permanent
residency rights & visa versa.
• Backstop option: NI remains in Customs Union & common regulatory area in
order to ensure north-south alignment
• A “status quo” transition period will be in place until Dec 31 2020, whereby the
UK will be bound by all EU rules.
• Negotiators are now discussing the framework of the future EU-UK relationship,
against a background of political instability in the UK.
Brexit Negotiations
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30. Climate Change & Agriculture
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Global Temperature since 1880:
• Evidence indicates that global temperature has increased by 0.85 degrees since 1880.
31. Climate Change & Agriculture
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What is causing global warming?
•Farming activity due to complex natural processes results in GHG’s.
•Methane is 25 times more potent as a GHG than carbon dioxide, remains in the
atmosphere for 12.4 years.
•Nitrous oxide is 298 times more potent as a GHG than carbon dioxide, remains
in the atmosphere for 120 years.
•GHG inventories are calculated based on activity data (.e.g cattle numbers or
fertilizer sales) and emission factors (emissions associated per activity).
Commission Proposal:
Published on the 2 May
Proposed an increase budget overall of €1.135 trillion (expressed in 2018 current prices); increase in contributions to 1.11% of MS GNI; However Brexit + New Priorities = cut to CAP and to Cohesion Policy
Budget of €378,920 for Natural Resources and the Environment: This includes the CAP budget of €365; and LIFE of €5.450 (up from €3.45)-would also support clean energy and energy efficiency programmes.
a further €10 billion in Horizon Europe dedicated to research and innovation in food, agri and the bioeconomy (increase form current €3.851 billion)
NOTE: ALL EXPRESSED IN CURRENT PRICES
Current v 2018/Constant Prices
Parliament/Farm Europe argue that to compare with current budget it is necessary to compare in constant prices (in this case 2018 prices, i.e. in real terms, excluding the effects of inflation).
Around 13% increase in research
Commissioner Oettinger had referred to a 5% cut to the CAP with a 4% cut to direct payments
This proposal, if accepted by the Member States and the European Parliament, would reduce the CAP budget by 7,2% over the next 7 years and be a decrease of 11,2% in 2027. The impact on the direct payments to which the budget cut would be affected would be considerable, with a shortfall for farmers of 10% over the period, and about 15% in 2027. The agricultural budget would thus not only assume the full CAP-Brexit bill (18.9 billion). But, in addition, it would contribute 8.5 billion euros to the deployment by the European Union of other policies.
In the end, the CAP would only represent 30.4% of the European budget.
It is proposing a 16 billions euros cut in the 2nd pillar of the CAP over the period (constant EUR), meaning that the total losses for the CAP budget proposed reached -11,71% on average 2021-2027 (in annual terms, -16% in 2027) - with a 2% inflation rate.
In other words, indeed -9,56% is missing in the budget for the first pillar on average 2021-2027 (meaning -15% in 2027) to maintain the current value of the direct payemnts and concerning the second pillar -21%.
New delivery model w/ National CAP Strategic Plan: More Flexibility, Simplification & results orientation.
CAP Strategic Plan will include:
i. Intervention strategy with a description of the elements, including direct payments, rural development initiatives, sectoral programmes & elements which ensure simplification & reduced administrative burden
ii. A financial plan, together with the governance & coordination structures and any additional national financing provided
iii. An ex-ante evaluation
iv. A Strategic Environmental Assessment (SEA)
v. SWOT analysis
vi. Indicative evaluation plan
Direct Payment/Basic Income Support for Sustainability (BISS):
Active- Genuine Farmer: TBD by MS- as well as Agricultural Activity; Agricultural Area; Eligible Hectares- no income to be given to “those whose agricultural activity forms only an insignificant part of their overall economic activities or whose principal business activity is not agricultural”.
Mandatory Capping at €60 000 per beneficiary per year- adjusted according to salaries of workers declared by farmers & cost of regular, unpaid labour
Funds saved by MS through capping would be allowed to be used for Pillar 2 initiatives (pillar flexibility).
Obligatory redistributive payments (from bigger to smaller &/or medium-sized farms)
Brussels will provide basic rules and Member states decide the rest- amount per hectare/maximum number of hectares per farmer; cannot exceed national average direct payment.
Name: Complementary Redistribution Income Support for Sustainability (CRISS)
Complementary Income Support for Young Farmers (CISYF)
Article 42 : Top-up for “young farmers who are newly set up for the first time”
Young Farmer Definition: 40 years of age or younger, who is “head of the holding” & had the appropriate training &/or skills
Coupled Support
May be up to 10% of national envelope; Further 3% coupling for protein crops
Environmental Measures:
Cross compliance & green direct payments scrapped = all operations integrated
Art 43, "Eco-Scheme": ‘Voluntary schemes for climate & the environment which go beyond mandatory standards e.g. for fertiliser, PPPs or other mandatory requirements.
