European Parliament report on sustainable competitiveness and innovation

The purposes of the report were first to explain the extent to which the instruments of the current CAP contribute towards improving the sustainable competitiveness of the CAP and stimulate innovation. The second, task was to evaluate if the proposed reforms of the CAP can further improve achievement of these goals. The third task was to make recommendations for further changes.

The conclusion on the first part was that the current policy does not realize its potential, particularly the untargeted, passive direct payments and market support regimes. Most instruments with potential to improve competitiveness and sustainability and encourage innovation are found in the Rural Development Regulation. The strategy in place since the late 1990s gradually to shift resources to the second Pillar was therefore correct, and it is regrettable if this strategy is now abandoned.

The study suggests that the proposals for rural development do offer potential to further improve sustainable competitiveness but that there are insufficient safeguards to overcome the already evident conservatism in programme design and delivery. It advocates that there should be a specified minimum share of CAP expenditure devoted to Rural Development, and proposes that managing authorities of the CAP should be required to devise specific eligibility, selection and targeting criteria for all investment aids, in particular which take account of local conditions and are clearly designed to improve the additionality of funding, and stimulate change that is demonstrably beneficial in economic, environmental and social terms. In Pillar 1 the Farm Advisory Provisions should be strengthened sufficiently so that at least 25% of registered farmers could benefit from support and advice. The greening measures should be accompanied by clear strategies on which aspects of environmental standards will be improved. In Pillar 2 the study suggests the Commission should add a provision which specifically incentivises risk-taking in innovative actions within RDPs, and take steps to prevent the ‘performance reserve’ mechanism from disincentivising innovation.

The study says that there is scope to reduce the rigidities of CAP financial regulations for the EAFRD and remove the inconsistencies with other EU funds. There are also recommendations: to strengthen the work of the networks for Rural Development and its evaluation; to consider a minimum threshold expenditure share for knowledge transfer, information and advice measures within RDPs; and to stipulate a maximum share for risk management, given that such a large share of CAP is already devoted to basic payments.