CAP-Reform 2020: Heading back to where we were?

This post was written by Sebastian Lakner and Guy Pe’er (guy.peer@idiv.de)

In our first blogpost (link) we analyzed the EU Council’s conclusions under the German presidency, showing an attempt to introduce changes that can worsen the CAP’s environmental performance even beyond its current poor performance (2014-2020. See new European Court of Auditors‘ report here). But the Council’s conclusion is preliminary, and – who knows – might still change to the better or worse. Our second blogpost focuses on the political side, asking a) where are we standing now and why, b) what might be the role of the EU Parliament, and c) what might be the long-term implications if the CAP 2021-2027 ends up similar or worse than now.

Landscape with flower strip in Mecklenburg-Vorpommern, Germany

1. Foreplay: A “discussion” involving only farm lobbies

Already before the EU Council’s conclusions were published, one could sense the “farmland for farmers” style of discussions. Calls for meetings by NGOs and scientists were refused or ignored (respectively, see e.g. link to our letter from July here), and the guests invited to the Council’s meeting included only the European farmers’ association (Committee of Professional Agricultural Organizations, COPA), the umbrella organization of agricultural cooperatives (General Confederation of Agricultural Cooperatives (COGECA)) , the European Council of Young Farmers (CEJA) and the German Farmers Association (DBV) to represent the environment through their project F.R.A.N.Z (link).

Farming organizations representing other political foci, as well as environmental and/or food organizations, were not invited. Such first views before a informal Council meeting can well serve, to set the scene and establish narratives. So farmers association could establish their views, to be picked up in the Council-debate, whereas other views (social, environmental) had to come from some of the ministers themselves.

The implied message was clear: From the Council’s perspective, CAP negotiations should address first and foremost the interests represented by specific farm lobbies. Public statements of the German Presidency regarding the Green Deal, farm-to-fork strategy or the biodiversity strategy only indicated that they might be accepted only to the extent they do not impede production. Agricultural Minister Julia Klöckner was relatively clear in stating that food security and consumer issues are higher on her CAP agenda (link in German):

„In addition to environmental and climate protection, food security must play a greater role in European agricultural policy“

(Julia Klöckner, translated Quote from Top-Agrar. Bold mark is ours)

The debate during the Council’s meeting itself was described as “intense”. Strong emphasis was placed by Minister Julia Klöckner on the Covid-19-crisis, suggesting that the farming sector has successfully managed through the crisis (see Klöckners press-briefing of Sept. 3, 2020). In reality, evidence shows that farming was hardly affected by the lock-down and the crisis (link), apart from severe cases of mismanagement in slaughtering houses in Germany (see ARC2020-post). The starting point of the German presidency thus can be considered as working under a misleading narrative which places unnecessary attention on food security and COVID-19, while neither of the two are a real challenge (see our recent blog on food security) – and, rather, the issue in question is the CAP’s poor performance and the Council’s position regarding environmental ambition. 

2. On the role of the Germany presidency

We should note that the Council’s initial conclusions cannot be considered official or final, but merely an in-between summary of the state of the discussions in the Council and an indication of the main issues under negotiations – highlighting the outcomes of first (rough) compromises. However, in the same way that the “Future of Food and Farming” document (published in December 2017) was highly indicative of the direction of the proposed CAP as published by the Commission in June 2018, we can regard such initial announcements as good indicators of the spirit of negotiations, and Germany’s role in them. 

Inititally, one could have placed high expectations on the German presidency, since Germany is not only the largest EU-country (both in numbers and economically), the number-one (net) payer of the CAP, and one of the countries least affected by the Covid-19-crisis (as of early October 2020). Germany could play a key role either in seeking compromises among Member States (MSs) and their needs, or in advancing its own agenda – which, until recently, was not openly revealed. Yet, if one could state that the role of the rotating Council’s presidency is to moderate and find compromises, the information-website of the EU Parliament on the role of the Council-presidency openly acknowledges that holding the presidency offers the potential to advance own objectives on the agenda (Link).

Having said this, it seems that on the choice on moderation- and compromise-seeking versus advancing an own agenda, Germany’s Agricultural Minister Julia Klöckner tends toward the latter, namely advancing a directional effort of watering down the already non-ambitious proposal of the Commission. Whether the aim was to align with farm lobby interests (as implied e.g. by the close interaction with Nestle (see die ZEIT 2019) or to avoid a conflict with them, Klöckner has avoided expressing clear positions towards the new green architecture (see e.g. Arc2020 of April 2019). But at the same time, a rather clear preference is visible toward other topics and issues. During the COVID-19 crisis Minister Klöckner chose to meet the farmers associations and the agribusiness, but at the same time openly refused to meet environmental NGOs.

