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Agriculture

Have Your CAP and Eat It

By Thomas Waitz

With the post-2020 reform of Common Agricultural Policy getting underway, many people are asking whether this huge funding scheme is working as it should. Struggling farmers, environmental damage, and high prices for consumers all point to the need for a shake up. We sat down with Thomas Waitz, Green MEP and – more importantly in this case – farmer, to discuss how the policy can be reshaped to ensure quality local food at fair prices for all.

Green European Journal: We are getting into the thick of the post-2020 reform process for European Union Common Agricultural Policy (CAP). The CAP represents about 40 per cent of the budget of the EU. Nevertheless, citizens are mostly unaware of its ins and outs. Could you explain to us, at a glance, what the CAP is and why it’s so important?

Thomas Waitz: The CAP constitutes 38 per cent of the EU’s budget and it is the oldest and the only really common policy that the EU has. Very few subsidies remain managed on the national level. It basically all goes through the CAP. While CAP spending seems very significant at the EU level, the combined EU and EU Member States’ agriculture budgets make up less than one percent of total EU and governments’ budgets. Some 0.6 per cent comes from the EU and some 0.3 per cent from national budgets. The question can also be asked whether the right amount of money goes to the right people, but the bottom line is that supporting food production and food producers in Europe with a certain amount of public money is generally a good idea.

CAP is composed of two pillars. The first is financed 100 per cent through the EU budget with no co-financing from Member States. For this pillar, there is one EU common framework of rules and goals. The second pillar works through co-financing: just 50 per cent comes from the EU budget and 50 per cent comes from national, regional, or local budgets. Thus, Member States have more choice over how to spend it, and you need support at the national level to unlock European money. In the last CAP reform proposal in 2013, the European Commission proposed linking the second pillar to common environmental measures. However, this was not accepted by Member States, who wanted the freedom to create their own strategy and to set their own aims about where to channel the money. That obviously leads to differentiated outcomes, sometimes negative and sometimes positive. In Austria, two thirds of the money went into projects for organic farming, rejecting the use of pesticides, or for cleaner soil measures. While in the Netherlands, 6 per cent of the money went towards environmental measures and the rest went into investments such as pork production.

To reach common goals, we need a tighter framework on how the money should be spent. At the moment, there’s too much diversity in approaches and rules within or between the Member States. Diversity can be a good thing but only provided there are common rules and criteria. At the moment, Greens are promoting a minimum of 30 per cent of the second pillar money going into commonly agreed environmental measures or policies.

What is the distribution key for the CAP budget? How do you decide who and what gets the money?

The first pillar is based on hectares, which is also part of the problem. In Austria and Germany, farmers receive approximately 350 euros per hectare per year. But for a 20 hectare farm, the average size in Austria, production costs per hectare are much higher than those for working 200 hectares or 1000 hectares. There is a big discussion at the moment on this and all the groups in the European Parliament are demanding digressive quotas, meaning that farmers would receive 350 euros per hectare up to a certain level, say the first 20 or 30 hectares, and then the amount per hectare decreases. The system as it is now greatly favours big farms. They get big revenues from the CAP, which in turn reinforces their competitiveness and dominance over small and medium farms who get taken over or bought off by big players, fuelling concentration. In addition, coupled payments in some countries mean that there are subsidies for animals on top of payments for land surface.

For the second pillar, there is not a distribution key as such, but subsidies are given according to the project put forward, its proposed measures, and its quality. There is much more room for maneuver and there are a series of extra measures, such as extra subsidies for so-called ‘greening’, for organic farming, supporting rare varieties, and so on. But the outreach of the second pillar goes beyond just agriculture as it funds investments also. Subsidies go beyond simple support of agricultural production in quantitative terms. For example, in Austria not only farmers can get subsidies from the second pillar. If a person in a rural area opens a small company producing cheese from locally produced milk, the initiative can benefit from subsidies because it strengthens local food chains through direct marketing, bringing income to the local community.

One of the frequent criticisms of the CAP, aside from throwing money at those that already have enough, is that it targets agricultural production only, with the aim of having a sort of quantitative food security.

