CAP – The real test is about to come

With the agreement on the EU’s Common Agricultural Policy just signed, IEEP explores what is left to play for, and where the funds should be directed to be in line with the EU Green Deal.

As the ink dries on the political agreement just passed through the European Parliament and Council on the future Common Agricultural Policy (CAP), the real work is already underway in national capitals and in Brussels to decide what the next CAP funds will be spent on.

The new Common Agricultural Policy for the period 2023-2027 will govern how EU Member States can spend their farming subsidies, which amounts to EUR 387 billion to 2027, around a third of the overall EU budget. How these funds are spent will play a strong role in whether the EU as a whole is able to reach the goals of the European Green Deal, given the contribution of the agri-food sector to greenhouse gas emissions, biodiversity decline and other environmental challenges including pollution.

The overarching basis for the new political agreement on the future CAP is a ‘New Delivery Model’ that gives increased flexibility for the EU Member States to choose what to spend the money on, but with the new provision that all their decisions will have to be approved by the European Commission (including Pillar I, whereas previously only rural development measures had to be approved). The process Member States will have to undertake is known as ‘CAP Strategic Planning’, whereby they (led by agriculture ministries) will submit plans for how to spend the funds that answer to ten CAP objectives (covering economic, environmental and social goals) and their specific national needs in relation to them. Member States must also demonstrate that they are increasing the environmental and climate ambition of the new CAP compared to the current one.

The process of approving the plans by the European Commission will take place in the first half of 2022, and will be a joint decision of the entire Commission, meaning involvement of not only DG Agriculture and Rural Development, but of other departments like DG Environment and DG Climate Action. IEEP and other experts and scientists had called for stronger links in the EU political agreement between the CAP and the EU Green Deal and accountability for environmental delivery. This was partially informed by experience with the current CAP where more flexibility for Member States led to them choosing the least environmentally ambitious options. Nevertheless, the impact of the final CAP, not only on the environment, but also on other areas including farm incomes and rights of workers, ultimately still hangs on the quality of this all-important Strategic Planning process (as acknowledged by the EU’s Agriculture Commissioner on Tuesday during the Parliaments’ Plenary debate). Done well, it could still steer the CAP on a more environmentally ambitious path.

The success of this process starts with an accurate and high-quality assessment of needs by Member States, according to which the European Commission will be able to assess whether the measures that Member States propose are answering to the real challenges (environmental and socio-economic). Without an accurate assessment of the needs, it will be impossible to assess whether the measures that Member States propose to fund with the CAP are adequate and relevant.

Therefore, to inform this process and provide an independent analysis, IEEP has conducted a series of needs assessments focusing on the environmental challenges faced in four Member States with some of the largest agriculture sectors: France, Germany, Hungary and Spain. Together, these countries represent a high proportion of the EU’s agricultural area, and are some of the biggest beneficiaries of CAP funds. Therefore, strong action in these Member States will make a significant contribution to improving the environmental impact of the agri-food sector such as on greenhouse gas emissions, biodiversity, water and soil.

IEEP’s analysis found that all the countries face significant environmental challenges to reduce greenhouse gas emissions, reverse declines of farmland species, safeguard soils and improve water and air pollution. For example, France is among the top emitters of agricultural greenhouse gases in the EU and will need to reduce emissions for both livestock and crops in the current CAP to meet its national and EU climate objectives for 2030. Germany also needs to reduce its emissions, especially of ammonia and methane to meet its 2030 reduction commitments for greenhouse gases. It will also need to address grassland conversion, which is a key pressure for biodiversity – more than two-thirds of habitats and species are in unfavourable conservation status in the country. Addressing soil degradation, avoiding additional warming and adapting to unavoidable climate changes in Spanish farming will be critical, with the country predicted to have some of the worst-hit regions in terms of declines in crop productivity due to adverse climate impacts. Actions will be needed in Hungary to meet a range of national and EU policy goals, for example, to stabilise the farmland bird population by 2020 and meet good status of water bodies by 2027, especially with regards to reducing pollution from fertilisers and pesticides.

The reports not only assess the needs, but also propose a suite of different measures that can be funded through the CAP to help to address these challenges. Funding such measures can also co-deliver on economic objectives, both in the short term by providing income support to farmers, and in the longer term by improving the resilience of the farming sector, given the detrimental impact of drought, flooding, heat stress, loss of pollinators and soil degradation on farming operations. This is a point underlined in the recently published EU Soil strategy, which calls for Member States to ensure that CAP strategic plans address their needs regarding the protection of agriculture soils, not least to safeguard the fertility that we rely on for food production.

With the political deal about to be approved, we are arguably at the most crucial point yet in terms of testing the ‘New Delivery Model’. Whether the move to strategic planning ultimately ends up working to increase the say over the CAP in favour of either Member States or the European Commission will depend heavily on the stance that the European Commission will adopt in the approval of the plans. We hope that these latest reports by IEEP provide valuable input into this process.

 

© Photo by Marcin Jozwiak on Unsplash