That farm income has a higher priority than the environment was stated publically for instance in a demonstration of the food and environmental NGO demonstration in Berlin, stating that “Bullerby-farming” will not save the world food situation. (hinting at the dreamworlds of Astrid Lindgren’s “The Six Bullerby Children”). 

We will not return to a pre-modern agriculture with romanticizing Bullerby ideas, because people are looking for an idyll, because their own everyday life is perhaps too hectic.”

Julia Klöckner (CDU), see ZDF 18.01.2020

The notion that functioning ecosystems and intact biodiversity, that are the basis for agricultural production, are perceived as “Bullerby ideas” – i.e. as a disconnected illusion  – ignores and even disregards the huge body of evidence indicating environmental pressures such as soil degradation and erosion, droughts, heat, water scarcity and pollination deficits, to pose the most central risks to food security.

The main point is: If social (rural development) and environmental issues comprise six of the nine official objectives of the CAP, why are the calls of food, farming and environmental organisations to address rural and environmental challenges framed as „Bullerby-ideas“? A balanced form of political leadership should start with an honest and fair dialogue with all relevant stakeholders affected by a poorly-performing policy.

The initial Council-conclusions align with a rather anti-environmental agenda, indicating an effort to maintain the existing structure of farm payments and to weaken attempts of placing environmental ambition. Klöckners presidency in this sense marks a counter-reformation direction, seeking to re-strengthen the more traditional role of the CAP as an income-protection policy while, de facto, risking a continuation of a policy that is trafficking tax-payers’ money (mostly via Direct Payments) to a handful of large recipients (more specifically land owners) without any further obligation. 

Somewhat surprisingly, the role of a moderator seems so far to have been adopted only in the case of Coupled Payments: while phased out by Germany, and despite Klöckner’s repeated statement that “meat is too cheap”, she chose to align with MS-demands to maintain Coupled Payments. To recall again, Coupled payments are repeatedly criticised for their market-distorting nature (OECD 2018Alan Matthews 2015), and their larger share go to meat and milk production (Alan Matthews 2020) – leading not only to grazing intensification and the degradation of grasslands in Europe but also to deforestation in the Amazon (Rajão et al. 2020 Science). Despite the critique, all MSs apart from Germany have increased their share after 2014. In the Council there seems to be an agreement to disagree between the MSs and Germany. The topic is not mentioned in the Council’s conclusions, but Minister Klöckner mentioned it in the 21.10.2020 press conference, albeit under the topic of “securing proteins” to EU citizens (see also our last post). In times where key challenges in the EU relate to over-consumptin, waste, overweight and obesity rather than lack of proteins, the choice to maintain harmful subsidies and instead adopt a new language should not be acceptable.

The esteemed economist Alan Matthews analysed the situation as follows:

„The German Presidency proposals continue the tradition whereby the two arms of the legislature water down those aspects of the Commission’s draft legislation that seek to promote environmental and climate ambition“

Alan Matthews; see Blogpost 2020

In the case of this reform, the Council actually continues not only its own tradition but also adopts the approach that was set by the former Commission under Phil Hogan, seeking to minimize changes and align with the more powerful farm lobbies in their demand to retain the CAP as it is:

Indeed, close consultation with both COPA and COGECA has been a constant feature of the process in preparing and drafting this proposal”.

“…I have fought tooth and nail to ensure that Direct Payments remained the top priority in the MFF discussions

Quote by Phil Hogan, Speech by Commissioner at Copa-Cogeca Praesidia, 14.06.2018.

To be fair, any debate, be it in the Council or elsewhere, should obviously allow a diversity of opinions, some more ambitious than others. Moreover, Brexit has weakened the pro-reform countries, which are in a weaker position (traditionally the Scandinavian countries, The Netherlands, Austria). But one could have placed the hope that Germany could show more leadership in taking the debate into a more pro-reform position, given the well established evidence for the urgency of such a reform.

Thus, as long as the German presidency shows reluctance to even acknowledge both the failures of the current CAP and the centrality of the environment in the future of farming, we fear that it is likely to lead the Council toward a proposal that endorses a worst case scenario, namely, one that seeks to continue benefitting very few beneficiaries and maintain or accelerate environmental degradataion and contribution to climate change, rather than carefully examining alternative paths for improvement. 