Risk management tools (Pillar 2):
Art 50: Support promotion of tools which help farmers manage production and market risks which are outside of their control
Including contribution to premiums for insurance schemes/ admin costs for mutual funds up to max 70%
Training, knowledge transfer initiatives & the inclusion in the farm advisory service on risk management and insurance tools (under rural development).
Use Handout
Food Harvest Base is the average production in 2007-09
Opportunities – Global demand for dairy remains positive (e.g. butter)
Challenges – Brexit, CAP, Volatility, Labour & Environment.
In March 2018, a draft “Withdrawal Agreement” was published detailing the progress of the negotiations so far. Many chapters are now considered agreed fully or in principle, with the following commitments made by both parties:
Financial Contribution: UK has agreed to honour its share of all the financial commitments that has been identified, with an estimated net charge of €40bn-€60bn. This is reflected in the text of the deal, which although containing no exact number, states the UK’s commitment to paying into the EU budget up to 2020 and “contribute its share of the financing” for any EU liabilities over the decades to come. This will be paid, not in a lump sum, but on a phased basis, meeting the payments as they come up.
Citizens’ Rights: EU citizens living in the UK before the end of the transition period, i.e. 31 December 2020, will be able to claim permanent UK residency status, which will leave their rights essentially unchanged. However there will be stricter limits on the possibility for their families to join them within the UK. These rights will be enshrined in UK law, and while the European Court of Justice will not have ultimate judicial oversight, its case law will be used to interpret the deal and UK courts will be able to refer cases to the ECJ for a period of eight years after the deal comes into force.
Transition Period: A 21-month “status quo” transition period will be in place, from 29 March 2019 until the 31st December 2020. This will extend UK membership of the single market and customs union, meaning the UK will be bound by all EU rules and in turn will maintain all
However as the UK will no longer be an EU member state it will lose its benefits and ability to trade under the 750 trade and market access arrangements the EU has with 168 countries worldwide. The agreement states that the EU will tell its trading partners to treat the UK as part of the EU, however it cannot guarantee that its trading partners will accept the arrangements.
The UK can negotiate trade deals during the transition period, as long as they do not take effect until afterwards.
There is no provision for extending the transition period should it be necessary and once the UK is outside the EU, it may not be legally possible to do so. Concerns remain over the length of this transition and whether either the EU or UK will be ready to implement new trading terms by the end of 2020, especially should new border infrastructure need to be built.
Goods Placed on the Market: There are specific provisions relating to goods placed on the market or under contractual arrangements before 1 January 2020. These are very relevant, for example to live animals in transit. If a product is on the market (i.e. under a contract or in circulation) it will falls under the old single market rules. However if the product is in storage and has no contract, it falls under the new rules.
However the issue of the Irish border remains unresolved: There is a commitment to preserving a number of fundamental aspects of the North-South Ireland relationship, including the Common Travel Area and the Good Friday Agreement. There is an agreement that North-South cooperation across all sectors must be maintained, that Peace and INTERREG funding for the border regions of Ireland will continue and that there will be no hard border on the island of Ireland. The UK intends to achieve this within the framework of the future EU-UK relationship. However, in the event a suitable alternative solution cannot be found, a “backstop” option has been agreed whereby Northern Ireland will remain in the EU’s customs territory for VAT and excise duty purposes and within a common regulatory area in order to ensure north-south.
Each of the past three decades has been warmer than any preceding decade.
Enteric Fermentation: Simply is the fermentation that takes place in the digestive systems of animals. The microbial fermentation that occurs in the rumen enables ruminant animals to break down course plant material. Methane is a by product from this fermentation process.
Nitrous oxide: Due to nitrogen fertilizer use and emissions from animal slurries.
Carbon sequestration.
Additional, Verifiable, Measurable
We live in a world where 1.9 billion people are obese or overweight. Further 815 million are chronically hungry and 2 billion suffer from hidden hunger.
-These targets were set in 2008 with GDP the main criteria.
Overall Non ETS target of 10% for the EU
Non ETS includes agriculture, transport, residential, waste etc
-Doesn’t acknowledge LULUCF.
Multiple objectives of agriculture recognized.
Its lower mitigation potential.
Coherence between food security and climate change objectives.
Sustainable intensification.
Inclusion of LULUCF
4% flexibility from the ETS
5.6% credit from LULUCF
