Towards a post-2020 Common Agricultural Policy  

The fifth major reform of the Common Agricultural Policy (CAP) was completed in 2013 and entered into force in 2015. At present, the European institutions are committed to adopting a new reform within the multiannual financial framework 2021-2027 before the end of the current period (2020).

Legal basis  

Legislative proposals on the post-2020 CAP (COM(2018) 0392, 0393 and 0394 of 1 June 2018) and a proposal for a new multiannual financial framework (MFF) for the years 2021 to 2027 (COM(2018) 0322 of 2 May 2018).

Implementation of the CAP 2014-2020  

The basic regulations underlying the new CAP were published in December 2013. The Commission then had the task of drawing up the implementing and delegated acts (see Fact Sheets 1.3.8 and 3.2.1) necessary for the deployment of the measures in question.

Member States had to make crucial choices in 2014, given the diversity of the implementing rules governing the new direct payments system and the room for manoeuvre it affords them. Most States, except one (Germany), have used the coupled payments option with very different rates, eight have decided to apply the redistributive payment, and finally fifteen States have implemented the Small Farmers Scheme. Lastly, as regards the ‘green payment’, five Member States have given farmers the option of complying with some of their obligations by adopting equivalent practices. Moreover, the choices of land areas designated Ecological Focus Areas vary considerably within the Union (the commonest being areas of nitrogen-fixing plants — a category which is eligible in every country except Denmark, while only eight countries have included terraces in their lists). Moreover, fifteen countries have transferred amounts between the two pillars: net transfers from the first pillar to the second stood at some EUR 4 billion for the period as a whole.

As regards the second pillar, between December 2014 and December 2015 the Commission approved all 118 rural development programmes drawn up by the twenty-eight Member States. Twenty Member States have chosen to implement a single national programme, and eight have opted to use more than one programme (allowing, for instance, more account to be taken of their geography or administrative arrangements) (see Fact Sheet 3.2.6).

Preparations for the post-2020 CAP  

Work on the post-2020 CAP started with the Dutch Presidency of the Council at an informal meeting in May 2016. The following Council presidencies continued the process that had been initiated by launching a reflection on the main agricultural challenges to be addressed (unfair commercial practices in the agri-food chain, climate change and water resources, risk management and the role of coupled payments, etc.).

The Commission, for its part, set up a task force in January 2016 to reflect on the future of agricultural markets policy which presented its final report in November 2016. On the Second Pillar, the ‘Cork 2.0’ conference in September 2016 led to the adoption of a declaration highlighting ten key policy guidelines for the future of rural development policy in Europe.

As part of the mid-term review of the multiannual financial framework 2014-2020, the Commission adopted an ‘omnibus’ legislative proposal on 14 September 2016 (COM(2016) 0605) which impacts a large number of European policies, including the CAP. In principle, the aim was to make technical adjustments to the basic acts in force in order to simplify existing instruments. Ultimately, at the instigation of the European Parliament, this has become a real mini-reform of the CAP. The European Parliament drew on the recommendations of the Agricultural Markets Task Force to table supplementary amendments aimed at improving the existing mechanisms. An agreement with the Council was reached in October and the text published in December 2017 [Regulation (EU) 2017/2393, OJ L 350, 29.12.2017]. The agreed improvements concern: the field of action of producer organisations; agricultural insurance and income stabilisation tools; the rules on green payments and payments to young farmers; and the definition of ‘active farmer’ (allowing Member States to apply it very flexibly).

What is more, during the debate on the State of the Union in 2016, President Juncker announced a communication on the modernisation and simplification of the CAP. As a preparatory measure, the Commission launched a pubic consultation exercise on the future of the CAP in February 2017 which ended in May 2017. Its Communication entitled ‘The Future of Food and Farming’ was published on 29 November 2017 (COM(2017) 713). This document outlines the priority areas which the future CAP should address (young farmers, knowledge-based agriculture, sustainability and resilience of agricultural holdings). However, this communication, which was very vague from an operational point of view, focused on agricultural governance, announcing a radical change in the implementation model of the CAP.

An own-initiative report (the Dorfmann report) on the Commission’s communication was drawn up by the European Parliament and the corresponding resolution adopted in the plenary sitting of 30 May 2018, two days before submission of the legislative proposals for the post-2020 CAP.

The context of reform of the CAP for the post-2020 period  

The 2013 CAP reform was decided on in the midst of a recession. Since then, the economic and institutional environment has changed. Growth has returned and the wounds caused by the crisis in the EU (unemployment and underemployment, increased income inequality, deterioration of public services, etc.) are healing. A shift in macroeconomic developments has had a major impact on both price volatility and agricultural demand and trade (inflation, energy prices, interest rates, EUR/USD exchange rates …), while geopolitical developments have increased market uncertainty (crisis in the traditional EU-US partnership following the election of President Trump); the consolidation of a multipolar global world with China as a rising power; the impact of migratory pressure on the European electorate, which is increasingly attracted by a Eurosceptic outlook). At the same time, trade multilateralism (the World Trade Organisation) is stagnating, without the increasing number of bilateral agreements being able to cushion the effect of protectionist tendencies and trade conflicts. Finally, new challenges are emerging related to climate change and sustainability with the entry into force of the Paris Agreement (COP 21) and the UN's commitments to sustainable development, while technological innovations, and in particular the digital revolution, are having a considerable impact on the production, processing and distribution of foodstuffs.

All these elements are superimposed on an in-depth reflection on the future of EU-27 without the United Kingdom (Brexit), which led to the Rome Declaration of March 2017 and the publication of a White Paper and several supplementary documents (on the structure of expenditure, defence policy, Economic and Monetary Union, etc.).

