The National Council of Agriculture Ministers and representatives of Parliament and the Commission signed an agreement on 26th June, which should be voted in plenary by Parliament and approved by national governments.
This agreement, conditioned by the vote of the 2014-2020 EU budget of 960€ billion in commitment appropriations (CA) and 908.4€ billion in payment appropriations, confirms a drop of 3.4% excluding inflation compared to the 2007-2013 budget. The CAP budget will suffer the biggest reduction: - 9.7%, still excluding inflation! The budget will drop from 420.6€ billion to just under 380€ billion, of which 280€ billion of direct payments to farmers and 80€ billion for rural development.
In addition to the budget decrease, which raises questions at a time when our trading partners are securing their agricultural budgets, it is the very spirit of this agricultural policy reform which is worrying: as it stands, the post-2013 CAP will be neither common nor agricultural. This project, which marks European food dependency, is a sad reflection of the crisis in European governance.
What remains of the CAP within this agreement?
Convergence and greening are the two master words of the reform.
Where is the analysis in terms of production costs, price levels and competitiveness? They are absent from the reform.
What happened to the regulatory mechanisms for agricultural markets? They were sacrificed in favour of a final settlement calculated with regards environmental criteria and not in relation to agricultural production (known as Basic Payments). After 2013, the CAP will therefore no longer have the capacity to manage the volatility of agricultural prices, which is essential for the visibility of European farmers and their long-term development.
European leaders are locked in trivial debates. They have disposed of the strategic and economic policies that the post-2013 CAP should have reflected in order to meet the challenges of food security and independence.
The post-2013 CAP will no longer be common
These negotiations are far from over! Indeed, negotiators have not yet found common solutions to all the questions asked during talks concerning the redistribution of part of the direct aid in terms of precise objectives: help young farmers, support breeders, compensate disadvantaged regions, support small farms by increasing the first 50 hectares....
So, several points are still awaiting decision by Member States, which “renationalises” de facto part of the CAP. The subsidiarity of credits allocated during the first pillar could exceed 50% for France. This direction implies troubling distortions in competition even within the European Union. Powerful and determined States will have more possibilities of supplementing CAP support with national measures, creating real discrimination between European farmers.
The post-2013 CAP will no longer be agricultural
The post-2013 CAP agreement presents a kind of positive discrimination for small farmers at the expense of Europe's largest farms, without setting up systems to enhance their competitiveness to compete in international markets.
Meanwhile, the major world powers (the United States, Brazil, China, Russia ...) are clearly displaying their agricultural ambition. They are increasing their agricultural budgets; they are adapting their intervention tools for the competitiveness of their agriculture and are combating the adverse effects of intrinsic instability in agricultural markets in the aim of securing income for their farmers.
The SGPA indicator (global support to agricultural production) developed by Momagri has for the first time, established a transparency on the reality and methods of agricultural support. Accordingly, the CAP is completely out of touch compared to the agricultural policies of the EU’s major trading partners. And 2013 has marked a turning point because the agricultural support per capita in China and Brazil is likely to exceed the European level of support, which is already well below the U.S. level of support.
The post-2013 CAP will no longer be strategic
Where are the ambitious and strategic objectives that all other major countries openly boast? Nowhere. The very essence of this reform is resumed by resistance to change. Could things be otherwise? Yes! But the post-2013 CAP reform reveals the European Union’s profound crisis. It also reveals the European Commission’s retreat, who arguing that the management of agricultural markets is too complicated, prefer to make Basic Payments to farmers, without any correlation with production or the markets.
The post-2013 CAP will be helpless faced with future agricultural crises!
What should we expect with the next crisis?
Will the EU unblock emergency funds? Perhaps, but these would only be temporary measures for European agriculture without acting on the causes.
Will the EU allow member states to respond in function of their financial resources, which would accentuate the renationalisation of the CAP and the distortions of competition even more?
One thing is certain, for lack of a strategic vision for the CAP, crises will be repeated regularly, and they will be costly for the European budget and catastrophic for farmers.
With an ultimate risk: the extent of deregulation will be such that the EU will have no more leverage for managing crises, leaving the markets to regulate the crises their way....
The post-2013 CAP will profoundly change the European agricultural model
As it stands, the post-2013 CAP reform will lead to a profound transformation of the European agricultural model. Unable to make a living, European farmers are leaving the land. Family agriculture will be replaced by financialised agriculture, dominated by investment funds. Our dietary diversity and the development of our territories will be disrupted with no guarantee for European food security and the competitiveness of our agri-food industries and jobs within agricultural and agri-food chain.
It is time for the CAP to face up to international realities (globalization, demography, competitiveness, food security) in order to regain a growth dynamic. Momagri, the think-tank which I chair, has made proposals to this effect: Another CAP is possible!
For the founding principles of the necessary revision of the CAP post- 2013, that at the very least, should occur mid-term, it is essential to redeploy the budget towards countercyclical mechanisms and market management in order to anticipate crises, manage their consequences, thus giving visibility to all stakeholders in the agricultural world.
I remain convinced that the CAP must embody a strategic vision and ambitious goals for an innovative European agriculture to produce more and better, to the benefit of all citizens of the Union.