1. Groupe de Bruges Dilemmas of CAP reform competitiveness and public goods, can farmers deliver both? 8 th April 2011 The CAP and Public Goods A view from land managers Allan Buckwell Policy Director

2. Agricultural competitiveness and land-based public goods The economic and policy context –Agricultural commodity market context –European fiscal austerity –The size and allocation of the EU budget for the MFF 2014-2020 –Trade liberalisation: Doha and Mercosur –Undersupply of environmental goods

3. Implications? –Less for what the market rewards; more for the market failures Higher market returns = less justified income support, & more need and more cost for environmental delivery –Social equity, between Member States, CAP Pillars, Arable vs livestock Favoured vs less favoured Europes marginal farmers

4. The story of 20 th Century commodity prices 1917 1951 (post war rebuilding) 1974 (first oil crisis) 2008 forecast

5. … and UK Foresight projections of commodity prices by 2050…

6. Equity – between Member States?

7. The CAP towards 2020 The Commissions three objectives –Viable food production –Sustainable management of natural resources and climate action –Balanced territorial development: avoiding land abandonment, dealing with the 5.5m semi-subsistence farmers The two key proposals: Commission – Ciolos, bolstered by the three Commissioners 11 th March letter Parliament – Dess Council failed to find consensus The debate is still open

8. Commissions Option 1 Pure financial redistribution

9. Option 2 Greening Pillar 1 Basic decoupled direct payment: uniform per Ha in each MS/Region; keeping entitlements and cross compliance, plus ceilings – adjusted for labour A mandatory greening component, –Non-contractual annual payments, perm pasture, green cover, rotation, ecological set- aside, enhanced cross compliance and N2K Additional income support to all farmers in areas with specific natural constraints as area-based payments, to complement P2 action in LFAs Plus specific small farmer scheme + limited voluntary coupled supports Better definition and targeting to Active Farmers

10. Option 3, European Parliament rapporteur Albert Desss ideas Pillar 1 remains but smaller (?) –Greening of P1 via conditionality to P2 –Maintaining production capacity, GAEC. Pillar 2 expands; resource protection role – Conditionality: obligatory participation in 2 priority programmes in P2 (to get DP) –Co-financing reduced –Pillar 2 resource protection beyond XC. –Mentions: erosion, permanent pasture, ecological strips, rotation, CO2 sequestration, organic farming, new green technology innovation

11. Comparison of Ciolos and Dess Similarities: –Two pillar CAP, more compulsory low-level greening –Reference to WFD, Climate Change and N2K –Restrict support to active farmers –Greening = crop rotation, green cover, EPA and PP Differences: CiolosDess –Greens P1 (thinly)Conditionally greens P1 in P2 + organic, erosion, CO2, Green technology and innovation –No more P2 resource ? Expands P2 resource –Annual non-contractualMulti-annual, contractual, M&E –New XC controls Existing controls in P2 –LFA top-up in P1Existing LFA payments in P2 –Payment ceilingsNo payment ceilings –No mention of Co-fin.Reduce Co-financing in P2 Political assessment –Legitimises pillar 1?Undermines Pillar 1? –Poor delivery of PGs?Stronger delivery of PGs?

12. Other contentious issues How countries/farmers who are signed-up for existing agri-environment will fit in? If Ciolos or Dess proposals go through, existing schemes will have to adapt Ceilings on support: scale and adjustment Narrower definition of Active Farmer ? Are we doing more for the Less Favoured Areas? What is happening to Co-financing? Few new ideas on Rural Development

13. Other competitiveness issues Dealing with volatility –Maintain minimal safety net intervention –Sarkozy: control of speculation; restricting export bans; more open info on stocks –Commission: Canadian Income Stabilisation scheme, MS voluntary in P2 Fairer conditions in the food supply chain –Changes in competition law –Codes of conduct Much talk about R&D and skills but no new actions mentioned Simplification – especially control & penalties

14. Where is this leading? The task is more complex than 1999 0r 2004: –27 MS, co-decision, budget pressure, –lack of consensus on the key problems; especially the key question of this conference. Less strong leadership The momentum is with the Commission unless the EP provides a strong clear steer. Commission proposals autumn (four new regulations: CMO, DPs, RDR, Finance) The timetable looks like slipping.

15. Likely outcomes The CAP has to grasp competitiveness and public goods; with more resource to the latter. The CAP will be smaller for the next period, still two pillars, with even less clear functional distinction With some redistribution of supports between MS and farmers. More low-level greening over most of the territory Some simplification of administrative procedures; but not as seen by farmers Farmers will be asked to jump through more hoops to get what support remains.

16. Contact details Allan Buckwell Tel + 44 (0) 20 74 60 79 37 allan.buckwell@cla.org.uk www.cla.org.uk CLA 16 Belgrave Square London SW1X 8PQ allan.buckwell@cla.org.uk www.cla.org.uk