Until now the focus was very much on competitiveness in the market, which means very low prices for the products and cheap food for the population. These days, several new focuses are coming to the center of public attention, related to climate, health, food quality, biodiversity, soil, and strengthening local rural communities throughout the EU. Policy-makers and officials at the European Commission, regardless their political affiliation, all realise they are contradicting their policies if they are subsidising measures to combat climate change on one hand, and putting a lot of taxpayers’ money into an agricultural system that partly causes climate change on the other.

Until now the focus was very much on competitiveness in the market, which means very low prices for the products and cheap food for the population.

The Parliament’s Report on the Future of Food and Farming, of which European People’s Party group MEP Herbert Dorfmann is the rapporteur, already calls on the European Commission to introduce a new, coherent, reinforced, and simplified conditionality regime for the first pillar. This would allow for the compulsory integration of the implementation of the different types of existing environmental actions, such as the current cross compliance and greening measures. The paper also stresses that the first pillar’s baseline should be mandatory. We Greens have strengthened this reference by negotiating a ‘no harm’ policy: no subsidies at all for those not meeting the baseline of no harm agriculture. If a farmer’s actions cause erosion, then they should not be eligible for subsidies. The no harm principle would be a big step forward and having it as a baseline would be quite an achievement in the EU framework. The real question remains how we make sure national parliaments and governments stick to it.

The question of ‘capping’, or limiting the maximum amount of subsidies, is also present in these discussions. There would only be two possibilities for receiving subsidies beyond the cap. The first would be very high environmental standards. For example, a mountain farmer who has a small harvest but preserves an area of high biodiversity would get extra subsidy. Even if a very big farmer does that, we are willing to go beyond the cap. This will incentivise farmers to go beyond the baseline, to go organic, or to go towards agroecology.  A second possibility for getting subsidies above the cap – one that has even more support across all political families – is the creation or the maintenance of quality or stable jobs. This would certainly apply to big organic farms because they are more labour intensive.

Last year, a study co-commissioned by the Greens/EFA group in the European Parliament was prepared after the European Commission failed to deliver its own report on the CAP. A detailed analysis has shown that the CAP is not fit for purpose. What are some of the reasons you would highlight?

The main problems from a green perspective were the environmental impact and the animal welfare question. The greening didn’t work. The CAP did not deliver its environmental promises. That’s a question of public money for public goods. The previous European Commission and several groups in the European Parliament supported former Commissioner Ciolos’s proposals on making the CAP greener. But it failed and was weakened because of EU Member States watering it down. In addition to our report, the European Court of Auditors’ report also came out last year with approximately the same conclusions: CAP was not fit for purpose.

Today, the state of the debate is somewhat different because large parts of agriculture are also part of the climate problem. Zero emission food production is just not possible today, but it is possible to have very low emission food production, and agricultural and forestry systems that sequester CO2 from the atmosphere into the soil again. If the framework is well designed, agriculture can become part of the solution.

Some CAP reform arguments revolve around “producing European and not importing” and providing jobs as well as addressing concerns about the development of rural communities. This could include shorter food chain circuits, direct marketing, and less transport with more consumption in the direct geographical range of the production. Is this pointing to something like the European common food policy IPES-Food advocates? 

What is missing to have a common food policy is the scope for creating that policy. Today the mainstream vision is still based on agricultural policy in isolation, delinked from other policy areas. But yes, the agricultural community realises that it has to have a more holistic perspective. Take beef production and the free trade agreements. A free trade agreement with Mercosur allows Mercosur to export hundreds of thousands of tons of beef into the European Union. Farmers realise that this is a problem, and that they need to promote a food policy that implements ideas of direct marketing, local food chains, and so on in order to secure their production and distribution.

Why should we even think about importing beef from 10 000 miles across the sea, which is produced on soil that used to be jungle and by people that have no social security?

But it is always from the standpoint of securing agricultural production. A genuine common food policy would have a different argument. Why should we even think about importing beef from 10 000 miles across the sea, which is produced on soil that used to be jungle and by people that have no social security? Why should we import things we produce – and in very high quality – just in our own backyard? Only the Greens ask these questions today, apart from some individuals here and there in other progressive political groups. 

Given what you’ve mentioned, including this production mindset and these missed opportunities, would you nevertheless say that the current CAP reform discussions are moving in the right direction overall?

