The Changes in Focus and Funding of the Common Agricultural Policy - Essay Example

?7. Outline the changes in focus and funding of the Common agricultural policy. Will the current model serve the long term needs of the EU member states? The changes in focus and funding of the Common Agricultural Policy: CAP, known as the Common Agricultural Policy, is one of the most important policies of EU which is based on EU agricultural subsidies and programs and is the most integrated program among all the policies of EU. It has been established after the Second World War as everyone feared of having shortage of food during the times of war. It was created to subsidize farmers and also to encourage them to produce more so as to ensure a stable food supply. Before, CAP had represented more than 50% of the EU budget. But this has supported unsustainable agricultural sectors. Therefore, after three reforms in 1992, 1999 and 2003 it has been reduced to 45%, which is 55 billion euro per year, with the prospect of further reductions in regard to new long term EU budget of 2014 – 2020. (EC. 2005; Doliak, 2004; Europa, 2011) There were two pillars of CAP. The first pillar was the current Single Farm Payment whereas the measures of the second pillar aimed to support development and diversification of rural communities. The CAP Health Check was launched in 2008, so as to modernize the policy and provide assistance when answering to new challenges such as climate changes. The EU 27 also agreed to further cut direct subsidies to farmers, so that there can be benefit of the rural development policy and also to abolish quotas on milk production. (ELO. 2001; EC., 2003) The future of CAP beyond 2010 in context of the general reform of EU budget has started in 2010. The European Commission highlighted the fact that agriculture must do more to mitigate climate changes and consider the option to establish the third pillar of CAP focusing on this issue. Also it stressed that the current single payment scheme could by maintained but targeted at providing public goods so as to real EU added value. Former commissioner Marian Fischer Bowl has committed to the farmers to carbon emission will be reduced by 20 % by the year 2020. (Europa, 2011) The biggest recipient of CAP funds was France. The largest per capita beneficiaries from CAP were Greece and Ireland. All four graduated countries were net beneficiaries of EU budget and CAP funding. At the start of February 2010, the ministers of agriculture of Hungary, Slovakia, Poland, Romania, Lithuania, Latvia, Estonia, Cyprus and Bulgaria agreed in Warsaw on common statement on the future of CAP after 2013. They wanted both pillars to be preserved. They also opposed to the idea of basing the payment level on historical principle. The economic crisis seriously attacked the European agricultural sector, especially the Dairy Farming. Farm milk prices began to fall in late 2008 until it brought the whole sector at the edge. Europe was a witness of several protests of farmers calling for action against volatility of prices and phasing out milk quotas as soon as possible, due to surplus production of milk and dairy products and falling prices. (Europa, 2011) In about 2020, the European Commission will publish a Communication on CAP which will meet the food, natural resources and territorial challenges in the near future. The reform focused in making the European agriculture sector more dynamic, competitive, and effective in responding to the Europe 2020 vision of stimulating sustainable growth, smart growth and inclusive growth. The paper outlined three options for further reforms. In mid 2011, the Commission will present formal legislative proposals following the discussion on these ideas. (Europa, 2011) On the basis of the Communication today, the Commissioner of EU Agriculture and Rural Development highlighted on the importance of making CAP greener, fairer, more efficient and more effective. As per him, CAP will not be just for farmers but for all the EU citizens – as consumers and taxpayers. Hence, it is important that we design our policy in a way which will more simply and clearly understood by the general public and which will make clear the public benefits that farmers should provide to the society as a whole. The European agriculture should be economically competitive as well as environmentally competitive. (Europa, 2011; EC, 2005) Earlier the Commission held a public debate and a major conference about the future prospects of CAP. Major contributions identified 3 principal objectives from CAP: Viable food production - there should be provision of safe and sufficient food supplies so as to the growing global demand, economic crisis and much greater market volatility in order to contribute to food security, Sustainable management of natural resources and climate action – situations may arise where farmers may have to put environmental considerations ahead of economic considerations, but in such cases such costs are not rewarded by the market, Maintaining the territorial balance and diversity of rural areas - agriculture should be an important factor in maintaining a living countryside and a major economic and social driving force in rural areas. (Europa, 2011) The Communication stressed on the importance of redistribution, redesign and better targeting of the support, based on objective and equitable criteria so that it can be easy for the taxpayers to understand the direct payments. These criteria should be both economic, keeping in mind the income support - element of direct payments and also environmental, reflecting the public goods provided by farmers, with support better targeted towards active farmers. A more equitable distribution of funds should be organized in an economically and politically feasible way with a transition to avoid major disruption. (Europa, 2011) There should be an approach to maintain a basic income support payment which might be