On 29 November 2017, the European Commission approved a Communication entitled "The future of food and agriculture" [1] On of the most important sentences of the entire Communication is the first one, and is written in invisible ink. It says: " The CAP budget for the next programming period will decrease in nominal terms, due to the budget consequences of the Brexit,  to the new priorities of the Union and to the lack of political will from the remaining Member States to increase significantly their contributors to the European budget "..

This budget hole will have consequences at European and  Member States level.

Consequences at European level

Each Member State will see its CAP budgetary envelope (s) for pillar 1, pillar 2 or pillar 1+2, reduced. After long and unpleasant negotiations, my forecast is that we will arrive at a situation in which each Member State could take advantage of a wide range of mechanisms to instrumentalize the cut, mechanisms that can be combined in the way that seems most appropriate to them:

• Do nothing, and simply assume the corresponding cut.
• Modulate direct payments, including a possible capping with a correction factor based on labor
• Prioritize active or "genuine" farmers, reducing aid to the others, or expelling them from the system, including very small farmers and/or retirees
• Co-finance certain direct aids in the same way that rural development aid is currently co-financed.
• Increase the rules of conditionality in such a way that farmers who do not participate in the ecological transition, for example those who practice corn monoculture, would be excluded from the scheme.
• Optional top-ups for some direct payments, in the same way that has been done for years with the aid to nuts,
• Co-finance certain aids from the current second pillar in the same way that is currently done with the operating funds of the producers´ organizations in the fruit and vegetable sector.

 

A new delivery model

 

But this new budgetary situation would also have consequences at the level of each member state, especially if we join it with the (logical) and growing demand to maximize the effectiveness and efficiency of the (increasingly scarce) public funds.

If results are required, it is necessary to leave sufficient margins of freedom for the beneficiaries to make their best possible use. This is exactly what the European Commission proposes when it says in its Communication " the Union should establish the basic political parameters (objectives of the CAP, general types of intervention, basic requirements), while the Member States should be more responsible and be more transparent as to how they meet the objectives and achieve the agreed goals. "

This " Strategic Plan" should ensure consistency between the two pillars of the CAP, although it is curious that throughout the text of the Communication no specific reference to another coherence is made, already introduced by the CAP 2014-2020, among the different European structural funds.

One of the main crtics that have been made to the content of the Communication is that it would undoubtedly be a step towards what with good will we could called a "PAC a la carte" or, with a little bit less good will a "renationalization of the CAP".

The argument of the distortion of competition among producers that would be created is not acceptable for two reasons, an economic one and a legal one.

From the economic point of view, differences between direct payments received by farmers from different Member States or regions already exist already today. A cereal grower does not receive the same support today in Germany, France, Spain, Lituania or Romania. Nor is it subject to the same conditionality rules, since good agricultural practices are different between Member States and regions.

Experience shows that these real differences have not jeopardized the functioning of the single market, nor distorted trade cereals flows within the Union.

From the legal point of view, direct payments are framed in the green box of the World Trade Organization, that is, those that do not distort (or do so minimally) international trade.

If it is now intended that this new system represents a distortion of competition among Community producers, it would also represent it in international trade. We would be saying that the European Union makes a mistake by communicating its direct payments in the green box instead of the ambar box.

In other words, we would be condemning direct payments to death and depriving European farmers of this support. We would be throwing the child with the bath water. I'm not sure that everyone who sings on this topic knows solfege and understands what the consequences of their speeches and actions might be. With the globalization of information, any unfortunate sentence can be thrown as an argument at the table of international trade negotiations against the CAP and European farmers ... or be used by the Americans to justify the imposition of a tariff on Spanish table olives.

The debate is therefore not simple. It is not fair to treat different people and situations in the same way, what was done often for many years by some CAP instruments. Nor is it fair to treat people and similar situations differently, although this is again what was done also for many years by other CAP istruments.

 

[1] https://ec.europa.eu/agriculture/sites/agriculture/files/future-of-cap/future_of_food_and_farming_communication_en.pdf