Is the CAP Fit for Purpose? An evidence-based Fitness Check - - PowerPoint PPT Presentation

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Is the CAP Fit for Purpose? An evidence-based Fitness Check - - PowerPoint PPT Presentation

Aug 22, 2022 129 likes •261 views

Is the CAP Fit for Purpose? An evidence-based Fitness Check assessment Part II: Socio-economy Guy Peer, Sebastian Lakner, Robert Mller, Gioele Passoni, Vasileios Bontzorlos, Dagmar Clough, Francisco Moreira, Clmentine Azam, Jurij Berger,

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Is the CAP Fit for Purpose?

An evidence-based Fitness Check assessment Part II: Socio-economy

  • S. Lakner
  • P. Bezak
  • Dr. Sebastian Lakner

University of Goettingen; Dept. Agricultural Economics & Rural Development

Guy Pe’er, Sebastian Lakner, Robert Müller, Gioele Passoni, Vasileios Bontzorlos, Dagmar Clough, Francisco Moreira, Clémentine Azam, Jurij Berger, Peter Bezak, Aletta Bonn, Bernd Hansjürgens, Lars Hartmann, Janina Kleemann, Angela Lomba, Amanda Sahrbacher, Stefan Schindler, Christian Schleyer, Jenny Schmidt, Stefan Schüler, Clélia Sirami, Marie von Meyer-Höfer, Yves Zinngrebe

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Fi Fitness ch check ck cr criteria

  • Effectiveness: Have the objectives been achieved? Which significant factor

contributed to or inhibited progress towards meeting the objectives?

  • Efficiency: Are the costs reasonable and in proportion to the benefits

achieved? Also considering other, comparable mechanisms?

  • Internal Coherence: Do the CAP instruments agree or conflict each other

in terms of objectives, institutions and/or effects?

  • External Coherence: Do other policies agree or conflict with the CAP in

terms of objectives, institutions and/or effects?

  • Relevance: Is the CAP relevant to the challenges as perceived by EU

citizens, farmers and policy makers? Is it using (and supporting) the most updated criteria, tools and knowledge?

  • EU Added Value: Does the CAP address challenges better than national-,

regional- or local-level solutions?

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To Topics covered by the report

Socio-economy:

  • 1. Growth of agricultural productivity
  • 2. Fair standard of living for farmers
  • 3. Market stability
  • 4. Balanced territorial development

Environment:

  • 5. Climate action and energy
  • 6. Soil and water protection
  • 7. Biodiversity and ecosystem services
  • 8. Organic farming in the context of sustainable farming
  • 9. Animal welfare

Overarching topics, also emerging from SDGs:

  • 10. Health, sustainable consumption and production
  • 11. Reduced inequalities
  • 12. Global-scale effects of the CAP

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Markets: CAP reduced distortions

  • Implementation of GATT/WTO
  • Reduction of tariffs, int. support, exp. subsidies
  • Resulting in stable markets + reduced effects
  • Farmers are challenged with price volatility
  • The end of production quotas are a challenge

Balanced territorial development Land use changes Effectiveness overall is mixed

Some Results in Detail:

Share of direct payments in farm profit (%)

Source: own calculations, based on FADN 2017, own calculations; Average figures 2007-2013

DP contribute to farmers income

  • DP contribute to 10-60% to profits (figure)
  • Decoupling improved productivity
  • DP influence farmers decisions, reduce TE
  • Dependence of DP

1 E 1 Effect ctiveness

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0% 10% 20% 30% 40% 50% 60% 70%

  • 1

1 2 2 3 3 4 4 Share of direct payments / profit (%) Profit in 1,000 EUR/ha Average farm profits (EUR/ha) Share of direct payments to profits (%) Average EU 27

Average EU 27 = 25.7%

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2 E 2 Effici ciency cy

Direct Payments

  • Distribution of DP unequal

Appropriate distribution of DP? Inefficient to address income

  • Leakage of DP to land-markets

Higher land rents (+30-50%) De facto support for land owners

  • No clear objective by Commission
  • Missing indicators:

No focus on farm households Assets ? Other incomes?

  • The DP is highly inefficient
  • CAP is inefficient

2006 2008 2010 2012 2014 0.60 0.65 0.70 0.75 0.80

Distribution of direct payments in the EU 2006-2015

Years Gini-coefficient [0,1] low equity high equity Legend:

Northwest South East Northwest South East

The Results in Detail:

European Court of Auditors 2016:

“…the Commission’s system for measuring the performance of the CAP in relation to farmers’ incomes is not sufficiently well designed and the quantity and quality

  • f statistical data used to analyse farmers’ incomes has

significant limitations.”

