The CAP reform process in perspective: issues of the post-2013 debate Carina Folkeson Directorate for Economic Analysis, Perspectives and Evaluations DG for Agriculture and Rural Development European Commission

C. FolkesonCAP perspectives 2 The long-term CAP perspective The general context of the CAP debate –The question about P in the CAP –The question about the "C" in the CAP –The debate about the two pillar structure of the CAP The post HC context of the CAP debate –Volatility in agricultural production and prices –Impact of the economic crisis on agriculture –Food security in the context of climate change and limited resources The institutional context of the CAP debate –New European Parliament and Commission –Lisbon Treaty –WTO prospects

C. FolkesonCAP perspectives 3 Budget Economic crisis Economic crisis Climate change Climate change The CAP debate at a glance The CAP debate at a glance

C. FolkesonCAP perspectives 4 Different regional impacts from Climate Change Warming water availability drought risk yields suitable crop areas floods hotter and drier summers summer drought forage sea levels floods hotter and drier summers crop yields, range forage sea levels summer rainfall storms, floods growing seasons, crop potential pests winter rainfall (floods) summer rainfall drought, water stress Soil erosion yields, range of crops

C. FolkesonCAP perspectives 5 Budget Economic crisis Economic crisis Climate change Climate change The CAP debate at a glance The CAP debate at a glance

C. FolkesonCAP perspectives 6 EU developments in agricultural income (agricultural income/AWU in real terms) Source: Eurostat EU-15 EU-12

C. FolkesonCAP perspectives 7 Evolution of agricultural income as a share of average income in the economy Source: European Commission - DG Agriculture and Rural Development, based on Eurostat data on national and agricultural accounts. *EU-15 average calculated with: EL, ES, FR, IT, NL, AT, PT; EU-10 average calculated with: CZ, EE, HU, PL, SK; EU-25 average = EU-15 + EU-10 countries.

C. FolkesonCAP perspectives 8 Budget Economic crisis Economic crisis Climate change Climate change The CAP debate at a glance The CAP debate at a glance

C. FolkesonCAP perspectives 9 CAP budget trends in perspective Source: European Commission – DG Agriculture and Rural Development

C. FolkesonCAP perspectives 10 CAP expenditure and CAP reform path EU-10EU-12EU-15EU-25EU-27 Source: European Commission – DG Agriculture and Rural Development

C. FolkesonCAP perspectives 11 Rural Development Direct payments Markets Pillar I Pillar II The CAP and the budget The CAP and the budget Modulation

C. FolkesonCAP perspectives 12 Budget Economic crisis Economic crisis Climate change Climate change The CAP debate at a glance The CAP debate at a glance

C. FolkesonCAP perspectives 13 Direct payments Markets Rural development Income Structural adjustment Public goods Budget Economic crisis Economic crisis Climate change Climate change The CAP debate at a glance The CAP debate at a glance

C. FolkesonCAP perspectives 14 Direct payments Markets Rural development Income Structural adjustment Public goods Risk management Market instruments Food chain issues Budget Economic crisis Economic crisis Climate change Climate change The CAP debate at a glance The CAP debate at a glance

C. FolkesonCAP perspectives 15 Cumulative reductions in EU price support Source: European Commission - DG Agriculture and Rural Development

C. FolkesonCAP perspectives 16 The evolving role of EU support prices - wheat Sources: European Commission - DG Agriculture and Rural Development and World Bank

C. FolkesonCAP perspectives 17 Impact of CAP reforms on EU net production surplus Sources: European Commission – Eurostat and DG Agriculture and Rural Development

C. FolkesonCAP perspectives 18 Long-term price evolution along the food supply chain Source: European Commission – DG Economic and Financial Affairs, based on Eurostat and Agriview data Agricultural commodity prices Food producer prices Food consumer prices Overall inflation (HICP)

C. FolkesonCAP perspectives 19 Direct payments Markets Rural development Income Structural adjustment Public goods Risk management Market instruments Food chain issues Budget Economic crisis Economic crisis Climate change Climate change The CAP debate at a glance The CAP debate at a glance

C. FolkesonCAP perspectives 20 Direct payments Basic rate Markets Rural development Income Structural adjustment Public goods Risk management Market instruments Food chain issues Other criteria GAEC Budget Economic crisis Economic crisis Climate change Climate change The CAP debate at a glance The CAP debate at a glance

C. FolkesonCAP perspectives 21 Average payments per ha Source: European Commission – DG Agriculture and Rural Development

C. FolkesonCAP perspectives 22 Share of DP and total subsidies in agricultural income Source: European Commission – DG Agriculture and Rural Development EU-15 EU-12

C. FolkesonCAP perspectives 23 Recent evolution of agricultural input and output prices Source: Eurostat

C. FolkesonCAP perspectives 24 Direct payments Basic rate Markets Rural development Income Structural adjustment Public goods Risk management Market instruments Food chain issues Other criteria GAEC Budget Economic crisis Economic crisis Climate change Climate change The CAP debate at a glance The CAP debate at a glance

C. FolkesonCAP perspectives 25 Direct payments Basic rate Markets Rural development Innovation Environment Territory Income Structural adjustment Public goods Risk management Market instruments Food chain issues Other criteria GAEC Budget Economic crisis Economic crisis Climate change Climate change The CAP debate at a glance The CAP debate at a glance

C. FolkesonCAP perspectives 26 The three RD thematic axes in the MS Source: European Commission - DG Agriculture and Rural Development

C. FolkesonCAP perspectives 27 Direct payments Basic rate Markets Rural development Innovation Environment Territory Income Structural adjustment Public goods Risk management Market instruments Food chain issues Other criteria GAEC Budget Economic crisis Economic crisis Climate change Climate change The CAP debate at a glance The CAP debate at a glance

C. FolkesonCAP perspectives 28 For further information The CAP after EU agriculture and CAP reform Economic Analysis and Evaluation Agricultural Policy Analysis and Perspectives

C. FolkesonCAP perspectives 29 Thank you