ECONOMICS AND POLITICS OF THE CAP AFTER 2020 Presentation to the Joint CEPS—Danish Agriculture and Food Council (DAFC) event European Agriculture, Sustainability and Competitiveness: The CAP After 2020 Brussels, February 9, 2017

Alan MatthewsTrinity College Dublin, Irelandalan.matthews@tcd.ie

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The mandate

• “The Commission will take forward work and consult widely on simplification and modernisation of the Common Agricultural Policy to maximise its contribution to the Commission's ten priorities and to the Sustainable Development Goals. This will focus on specific policy priorities for the future, taking account of the opinion of the REFIT Platform, and without prejudice to the Commission proposal to revise the Multiannual Financial Framework”.

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A CAP 2013 mid-term review or designing the CAP post 2020?

• Public consultation• Wide-ranging survey sensibly focused on assessing support for

different policy priorities for CAP rather than policy details

• Impact assessment• 1. Maintaining the EU’s farm rules as they currently stand • 2. No policy, full liberalization• 3. Programming with implied shift from area-based payments towards

rural development & risk management tools • 4. Build on area-based payments to further leverage economic &

environmental benefits in a simplified way• 5. Focus on small-holders, environmentally-friendly farms & local food • Source: Commission, inception Impact Assessment for a Communication on Modernising and Simplifying

the Common Agricultural Policy, Feb 2017

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The money• Commission proposal for next MFF by end of 2017• European Council negotiations complicated by:

• Loss of UK net contribution following Brexit• Rising salience of critical new priorities including (outside EU

budget) increased defence spending• Whether it intends to address reforms in own resources financing• Reduced sense of solidarity among Member States• Renewed debates about subsidiarity

• Timetable (following precedent of 2014-2020 MFF)• First discussion in European Council Spring 2019• Expected agreement in European Council Autumn 2019

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Overview of the issues in status quo review

• Direct payments• “I am determined to maintain basic income support and an effective

safety net through a system of direct payments.” - Comm. Hogan• Old battles in new bottles

• Land management• Future of cross-compliance and the greening payment

• Risk management• Improving market resilience of farmers including food chain issues

• Rural development• Ideas in the Cork 2.0 Declaration

• Relative spending priorities• If CAP budget is reduced, which area takes the brunt?

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Alternative ways forward

Support for products

Support for producers

Preventive supply managementRaise safety-net intervention pricesCounter-cyclical paymentsMore coupled support

InnovationClimate mitigation and adaptationReduced chemical inputs, efficient water use, improved soil health, habitats for biodiversity

CAP reforms 1992-2008

Support for production methods

2013 CAP reform

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The politics• Can co-legislators agree within 12 months of Commission publishing

legislative proposals?• Will European Parliament, in particular, agree to draft its opinion before

it knows the outcome of MFF negotiations?• Will European Council attempt to red-line particular CAP issues which

are the prerogative of co-decision as on last occasion?• How will elections in key Member States in 2018 affect AGRIFISH

Council perspectives?• How will current CAP adjust to loss of Brexit funding in 2019 and 2020?• If no agreement by March 2019, given need for lead-in time for paying

agencies to adjust systems, will slightly tweaked CAP simply be rolled over into early years of 2020s?

• What might be impact of a radically different agricultural policy taking shape in the UK post 2020 on future CAP design?