3. More ambition in the EU Parliament?

Prior to the EU Parliament elections, COM ENVI and COM AGRI made two different, and largely opposite (link) proposals for amending the CAP – the former proposing significant improvements that could rectify the poor Hogan proposal, the latter proposing significant weakening (Pe’er et al. 2019). Following the elections, the proportion of environmentally-oriented Parliament Members (MEPs) increased – not only through the expansion of the Greens Party but also within other parties. Observing the scene in Brussels since then, and following a range of interactions with MEPs, we see much more openness and willingness in the EU-Parliament, especially looking on the great coalition in between European Peoples Party (EPP), Socialist & Democrats (S&D) and the centrist Renew Europe (RE, former ALDE). In the Social democrats, there have been members committed to environmental ambition. 

The Renew Europe-group seems to still be searching its position regarding the CAP, but also demonstrates larger variance of opinions with a stronger domination – somewhat surprisingly – of counter-environmental directions, as described by the CAP-Expert Oliver Moore from Ireland:

„There is a tension inherent to the group: one side supports a more large scale, agri-industry and business-as-usual approach, including the group’s ENVI and AGRI shadows on the CAP strategic plans regulation file, while others have what could be considered more progressive positions on climate and environment.

Oliver Moore; Blogpost on Arc2020, 16.09.2020.

Given that RE is considered central, such a bias within that party may have detrimental impacts at the larger scale of the coalition and the Parliament as a whole.

Yet the Parliament comprises of many people with varied interests, and it is hard to predict their impacts on the overall proposals made by the parties. The spectrum seems to be wide, ranging from highly ambitious, through business-as-usual to anti-environmental. In discussions with members of the EPP, which typically forms a close ally to farmers’ associations, we noted interesting and perhaps promising openness. An insider report also reveals some willingness to include the Greens/EPA into a final compromise for the plenary voting, which would mean, that the final amendments may include a substantial degree of environmental ambition, coming closer to the proposal of COM ENVI prior to the election (see Arc2020, link) or the ambition presented by the new EU Commission. 

The withdrawal of COM ENVI from direct negotiations with COM AGRI indicates that the overall nature and position of COM AGRI does not differ significantly from its predecessor prior to elections, but it introduces an important game changer by allowing the variance of opinions in the Parliament to play a more impactful role. This can be a historical moment, but it might be toned down by internal negotiations and lobby pressures. 

4. Will the Parliament save this reform?

Great cormorant (Phalacrocorax carbo) near Lübeck, at the Baltic Sea

At the end of the day, it remains unclear to what extent the Parliament will pick up the ideas of von der Leyen’s Green Deal, or the more conservative approach of COM AGRI as presented prior to the Parliament-election (link). If it goes closer to the Council’s proposal, then two out of three arms of the trilogue may indeed push for a worst-case scenario, i.e., one that performs equally bad for farmers and worse than now for the environment, thereby wasting taxpayers’ money in support of the wrong farmers and regions (see Scown et al. 2020). Such a BAU-CAP may harm those farmers who want to be environmentally-ambitious, but fails to receive support to this end, and more so, may continue eroding farmers’ reputation as a sector. Notably, farm lobbies are rightly trying to defend farmers’ reputation by stating that farmers are not the problem but rather the central part of the solution. Here we can only fully agree: the problem is not with the farmers but with the CAP. 

5. What are future development paths for the CAP?

While nothing is lost yet, the signals from the Council point toward the direction of a deform rather than a reform. At this stage, the Parliament’s position may be decisive for the direction of the next CAP. Are there still chances for improvement? 

In our recent comment in ONE EARTH from August 2020 (See Pe’er & Lakner 2020), we noted that the decisions taken in the weeks and months to come will set the longer path for the CAP’s future. We delineated three scenarios: 