uniform per region but might not prevail at the flat-rate across the EU, based on new criteria, and capped at a certain level, plus a compulsory environmental payment for additional actions per year which might extend beyond the basic cross-compliance rules such as green cover, crop rotation, permanent pasture, or ecological set-aside, also a payment for specific natural constraints, defined at EU level, and complementing amounts paid via Rural Development measures, as well as a limited coupled payment option for particularly sensitive types of farming which was similar to the current option introduced under Article 68 in the CAP Health Check. (Europa, 2011) A simple, specific support scheme should enhance the competitiveness of small farms while cutting the red tape and contributing to the vitality of rural areas. Based on market measures such as public intervention and private storage aid, there can be possibility for streamlining and simplifying measures to improve the functioning of the food chain. Although these mechanisms were the traditional tools of CAP, subsequent reforms have enhanced the market orientation of EU agriculture and reduced these to safety net measures to the extent that public stocks have virtually been eliminated. In other cases, market measures accounted for 92% of CAP spending in 1991 where just 7% of CAP budget was spent on them in 2009. (Europa, 2011) The Rural Development policy has enhanced the economic, environmental and social sustainability of the farming sector and rural areas but still after then there were calls for better programs. Importance was drawn on direct sales and local markets and the specific needs of young farmers and new entrants. The LEADER approach will be further integrated. In order to be more effective, more outcome-based approach is floated with quantified targets. One new element in the policy was the risk management toolkit to help deal better with market uncertainties and income volatility. The member states should have options to address production and income risks, ranging from a new WTO-compatible income stabilization tool to strengthen support to insurance instruments and mutual funds. As with direct payments, there should be a new allocation of the funds based on objective criteria, while limiting significant disruption from the current system. (Europa, 2011) The Communication outlined 3 options for the future direction of the CAP in order to address these major challenges – Shortcomings in CAP should be adjusted through gradual changes, To make CAP greener, fairer, efficient and more effective, Focus should be based on environmental and climate change objectives. (Europa, 2011) In all these options, the Commission predicts the maintenance of the current system of 2 Pillars – the First Pillar, where rules covering direct payments and market measures are clearly defined at EU level and the Second Pillar, comprising of multi-annual rural development measures, where the framework of options is set at EU level, but the final choice of schemes is left to member states or regions under joint management. The common element in these options highlighted that the future system of direct payments cannot be based on historical reference periods but should be linked to the objective criteria. For further allocation in rural development, there should be more objective criteria. The Commissioner added that the current system, which supported various rules for EU-15 and EU-12, cannot be continued after 2013. Will the current model serve the long term needs of the EU member states? The CAP, in the European Union budget scheduled under the title of ‘Preservation and Management of Natural Resources’, shows an enormous civil investment in farming: €55 billion, or 42 percent of the entire 2008 European Union budget, is used up on helping farming, chiefly through straight payments (EC, 2008b). Previously, the Common Agricultural Policy has particularly incentivised manufacture, driving amplification at great charge to the nature. As the 2003 reconstruction was over of the Common Agricultural Policy, the method of straight payments to farm persons in the getting on Member States was reinstated with the ‘Single Payment Scheme’, during a easier ‘Single Area Payment Scheme’ has been functional in the fresh Member States. Two payment plans subsides are delinked to manufacturing (= decoupling), but to farmland area. Nevertheless farm persons nomenclature are now chiefly estimated based on the subsidy paid previously (historical baseline) which another time is connected to (past) manufacture. The limitations of these costs to farmers’ fulfilment with fundamental environmental as well as animal interests standard (“cross-compliance”) does not alter the truth that a enormous share of Common Agricultural Policy subsidy (European taxpayers' money) is worn-out devoid of any obvious policy purpose. Public money spent does not deliver public goods BirdLife International believe that the potential of the Common Agricultural Policy must be structured on the law of paying the farmers and territory managers to bring the civil benefits that European Union citizens wait for and the requirement from farming plus which, not like foodstuff, are not waged by this market: healthy ecology, nature, fresh water, fertile land and gorgeous sceneries. The recent system widely fails in that job. Most of recent expenditure (Pillar 1 -- 74% of the CAP budget in 2008) is target less and severely prejudiced in support of the maximum competitive and concentrated sectors as well as the farmers, like the expense to each farmland is allocated in the basis of the amount received in a historic suggestion period 2000-2002, by turn based upon previous manufacture subsidies. The most of farmers getting high salaries are situated in aged Member States, and found faulty for wide spreading loss of farm wildlife. Traditional farming does not receive enough support For the features of