We are moving in the direction of taking into account the whole food system, but still just from an agricultural perspective. A good perspective to grasp the problem is that of the supply chain. CAP supports farmers and we are told this sector is poor and cannot survive without this support. But the reality is that payments per hectare do not contribute to any public good beyond producing cheap food. Even the dogma of producing cheap food has not brought results. Production prices of farmers are very low and the food is very cheap, but how much do you pay in the supermarket? An Austrian apple farmer typically gets around 25 cents per kilo of apples – and that’s for the nice ones, without dots or bumps. In the supermarket, we pay between 1.5 and 2.15 euros. So where is the cheap food? Examples abound. Farmers get a very low margin and food is still not cheap for the population.

Looking at the business overall, how much stays in the farmer’s pockets, and how much ends up in somebody else’s? That’s an urgent question within agriculture and it’s an urgent question for any common food policy. But it’s one only dealt from an agricultural point of view. Farmers want to strengthen their negotiation power, and one way to do so would be direct marketing schemes that distribute directly to the consumers. This is the direction that we would like to see in the common food policy.

Farmers get a very low margin and food is still not cheap for the population.

We cannot forget the political calendar because it will also influence CAP reform discussions. The European Commission wants to finish the whole CAP reform procedure before the European Parliament elections in 2019, but I can’t imagine how this is going to happen. I think it will be part of the campaign. Even if the Commission would like to have it done before the election, there is also a democratic question: should an outgoing parliament decide a policy for the next for seven years? It even goes beyond the mandate of the next parliament and would give the next parliament no say on that policy.

And the next CAP could be smaller in size and not the most important budget item of the EU Multi-annual Financial Framework anymore.

It was reduced by 11 per cent in the last round. But there could indeed be further cuts and the farmers and their lobbyists realised that there are very few arguments that could save them from severe cuts. These are climate or environmental arguments related to food security in terms of quality and supply. These are actually Green arguments which they now need to explain why this amount of money should keep going into agriculture.

Is the argument of agricultural jobs on the table and part of the political defense of farmers and the agricultural world?

Yes, in connection with rural areas. To have vital rural areas you need employment in the farming sector. In regions where there are no more farmers, the whole regional economy starts to crumble. A farmer brings more than just their agricultural output. A farmer needs a mechanic, suppliers for seeds, fertilizers, rubber boots, and all kinds of professionals that help rural life exist. Farmers also have families. They need schools, kindergartens, a doctor, and a pharmacy.

The argument is that better rural communities also mean farmers will provide quality foods, meaning organic, and deliver public goods, meaning clean water, clean air, high biodiversity, CO2 sequestration into the soil, and so on. Now, serving the public with public goods automatically creates more employment given that organic farming, for example, is more labour intensive. Here I want to add that organic and technological is not always a contradiction. Precision farming can be organic, and technological developments can create new farming strategies that have never been done by hand before, such as harvesting mixed cultures.

So for 2019 elections and beyond who will defend farmers and rural communities?

At least in Austria and in Germany it was the conservatives still trying to do that, but they are increasingly squeezed between industrial interests and the interests of the rural areas. Because of these contradictions, they are losing more and more trust in the rural areas. It’s important for the Greens to link that together. Who is promoting food co-ops now, who is promoting short-distance food chains, who is promoting direct consumer producer connection? It’s basically the Greens. Greens with their roots in the cities have to learn this, and to implement it in their policies. Some do. Look at Copenhagen, which is around 90 per cent organic. 

Greens become ever more the allies of people in rural areas in making a decent living. For a farmer, it’s not a good feeling to have 50, 60, or even 70 per cent of your income dependent on public subsidies. They work day in, day out, with no holidays, doing their best to produce very high quality of food, which they sell to a wholesaler for less than the production costs and make their living from public donations. This not the way to show respect for what farmers do, to value their work. And so for many farmers it is a new and very supportive experience to get into direct contact with consumers who value their work.  

If you look at the question of fair prices from a systemic perspective, what we’re doing is keeping farmers alive with public money, and to create what? First of all to have a negative environmental impact. But then who is making the profits in the whole agriculture and food sector? We use taxpayers’ money to keep production alive and pay big companies. There is something wrong. 

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Have Your CAP and Eat It

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