The Common Agricultural Policy has done a good job of ensuring farm income and food security but it is incoherent, inefficient and outdated, and must be radically overhauled to ensure good value for money in the future, an independent report has found.

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Its asks the European Commission to turn the so-far inadequate process around and use this study as the foundation for a serious impact assessment that will result in an evidence-based future policy.

Given the sheer scale of the Common Agricultural Policy (CAP), which accounts for close to 40% of EU spending, it is hardly surprising that it should attract scrutiny and criticism. Picking the policy apart to assess exactly what benefits it brings and whether it offers good value for money is a big challenge for taxpayers, recipients of funding and even the EU institutions themselves.

The European Commission will publish its much-awaited assessment of the CAP this Wednesday (29th Nov) and is expected to contain comprehensive recommendations for the future of farm support and rural development, as the EU executive’s thoughts turn to the post-2020 budget.

Ahead of the report the NGOs Birdlife Europe and the European Environmental Bureau, along with the European Parliament’s Greens/EFA and Socialists & Democrats groups commissioned their own fitness check of the CAP, entitled ‘Is the CAP fit for purpose? An evidence-based fitness-check assessment’. While they recognised that the policy had achieved good results in eradicating poverty among EU farmers and hunger among EU citizens, the authors question the relevance of these goals today.

The Common Agricultural Policy (CAP) is the EU’s largest single budget item, absorbing around 38% of all EU spending in the current seven-year budget (2014-2020), or roughly €408bn.

Most CAP funding (more than three-quarters) is delivered to farmers in the form of direct payments, known as the CAP’s first pillar. This land-based payment scheme aims to support farms’ income based on the size of their operation and the environmental measures they take. It also contains support packages for young farmers and measures to ensure animal welfare and the sustainable use of inputs.

The remaining €99bn is earmarked for rural development programmes: the CAP’s second pillar. These programmes aim to use agriculture as a lever to bring broader societal benefits to the bloc’s deprived rural areas and are drawn up by national or regional authorities in the EU’s member states.

Changing Market & Environmental Conditions

The CAP has been adapted to changing market and environmental conditions over the years, but its critics argue that its fundamental objectives are no longer relevant and its structure too complex and contradictory.

First to be questioned by the report were the socio-economic benefits of the CAP’s focus on productivity.

“Enhancing agricultural productivity relates to post-war Europe and can be considered as already fulfilled and largely outdated within the EU,” the report states. “Public demand for quality instead of cheap food is not reflected.”

While the report praised the CAP for supporting farm incomes, it strongly criticised the broader socio-economic impacts of the policy and its lack of internal and external coherence. “Conflicting objectives and conflicting instruments weaken policy design and implementation,” it said, assigning the blame in part to overly flexible national interpretations of the CAP’s objectives.

And while the high-production, export-driven nature of the CAP is praised as having increased trade with many high and middle-income countries, this has often come at the expense of preferential trade for the least developed countries, undermining the bloc’s development goals.

Direct payments create Dependency

Although supporting farm incomes on the one hand, direct payments “create dependencies on subsides, influence some production decisions and reduce farm efficiency” on the other, the report said. And the land-based nature of direct payments means small farmers receive only limited support, while bigger businesses and landowners receive bigger subsidies.

The report found that direct payments had helped slow the concentration of land by big farming businesses by keeping smaller farmers afloat, but that it is “insufficiently targeted to lower income farm households”.

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“We see that 32% of subsidies go to 1.5% of farm businesses,” said Bart Staes, a Belgian Green MEP and member of the European Parliament’s agriculture committee. “So we can only conclude that small farmers are missing out.”

 “The CAP should turn its attention to small and medium-sized farm businesses because they are better for the local economy,” he added.

These payments also have the knock-on effect of inflating land prices and rents and enriching land owners that are not necessarily farmers.

Direct Payments encourage Intensive Methods

The report also criticised the CAP’s environmental coherence. It found that direct payments encourage intensive methods that often cancel out the benefits of the environmental, or ‘greening’ measures it also tries to encourage.

Greening measures include paying farmers to practice crop rotation and designate ecological focus areas (EFAs) to support biodiversity on their land.

But beyond the tension between the CAP’s objectives, complex administrative requirements also undermine the policy’s efficiency. The paperwork associated with accessing EU funding pushes farmers to make easier, less effective environmental choices, according to the report, “with the highest uptake of EFA options that offer no return (i.e. no environmental improvement) for the greening investment”. In this regard the authors suggested that “regulation is generally more efficient than subsidies” in ensuring minimum ecological requirements are adhered to.

For the NGOs and lawmakers behind the fitness check, the EU must thoroughly rethink its approach to agricultural policy, ensuring the focus is on guaranteeing an efficient, coherent policy that gives farmers and the environment the support they need and delivers good value for money.

Greens/EFA MEP Molly Scott Cato comments: "There needs to be a major change in direction if the CAP is to be made fit for purpose. "With CAP spending amounting to nearly sixty billion euros per year, it should be a major driver of socioeconomic progress. But with far too much money going into the hands of far too few farmers, it is failing to deliver on its potential. We need a clear commitment to small and medium sized agriculture, and action to stop the expansion of corporate-controlled mega-farms which drain our local economies. "The CAP is also failing on the environment. Europe needs an agricultural policy that will help farms make the transition to animal-friendly and greener production."