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XV EAAE Congress
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 CongressXV EAAE Congress CAP reform
Positive or normative approach?
• What should be in the CAP
after 2020?
(alrea...
XV EAAE CongressXV EAAE Congress CAP reform
Where are we now?
• Oct 2016 Commission 2017 work programme launched initiativ...
XV EAAE CongressXV EAAE Congress CAP reform
Simplifying and modernising the CAP – why?
• The Commission’s proposal on the ...
XV EAAE CongressXV EAAE Congress CAP reform
Parallel processes
• Omnibus Regulation on financial simplification (Sept 2016...
XV EAAE CongressXV EAAE Congress CAP reform
Results of public consultation
• Having asked participants to state the most i...
XV EAAE Congress CAP reform
7
XV EAAE Congress CAP reform
8
XV EAAE CongressXV EAAE Congress CAP reform
Commission impact assessment scenarios
• 1. Maintaining the EU’s farm rules as...
XV EAAE Congress CAP reform
10
Source: Matthews, A., capreform.eu
0
20
40
60
80
100
120
140
160
180
2005 2006 2007 2008 20...
XV EAAE CongressXV EAAE Congress CAP reform
Prospects for the CAP budget
• The actual context
• New EU priorities
• Brexit...
XV EAAE CongressXV EAAE Congress CAP reform
Commission Reflections Paper
• Options under heading ‘Reforming the Common Agr...
XV EAAE CongressXV EAAE Congress CAP reform
Commission Reflections Paper
– 5 ‘illustrative scenarios’
No. Scenario EU budg...
XV EAAE CongressXV EAAE Congress CAP reform
Prospects for the CAP budget
• The actual context
• New EU priorities
• Brexit...
XV EAAE Congress CAP reform
15
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Denmark
UnitedKingdom
Netherlands
Belgium
Franc...
XV EAAE CongressXV EAAE Congress CAP reform
Political and scheduling constraints
• Can co-legislators agree within 12 mont...
XV EAAE Congress CAP reform
17
Which direction for CAP after 2020?
Support for products
Support for
producers
Preventive s...
XV EAAE CongressXV EAAE Congress CAP reform
More detail
• CAP – Thinking of the Box report
• RISE Foundation
• http://www....
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Economics and Politics of the CAP after 2020

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This presentation discusses the state of play and likely prospects for substantial CAP reform after 2020

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Economics and Politics of the CAP after 2020

  1. 1. XV EAAE Congress 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
  2. 2. XV EAAE CongressXV EAAE Congress CAP reform 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) 2
  3. 3. XV EAAE CongressXV EAAE Congress CAP reform 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? 3
  4. 4. XV EAAE CongressXV EAAE Congress CAP reform 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” 4
  5. 5. XV EAAE CongressXV EAAE Congress CAP reform 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 5
  6. 6. XV EAAE CongressXV EAAE Congress CAP reform 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 6
  7. 7. XV EAAE Congress CAP reform 7
  8. 8. XV EAAE Congress CAP reform 8
  9. 9. XV EAAE CongressXV EAAE Congress CAP reform 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 9
  10. 10. XV EAAE Congress CAP reform 10 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
  11. 11. XV EAAE CongressXV EAAE Congress CAP reform Prospects for the CAP budget • The actual context • New EU priorities • Brexit • The Brussels rumour mill • Commission Reflections Paper on Future of EU Finances 11
  12. 12. XV EAAE CongressXV EAAE Congress CAP reform 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 12
  13. 13. XV EAAE CongressXV EAAE Congress CAP reform 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 13
  14. 14. XV EAAE CongressXV EAAE Congress CAP reform 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? 14
  15. 15. XV EAAE Congress CAP reform 15 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
  16. 16. XV EAAE CongressXV EAAE Congress CAP reform 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? 16
  17. 17. XV EAAE Congress CAP reform 17 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
  18. 18. XV EAAE CongressXV EAAE Congress CAP reform More detail • CAP – Thinking of the Box report • RISE Foundation • http://www.risefoundation.eu/publications • capreform.eu 18

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