jyrki niemi, natural resources institute - cap through the eyes of a scientist
TRANSCRIPT
CAP through the eyes ofa scientist
Seminar on the CAP after 2020Jyrki Niemi
Natural Resources Institute Finland(Luke)
• have followed a certain logic towards what economists consider less distorting and more market-oriented policy instruments
• the MacSharry and Agenda 2000 reforms replaced market price support with coupled direct payments
• the Fischler 2003 reform and the Fischer Boel Health Check replaced coupled by decoupled payments and set a date for the final elimination of supply controls on milk, sugar and vineyard areas
How has CAP evolved? (1)
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CAP reforms taken since 1992 until 2013
• against the evolutionary background, a radical reform in 2013 would have moved from untargeted decoupled direct payments to targeted transfers designed to achieve specific objectives • public money for public goods• discarding the old two-pillar structure and
replacing it with a public good pillar• drive to rural development
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The latest reform in 2013
How has CAP evolved? (2)
• budget was cut → smaller CAP • direct payments redistributed
• between the Member States• between farmers in each MS
• greater subsidiarity by providing increased flexibility to MS → less common policy
• enlarged the scope for re-coupling of direct payments → reversing the decoupling trend?
• the greening CAP adopted → strategic gain• introduced measures to give producers greater
bargaining power in the supply chain
The 2013 reform – what did it achieve?
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Any effort to take a longer view overthe CAP must address two questions:
• What are the prime challenges facing EU agriculture post 2020?
• What types of market failures require an agricultural policy?
Where is the CAP going?
(1) Supporting farm incomes- direct payments justified as basic income support
- payments represent a considerable share of incomes- however, uneven distribution of benefits, and leakages to
non-intended beneficiares➨ increase the cost of farming (land prices)
➨ can direct payments be defended after 2020?
Prime challenges of the CAP (1)
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(2) Competitiveness and productivity-the focus of the policy is on promoting innovation
(development, diffusion and uptake of new technologies)➨ is there an added value of the EU policy? ➨ investment/productivity enhancement tools?
➨ a structure based on family farms or corporate entities?
Prime challenges of the CAP (2)
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(3) Managing risks and crises in agriculture-EU producers no longer isolated from the world market- how price volatility and other risks should be tackled?
-the role of the EU and publicly-funded schemes? ➨ risk management at EU level benefits MS very unevenly- currently, most MS focus on ex-post ad hoc payments ➨ ex ante rules for criteria to be applied and procedures
to be followed in responding to catastrophic risks needed
(4) Farmers’ position in the food chain- options for arranging contractual relations within the
chain and legal possibilities for organizing farmers’ collective actions
➨ is binding EU legislation needed to tackle the issue of fairness in the supply chain?
Prime challenges of the CAP (3)
(6) Climate policy and the CAP-need to reduce agricultural emissions by 2030
➨ what type of policy design is needed?-CAP 2013 Pillar 2 policies are currently extremely weak
➨ cost-efficient emissions reduction policy requires coverage of agricultural and land use emissions
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(5) The environmental record of the CAP-limited improvements observed regarding the
environmental footprints of agriculture (little evidence on the efficiency of cross-compliance or greening)
➨ need for payments which compensate farmers for providing public goods (ecosystem services)?
Prime challenges of the CAP (4)
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(7) The rural impacts of the CAP-a considerable proportion of EU agriculture operates in
remote areas with difficult natural constraints- coherence of agricultural and RD policies important
➨ payments to farms in rural zones with natural handicap which cannot compete but are essential to the
rural fabric
(8) Financing of the CAP- source of political tension and a cause inefficiencies
-CAP is over-constrained by benefit distribution- pillar I is EU-financed and only pillar II is co-financed➨ how much really has to be commonly financed &
administered?
► Focus on essential market failures- well-functioning markets rather than policy interventions are best way to attain a competitive agricultural sector- e- essential market failures are prospective targets for action
► Allocate public money according to returns in social value and services- for example, by targeting payments to preserve soil fertility and water resources, rural landscape, to maintain a critical level of farming activity, to protect biodiversity, or to fight against climate change
► Extend subsidiarity in the design and the financing of the CAP measures- responsibility for implementation of certain policies could be left on member states - national policies should be in conformity with the EU’s constitutional principles, including the EU competition policy and the principle of Single European Market
► Recognise administrative and transaction costs in the design of policies- administrative costs can be particularly heavy in the early stages of a program
Directions for future?
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Sources of the presentation• Brady, M, Höjgård, S., Kaspersson, E. & Rabinowitz, E. 2009. The CAP and
future challenges? Available at http://www.agrifood.se/Files/AgriFood_Other_20147.pdf
• Buckwell, A. 2015. Keep chewing this bone: a trickle of ideas on a future CAP. Available at http://www.cap2020.ieep.eu/2015/
• Buckwell, A. & Baldock, D. 2014. Some thought on the CAP post 2020. Available at http://www.cap2020.ieep.eu/2014
• Bureau, J. & Mahe, L. 2008. CAP reform beyond 2013: An idea for a longer view . Available at http://www.notre-europe.eu
• Matthews, A. 2015. Prospects for CAP reform 2020. Available at http://capreform.eu/
• Matthews, A. 2015. Use of risk management tools in the CAP. Available at http://capreform.eu/
• Rosa & Selnes 2012. Simplification of the CAP. Assessment of the European Commission’s reform proposals. LEI report 2012-011.
• Swinnen 2015 (edit). The Political Economy of the 2014-2020 Common Agricultural Policy: An Imperfect Storm. Centre for European Policy Studies (CEPS), Brussels. Available at https://www.ceps.eu/ publications/political-economy-2014-2020-common-agricultural-policy-imperfect-storm
Thank you!
Jyrki Niemi, professorNatural Resources Institute Finland (Luke)Koetilantie 500790 HelsinkiTel. +358 29 532 [email protected]