usual farming practice: low reserve densities, low utilization of chemical involvements and the existence of partially-natural plant life; such agricultural scenarios often hold high level of biodiversity, known as High Nature Value (HNV) farm. Principally significant HNV farms with biodiversity are generally small-scale farming schemes still regular in eastern as well as central Europe, liable for making and keeping species-rich partially-natural grassland (EEA, 2004a). Nevertheless, 86% of the €286 billion for support 1 (2007-2013) is being apportionated to the previous European Union-15 Member States (IEEP, 2007); the straight costs are focused in the hold of concentrated farmers liable for many environmental hazards and biodiversity reduction. Inside the system, numerous of subsistence as well as semi-subsistence farm persons, lot of them coming from fresh member states, exercising conventional farming practices which keeps Europe’s natural along with cultural tradition, do not accept the crucial help and usually do not accept any of the subsidy in any cost. Certainly, as per WWF Danube-Carpathian Programme, almost 70% of life and partial-subsistence farm persons in Bulgaria as well as Romania do not accept any help for the minimum area size need in the plan called Single Area Payment Scheme (Kazakova, 2008). Limited funding for the environment and rural economy Recently, only near about 24% of the Common Agricultural Policy funds is allotted to rural up gradation measures, situated within support 2.  Inside this support, only a little percentage of the total CAP cost is committed to Agri-environment plans.  Agri-environment plan is the best capable element of the Common Agricultural Policy which profits nature, the environment with the rural finance. The policy helps farmers who chose higher environmental principles that end in public profits like wildlife along with clean water. Nevertheless, insufficient budget in rural up-gradation measures, in specific Agri-environment policies, indicates that the impact of these arrangements have on farming verdicts is reduced by the effect of support measures. Much extensively, even rural improvement processes are mostly used to help environmentally negative acts, as for example: Collecting money for unstable drainage as well as irrigation extension , and unsuitable afforestation; Utilizing agri-environment wealth to compensate for practice having no clear natural advantage, or for acts which will be followed anyway; Less Favoured Area costs which go to every farm persons in appointed areas, in spite of whether they are practising eco-friendly farming. Weak control / compliance Being part of the 2003 Common Agricultural Policy reconstruction, cross-fulfilment was made must to all farm persons receiving straight money. Farm persons might have their straight payment lessened, or in acute cases, fully discarded, on not respecting a series of Good Agricultural and Environmental Conditions (GAEC) along with Statutory Management Requirements that are connected to 18 EU Directives as well as Regulations concerning the safety of nature, animal wellbeing, and public, animal as well as plant health (EC, 2008c). Though on paper it looks quite good, a number of problems in relation to cross-compliance have arisen at the time of implementation at the EU Member State level. The current system of control is mainly based on a very small number of visits to farms at random, which in number of areas creates an individual inspection rate of only once in whole century. Along with the negligible a s well asl and temporary penalty to farmers if there are incidences of non-compliance, this kind of fragile and futile sanction system cannot ensure minimum standards of environment, particularly in a time of high prices of commodities where considerable economic benefits can be obtained through for breaking the rules. According to information collected by the European Commission, evaluation and inspection of the entire CAP system generally took place on just under 5% of farms receiving the Single Payment in 2005, and around 12% of these farms were penalised for not meeting the required standards (IEEP, 2007). References: 1. Kazakova 2008. Farmers managing High Nature Value Farmland. Available at http://www.efncp.org/download/YankaKazakova_FarmersIssues_Bxl2008.pdf (7th MAy, 2011). 2. European Commission 2008b. General budget of the European Union for the financial year 2008 – The figures. Available at:  http://ec.europa.eu/budget/library/publications/budget_in_fig/syntchif_2008_en.pdf(7th MAy, 2011). 3. European Commission 2008c. Health Check of the CAP. Guide. Available at: http://ec.europa.eu/agriculture/healthcheck/guide_en.pdf(7th MAy, 2011). 4. EEA.2004a. High nature value farmland. Characteristics, trends and policy challenges. EEA report No.1/2004. Available at: http://reports.eea.europa.eu/report_2004_1/en/EEA_UNEP_Agriculture_web.pdf(7th MAy, 2011). 5. IEEP 2007. Future policy options for cross compliance. Background paper for the 26 April 2007 Cross compliance policy seminar, Brussels. Deliverable 23. Available at: http://www.ieep.eu/publications/pdfs/crosscompliance/future_policy_options_for_cc.pdf(7th MAy, 2011). 6. Europa. 2011. Commission outlines blueprint for forward-looking Common Agricultural Policy after 2013. Available at: http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/1527 (7th May, 2011) 7. EC. 2003.CAP reform – a long-term perspective for sustainable agriculture. Available at : from http://europa.eu.int/comm/agriculture/capreform/index_en.htm. (7th May, 2011) 8. Doliak, M, 2004. EVALUATION OF THE COMMON AGRICULTURAL POLICY’S IMPACT ON FOOD PRICES FOLLOWING SLOVAKIA’S ACCESSION TO THE EU. BIATEC, Volume XII 9. ELO. 2001. Towards a more integrated rural policy for Europe: the next reforms of the CAP. European Landowners Organisation. 10. EC. 2005. Europeans and the Common Agricultural Policy. Special EUROBAROMETER. Read More