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

Is the CAP Fit for Purpose? An evidence-based Fitness Check assessment Part II: Socio-economy 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 Dr. Sebastian Lakner University of Goettingen; Dept. Agricultural Economics & Rural Development P. Bezak S. Lakner

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? 21.11.2017 Is the CAP fit for purpose? Part II - Socioeconomy 2

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 • 21.11.2017 Is the CAP fit for purpose? Part II - Socioeconomy 3

1 Effect 1 E ctiveness Some Results in Detail: Markets: CAP reduced distortions DP contribute to farmers income Implementation of GATT/WTO DP contribute to 10-60% to profits (figure) • • Reduction of tariffs, int. support, exp. subsidies Decoupling improved productivity • • • Resulting in stable markets + reduced effects DP influence farmers decisions , reduce TE • • Farmers are challenged with price volatility Dependence of DP • The end of production quotas are a challenge • Share of direct payments in farm profit (%) Source: own calculations, based on FADN 2017, own calculations; Average figures 2007-2013 Balanced territorial development 4 70% Average EU 27 = 25.7% Share of direct payments / profit (%) Profit in 1,000 EUR/ha 4 60% Land use changes 3 50% 3 40% 2 30% Effectiveness overall is mixed 2 20% 1 10% 1 - 0% Average farm profits (EUR/ha) Share of direct payments to profits (%) Average EU 27 21.11.2017 Is the CAP fit for purpose? Part II - Socioeconomy 4

2 E 2 Effici ciency cy The Results in Detail: Direct Payments Distribution of direct payments in the EU 2006-2015 0.80 Distribution of DP unequal • low equity Appropriate distribution of DP? 0.75 Inefficient to address income Gini-coefficient [0,1] Leakage of DP to land-markets • 0.70 Higher land rents (+30-50%) De facto support for land owners 0.65 high equity No clear objective by Commission • Northwest Northwest Missing indicators: South South • 0.60 East East No focus on farm households 2006 2008 2010 2012 2014 Legend: Assets ? Other incomes? Source own calculations Years European Court of Auditors 2016: The DP is highly inefficient • “…the Commission’s system for measuring the performance of the CAP in relation to farmers’ incomes is CAP is inefficient • not sufficiently well designed and the quantity and quality of statistical data used to analyse farmers’ incomes has significant limitations.” 21.11.2017 Is the CAP fit for purpose? Part II - Socioeconomy 5

3 I 3 Internal C Coherence ce The Results in detail: Share of total coupled support in the EU 2015 Share of the total coupled payments within the EU (%) Conflicts of objectives : Source: EC 2015 45% Environment ó Income • 40% 42% Income ó Structure • 35% 30% Conflict of Instruments 25% Conflicts within Pillar I: 20% • (Re-)Coupled payments (10% P1) 20% 15% • Undermine market principles • Intervention milk market 2015/16 10% 12% 10% Buying excessive milk quantity 5% 7% 5% 4% 0% Conflicts between Pillars Pillar II: Greening undermining • the Agri-environmental schemes? The CAP shows low internal coherence 21.11.2017 Is the CAP fit for purpose? Part II - Socioeconomy 6

4 E 4 External C Coherence ce The Results in detail: Reduced distortions Reform process since 1992 • Development of EU export - subsidies • Impact of GATT/WTO 1995-2013 6 Notified budget outlay at WTO (in bn. EUR) Open agricultural markets 5 Stop of export subsidies • Reduced market barriers • 4 Some exception as e.g. beef, sugar… • 3 Remaining problems 2 Standards with mixed effects on LDC • 1 Design of free trade agreements? • Source: WTO 0 External coherence: mixed 21.11.2017 Is the CAP fit for purpose? Part II - Socioeconomy 7

4a 4a E EU’ U’s ex external global ef effects The Results in detail: Exporting environmental footprints Importing feed for EU livestock production • Exporting GHG emissions: Problematic climate balance • Source: European Environment Agency, 2015 Increasing biofuel demand • Consumption of land and biomass • The global external effects of EU’s agriculture are a challenge! Environmental degradation has social consequences 21.11.2017 Is the CAP fit for purpose? Part II - Socioeconomy 8

5 R 5 Relevance ce Some arguments: Priority given by farmers 90% Priority given by citizens The CAP objectives are vague • Actual share of EU Spending 80% 83,0% Share of Greening (%) and largely outdated. 70% Datenreihe5 71,7% Public acceptance eroded • Datenreihe6 60% Citizens ask for public goods 56,8% 56,1% 50% CAP as part of EU-criticism 48,4% 43,9% Expectations of EU citizens 40% • not reflected in the objectives 30% not reflected in the budget 20% 21,5% 19,5% 2017 public consultation • 10% 330 k persons non representative 7,7% 5,5% 0% 0.064% of EU population Decoupled payments Support for RD Support for RD 47% from Germany to farmers environment & investments in (Pillar I) climate actions physical/humal Relevance lacking • (Pillar II) capital Consultations do not replace the • (Pillar II) regular policy process Source: Own compilation; Data from EU Commission 2017; Database on EU spending in RDP; EC (2017) 21.11.2017 Is the CAP fit for purpose? Part II - Socioeconomy 9

6 E 6 EU A U Added V Value The Results in detail: 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” 21.11.2017 Is the CAP fit for purpose? Part II - Socioeconomy 10

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 21.11.2017 Is the CAP fit for purpose? Part II - Socioeconomy 11

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