  1. A transition of the CAP: The CAP can successfully transform into a policy that attempts to address the key environmental challenges ahead, including biodiversity decline, climate change, soil and water-quality degradation, but also public’s demand to address animal welfare issues. This can be done either by strengthening the relevant instruments like AECM; sharpening the definitions for Eco-schemes as an evolving instrument, or even a developed basic-payment-scheme combined with a more ambitious conditionality might be (though not optimal) an option to cope with the challenges. Such a direction would require ambition from the MSs and measurable impacts of the new CAP implementation. Yet with such clear signals from the EU Council under the German presidency, we foresee the chances for such a transition as, sadly, exceedingly slim. 
  2. A replacement by food and farming policy: The trend of placing food issues into a more central focus of agricultural policies, was observable in Germany already in 2001, when the “agricultural ministry” was transformed into a “Ministry for consumer protection, food and agriculture” by the new minister Renate Künast from the Green party. The idea to place greater emphasis on consumer interests was a development that was, however, terminated in 2005 with the more conservative CDU-SD Merkel-government. However, the point was made and can be observed also in other countries. It now re-emerges in the Farm-to-Fork strategy, which rightly acknowledges production challenges to be tightly linked with consumption behaviour. With a limited budget, such a direction might to some extent come at the costs of agriculture, such that farm ministers see themselves as „representatives of the whole society“ and not only for specific farm-issues. From the society’s interests, this might not be the worst development, but for farmers it might involve the risk of getting marginalized. The chance for a food-and-farming policy to evolve is, however, not marginal if, for instance, the Parliament decides to adopt the Farm to Fork strategy, and/or parts of it, as a policy rather a (non-binding) strategy. This could entail cancelling some instruments (such as Direct Payments, as urgently needed) or transforming the CAP into a “CAP-for-sustainability” rather than “CAP-for-income” policy. 
  3. An “end of the CAP as we know it” scenario: The fact that the CAP contributes neither to societal interests nor to SDGs, has slowly become common knowledge. Not only scientists (economists, ecologists, social and political scientists etc.) but also farm-oriented politicians acknowledge that the CAP fails to achieve its own objectives or bringing a real value added. With polarized public discussions placing the farming sector out of society (while asking the public to support the sector by circa 38% of the EU-budget), one sets the risk to lose public support altogether. This is well observed in the UK, with announcements of an intention to cancel Direct Payments coming almost simultaneously with the final announcement of Brexit becoming a reality. The point is that there are other European policy fields like the integration of migrants, internal policies, economic policies, Covid-19-crisis, climate change and other crises that (may) warrant funding. During the Covid-19-crisis, in July 2020, the EU decided to take debts of 750 bn. EUR for a recovery fund, which will create substantial pressure on the EU-budget, when it comes to the negotiation of the Multiannual Framework (MFF) 2028 ff.. Thus, if the CAP does not deliver, further erosion of public support may well lead to the decision to place the budgets elsewhere. An end of the CAP can easily end up being the worst-case scenario both for farmers and environmentalists, as it may accelerate land concentration, rural emigration and farm-income-inequity which the CAP is attempting to oppose.

The Council clearly marked that the first option is unviable (i.e., MSs will oppose an ambitious CAP). The Farm-To-Fork strategy may point at option 2 as favored by the Commission, if the strategy finds its way to an obligatory (and financed) policy rather than a strategy.

It thus remains for the Parliament to demonstrate where it aligns. If the Parliament adopts an unambitious proposal, then two out of three branches of the trilogue are at risk – in which case, the third scenario is likely to be the most plausible. We reiterate that this is likely to be the worst-case scenario, since both farmers and environmental NGOs should share the interest to see the CAP better used (for its own objectives!) rather than dumped altogether.

It seems we are heading a branching moment between a win-win option and a lose-lose one. Unfortunately, one branch is being threatened by the chainsaw of the Council, who seems to choose on representing narrow interests of few farmers rather than serving the needs and will of the majority. 

From a scientific perspective, we should remind the EU and MSs again of the huge amount of available knowledge to fulfil an ambitious route if chosen by policy-makers – as stated by over 3.600 scientists calling for an action and expressing a will to help (see Pe’er et al. 2020). Or if you want, “if there is a will, there is a way” – and the scientific community is eager to help taking it. 

Agricultural sustainability is indeed not a simple issue, but complexity is where science resides. If scientists can help MSs recognize the size of the opportunity ahead (i.e., in a CAP that performs better for both farmers and the environment), perhaps they can help the Council – through its MSs – to reconsider its position.

6. Conclusions

To conclude, there are enough compromise options, and more than enough knowledge, to find a better balance between the needs ot farmers (employment, income, wellbeing) and societal interests. A set of meetings with Commission members indicates high ambition there, and according to our perception, the message has also reached large parts of the EU-Parliament – but not yet to the Council. If the recent developments and decisions in the Council continue, the German Presidency might end up being a central architect of a policy disaster. This could also affect the conservative Party (CDU) in the German federal elections in autumn 2021. Whether Germany will take a more balanced form of leadership soon, is yet to be seen.

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