Haniotis, Tassos

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UC BerkeleyWorking PapersTitleAgri-Environmental Policy in the EU: What is the Relevance of Cap ReformPermalinkhttps://escholarship.org/uc/item/88x7w274AuthorHaniotis, TassosPublication Date2005-09-07eScholarship.org Powered by the California Digital LibraryUniversity of CaliforniaUC-BERKELEYCenter on Institutions and Governance Presentation No. 15Agri-Environmental Policy in the EU: What is theRelevance of Cap ReformTassos HaniotisInstitute of Governmental StudiesUniversity of California, BerkeleyFebruary 2005This paper can be downloaded without charge at:Center for Institutions and Governance Working Papers Series:http://igov.berkeley.edu/workingpapers/index.htmlSlide 1  Agri-environmental policy in the European Union:What is the relevance of CAP reform?Tassos HaniotisHead of UnitAgricultural Trade Policy AnalysisDG for Agriculture and Rural DevelopmentEuropean Commission   Slide 2  May 27, 2005 2Outline! The  relevance of the issue the uneasy relationship of farming and the environment ! What is the direction of CAP reform? principles and instruments of the new CAP! What impact from CAP reform? on the environment on agri-environmental measures! What lies ahead? future challenges and risks   Slide 3  May 27, 2005 3The uneasy link: farming and environment ! Positive externalities of agriculture... are more visible on the environmental landscape play a major role in European approach to agriculture strengthen image of farming as something beyond just food production ! Negative environmental externalities of agriculture… generate questions about their linkage to agricultural policy often put the whole notion of farm policy into question but also hide a complex causality relationship ! Agriculture among first sectors to face policy pressures leading to need for farm policy consistency with environmental goals but also raising questions about the instruments used to achieve them   Slide 4  May 27, 2005 4What drives the CAP debate?! Most drivers of recent CAP debate non-environmental… BSE, FMD, (even GMO): mainly around food safety/quality concerns budgetary pressures: always present, although often out of context WTO issues: but CAP reform changed role of EU    CAP impact: focus on LDCs, even though EU is increasingly a price-taker ! …yet most measures relevant to environment… in cross-compliance, most measures linked to environmental obligations most direct impact from decoupling expected on agri-environment all farmers affected by agri-environmental standards  most RD priorities are agri-environmental! …reflecting deeper linkage of policy to agri-environment    Slide 5  May 27, 2005 5What drives CAP reform?! CAP policy dilemma (as defined by CAP objectives) be competitive in world markets meet the highest environmental/food quality/animal welfare standards! CAP reform orientation aims at meeting both objectives in a manner that meets citizen, taxpayer and consumer priorities in the less-trade distorting manner! As coverage of CAP reform gradually expands… arable crops, beef, dairy, olive oil, tobacco, cotton reformed sugar proposal to follow soon! …CAP becomes more demand-driven its policy instruments move in similar direction   Slide 6  May 27, 2005 6The path of CAP expenditure01020304050198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003billion Export subsidies Market support Direct aids Rural developmentEU-10 EU-12 EU-15   Slide 7  May 27, 2005 7EU price support reductionsCumulative % reduction in price support-75-60-45-30-150Soft wheat Durum wheat Beef Rice Butter SM PowderCompleted reform Reform in process   Slide 8  May 27, 2005 8CAP reform path at a glance! From product price to direct producer support… gradual reduction of support prices into safety-nets partial compensation of product support drop by shift to producer support! …to decoupling of direct aids… single farm payment based on historical references requiring compliance with set of existing statutory standards! …and to a better balance of support enhancement of RD policy instruments to meet new standards shift of funds from market support to rural development financing new market reforms with redistribution of direct aids   Slide 9  May 27, 2005 9CAP budget cost trend0102030401993 2000 2012billion  Market measures Area/animal payments Single Farm Payment (minimum from 2003/2004 reforms)EU-12 EU-15 EU-25   Slide 10  May 27, 2005 10Opportunities from CAP reform  ! From market reform… supply (price) incentive for overproduction and intensity largely gone  expectation for more demand-driven pressures leads to market response  ! …to producer direct support… allows farmers to respond better to markets-driven signals thanks to the presence of a rather stable income component! …to rural development measures… it is not so much the additional funds (always constrained) that matter   but also the additional policy instruments that become available! …the potential for a consistent approach exists!   Slide 11  May 27, 2005 11Market reform: impact on environment! Arable crops reforms price support reductions diminish or remove incentive to overproduce lead to visible results on input use already from the 1992 reform and a similar impact is expected in newly reformed sectors! Beef sector reforms  mixed results of 1992 reform but post-BSE adjustments have helped  so has the abolition of intervention ! Dairy sector expected acceleration of restructuring will increase efficiency but quota system does not allow full benefits to materialise while impact of dairy herd on beef production remains significant   Slide 12  May 27, 2005 12Decoupling: impact on environment! Single Farm Payment (decoupled support) facilitates restructuring with lower income pressure is mainly neutral on land values, thus allowing land use adjustments  ! Coupled support  level much lower than in recent past (11%-14%) generally limited to sectors or regions that face abandonment risk often coupled with quality incentives! Cross-compliance respecting good farming practice is a requirement for support non-respect now bites the individual farmer implicitly creates new incentives for improvement in farming   Slide 13  May 27, 2005 13Rural development: impact on environment! More funds from markets to RD clearly below initial objective still set precedent for future direction  ! New instruments for RD complement direction of other pillars of CAP reform expand environmental provisions (Natura 2000, increase co-financing) proposals under discussion impose minimum 25 % for agri-environment  ! Member-state role essential agri-environmental challenges are more localised than other standards capacity building essential  how (and how soon) will the advisory systems be implemented?   Slide 14  May 27, 2005 14Conclusions and challenges! CAP reform provides opportunities for agri-environment  direction of reform in three pillars moving in same direction multiplier effect possible if implementation focuses on coherence continuing demand-driven pressures enhance this direction ! Impact depends on several factors budgetary pressures create again risks (especially for RD) significant burden of implementation by member-states! Is there an alternative? is there a policy dilemma between competitiveness and standards? is the overall policy direction meeting agri-environmental concerns? is the mix of policy instruments appropriate?     

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Agri-Environmental Policy in the EU: What is the Relevance of Cap Reform

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Agri-Environmental Policy in the EU: What is the Relevance of Cap Reform

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