Source own calculations 21.11.2017

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3 I 3 Internal C Coherence ce

Conflicts of objectives:

  • Environment ó Income
  • Income ó Structure

Conflict of Instruments

Conflicts within Pillar I:

  • (Re-)Coupled payments (10% P1)
  • Undermine market principles
  • Intervention milk market 2015/16

Buying excessive milk quantity Conflicts between Pillars

  • Pillar II: Greening undermining

the Agri-environmental schemes?

The CAP shows low internal coherence

42% 20% 12% 10% 5% 4% 7%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Share of the total coupled payments within the EU (%)

Share of total coupled support in the EU 2015

The Results in detail:

Source: EC 2015

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4 E 4 External C Coherence ce

Reduced distortions

  • Reform process since 1992
  • Impact of GATT/WTO

Open agricultural markets

  • Stop of export subsidies
  • Reduced market barriers
  • Some exception as e.g. beef, sugar…

Remaining problems

  • Standards with mixed effects on LDC
  • Design of free trade agreements?

External coherence: mixed

1 2 3 4 5 6

Notified budget outlay at WTO (in bn. EUR)

Development of EU export - subsidies 1995-2013

Source: WTO

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The Results in detail:

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4a 4a E EU’ U’s ex external global ef effects

Exporting environmental footprints

  • Importing feed for EU livestock production
  • Exporting GHG emissions: Problematic climate balance
  • Increasing biofuel demand
  • Consumption of land and biomass

The global external effects of EU’s agriculture are a challenge! Environmental degradation has social consequences

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The Results in detail:

Source: European Environment Agency, 2015

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5 R 5 Relevance ce

48,4% 56,8% 56,1% 19,5% 83,0% 43,9% 71,7% 5,5% 7,7% 21,5%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Decoupled payments to farmers (Pillar I) Support for RD environment & climate actions (Pillar II) Support for RD investments in physical/humal capital (Pillar II)

Priority given by farmers Priority given by citizens Actual share of EU Spending Share of Greening (%) Datenreihe5 Datenreihe6

Some arguments:

Source: Own compilation; Data from EU Commission 2017; Database on EU spending in RDP; EC (2017)

  • The CAP objectives are vague

and largely outdated.

  • Public acceptance eroded

Citizens ask for public goods CAP as part of EU-criticism

  • Expectations of EU citizens

not reflected in the objectives not reflected in the budget

  • 2017 public consultation

330 k persons non representative 0.064% of EU population 47% from Germany

  • Relevance lacking
  • Consultations do not replace the

regular policy process

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6 E 6 EU A U Added V Value

Standards and Markets Standards are positive for market development

  • e.g. organic farming policy
  • e.g. legal security for a common market, e.g. sanitary standards in EU

Rural Development Programs

  • Ownership through programming in RDP?

CAP-reform 2013

  • New flexibilities of pillar I not according subsidiarity
  • Re-coupling, Re-shifting between Pillars => new “rent-seeking”
  • Flexibilities and coupled payments undermine EU added value

EU added value has been reduced in the last CAP-reform 2013 by “new flexibilities”

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The Results in detail:

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7 K 7 Key l y lessons a and c concl clusions

  • Reforms has resolved most market & development problems
  • Today’s DP are neither efficient nor well justified
  • No consistent, well-justified set of objectives
  • Indicators & evaluation of the CAP are still weak

=> Income indicators: e.g. farm households?

  • In some regions the CAP has social responsibility

=> Note: small farms ó environment

  • Some emerging economies gained from market access

=> Chances vs. challenges

  • The CAP fails in reducing the global ecological footprint
  • Coherent policy packages are missing

=> incentives policy integration

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Thank you for your attention!

Guy Pe’er, Sebastian Lakner, Robert Müller, Gioele Passoni, Vasileios Bontzorlos, Dagmar Clough, Francisco Moreira, Clémentine Azam, Jurij Berger, Peter Bezak, Aletta Bonn, Bernd Hansjürgens, Lars Hartmann, Janina Kleemann, Angela Lomba, Amanda Sahrbacher, Stefan Schindler, Christian Schleyer, Jenny Schmidt, Stefan Schüler, Clélia Sirami, Marie von Meyer-Höfer, Yves Zinngrebe Scoping committee: Tim Benton, Lynn Dicks, Kaley Hart, Jennifer Hauck, Amanda Sahrbacher, and William Sutherland