Legislative proposals for the post-2020 CAP  

The Commission proposal on the multiannual financial framework (MFF) for the years 2021-2027 (COM(2018) 0322 of 2 May 2018) established the future agricultural budget. Even if the Union continues to devote a significant part of its budget to agriculture (28.5% of the total over the period in question) (see table below), there are very significant cuts in current prices (-3 to -5%) and, especially, in real terms (-12 to -15%), due to the exit of the United Kingdom (a net contributor to the budget) and the financing needs resulting from the new priorities of the Union (migration, external borders, digital economy, transport). The agricultural envelope amounts to EUR 324.2 billion in constant 2018 prices, which should be compared with the previous budget for the period 2014-2020, after deduction of expenditure for the United Kingdom (column C of the table below), or, using another possible basis of calculation, the EU-27 budget for 2020 multiplied by seven (column B). The first pillar retains its primacy (EAGF, 78.4%), even if it decreases by 7 or 11%, while the big loser is rural development, which falls by 25 or 28%.

In constant 2018 prices. A.
EU 28
2014-2020
B.
EU 27 2020 x 7
C.
EU 27 2014-2020
D.
EU 27 2021-2027
E.
% B/D
F.
% C/D
EAGF 309 064 273 743 286 143 254 247 -7% -11%
EAFRD 102 004 93 877 96 712 70 037 -25% -28%
CAP Total 411 068 367 621 382 855 324 284 -12% -15%
TOTAL MFF 1 136 105 1 107 138 1 082 320 1 134 583 2% 5%
% CAP 36.1% 33.2% 35.3% 28.5% --- ---

The future CAP will focus on nine objectives reflecting its economic, environmental and socio-territorial multifunctionality. It will retain its two pillars as well as the two agricultural funds to support national programmes according to a range of measures chosen by an integrated approach. In any case, direct payments (decoupled and coupled) will remain the priority elements of the new CAP.

In addition to the new governance of the CAP, the other highlights of the reform proposals are:

  • With regard to the first pillar, the redistribution of direct support acquires fresh momentum: the Commission is proposing digressive payments above EUR 60 000 and compulsory capping (maximum EUR 100 000 per beneficiary); in addition, the sectoral intervention programmes are transferred from the Common Market Organisation (CMO) to the new national strategic plans;
  • The new green architecture is much more flexible in its design and management, being entrusted to the national authorities. It comprises three strands: the new conditionality (mandatory, but more flexible in detail); the climate and environmental programmes (which will be funded by the EAGF and will replace the green payment currently in force) and environmental and climate commitments (financed by the EAFRD);
  • As regards the second pillar: the EAFRD is no longer a Structural Fund under the common framework of Cohesion Policy; The co-financing rate is reduced by ten points; the Commission is concentrating interventions in the interest of simplification, although some measures lose their visibility (such as agroecological farming); finally, the rules of the Leader programme become the responsibility of Cohesion Policy, even if its financing is ensured by the agricultural budget.

The ongoing discussions  

The initial reactions to the Commission's proposals show a broad consensus on the proposed objectives, but reveal major divergences on the means implemented to achieve them and to ensure that management is simplified and more efficient.

The main bones of contention are: the budget cuts foreseen in the CAP for the period 2021-2027 (the European Parliament and some 20 countries request that the corresponding budget be maintained); the scope of the national strategic plans, which could be very different and fail to meet the objectives set at European level (especially at the environmental level); the imposition of a compulsory ceiling of aid, considered too restrictive for the majority of Member States and their professional organisations, which are more disposed to an optional solution; the level and pace of external convergence of direct aid (seven Member States have called for the acceleration of the harmonisation of support per hectare of the 27, but eight others are resolutely opposed to this approach); even though the new enhanced conditionality and the additional subsidiarity granted to the Member States are well received, the administrative burdens arising from the new performance requirements could jeopardise the achievement of the objective of simplification; lastly, the scope of some proposed delegated and implementing acts has been called into question, in particular because they could go beyond the Commission’s management powers.

Role of the European Parliament  

The 2014-2020 reform of the CAP was the first in which the European Parliament was involved as a co-legislator. With this initial experience under its belt, Parliament will make sure that it plays a central role in the new reform. Its Committee on Agriculture and Rural Development had already adopted a large number of prospective reports (on price fluctuations, jobs in rural areas, innovation, unfair trading practices, farmland, etc.). On the day of its vote on the Commission communication ‘The Future of Food and Farming’ (P8_TA (2018) 0224 of 30 May 2018), Parliament, meeting in plenary sitting, reaffirmed that CAP funding should be maintained at the current level after 2020 (P8_TA (2018) 0226). Immediately afterwards, it quickly started examining the legislative proposals of June 2018 following the appointment of rapporteurs for each legislative act: Ms Esther Herranz (Group of the European People's Party) on the new architecture of the CAP; Ms Ulrike Müller (Group of the Alliance of Liberals and Democrats for Europe) on the new, cross-cutting regulation; and Mr Eric Andrieu (Group of the Progressive Alliance of Socialists and Democrats in the European Parliament) on the amended proposal on the CMO. However, it seems almost impossible to keep the timetable proposed by the Commission and to adopt the new CAP before the European elections in May 2019 unless the negotiations on the MFF 2021-2027 make progress beforehand. It is clear that without a financial agreement, it will not be possible to complete the reform of the CAP because of the budgetary importance of the agricultural instruments. In principle, once the agricultural positions of the two co-legislators are established after the European elections in May 2019, it should be possible to conclude an institutional agreement before the end of 2020.

 

Albert Massot