EU

Modernising the EU Common Agricultural Policy

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EUWhile the future of the CAP is already debated in various instances, the European Commission launched its “Consultation on modernising and simplifying the Common Agricultural Policy.” Sourcing large amounts of European vegetable oil, IMACE has a strong interest in a competitive, economically viable and healthy agricultural sector. 

European Commissioner for Agriculture Phil Hogan suggested that he is open to real reform 1 and is focussing on cutting bureaucracy, protecting the environment, and ensuring farmers are not left at the mercy of volatile markets. Essential elements which will indicate the success of the current exercise.

The CAP, being one of the oldest policies of the European Union has been reformed on many occasions. Today, a focus on competitive markets, sustainable production and healthy living should go hand in hand throughout the entire reform process.

Competitive markets

Our sector is facing direct competition from the butter industry. The sector’s 2016 difficulties highlight its dependency on public support. IMACE is particularly concerned regarding trade and market distorting measures still present in the CAP. The World Trade Organization is clear on this: all domestic support measures considered to distort production and trade fall into the Amber Box and must be reduced.

Direct dairy support and milk price intervention measures stimulate adverse risk taking and unfair risk pricing. Risk assessment and pricing should be left to specialised players and market instruments. IMACE’s members bear the full cost of operating risk.

The proposed interventions cannot be seen as an isolated intervention without further repercussions throughout the business cycle. They cannot be explained simply as crisis support. The proposed interventions reward farmers that ignore market risk during “good times.”

Note that the European Court of Auditors (CoA) is highly critical towards the CAP measures in support of farmers’ incomes. It finds the impact of the €270bn farm subsidies impossible to measure. The CoA mentions “vague objectives”, absence of representative data on the disposable income of farm households, no reliable system for comparing agricultural incomes with other sectors, and when data is available, neither the Commission nor Member States assure it is of appropriate quality.

IMACE supports the role of the CAP in an expanding world market. To remain competitive, the CAP reform should lead to greater simplification with fewer market management tools. IMACE members source large amounts of healthy European vegetable oils, thus contributing to farmers’ income. IMACE considers a productive farming system and an efficient market to be the best way towards a sustainable income for the European farmers.

Innovation for healthy and sustainable living

The revised CAP should support innovation and allow farmers to adjust to evolving trends and scientific knowledge. In particular, it should support farmers to respond to health and environmental considerations.

Health

Currently, there is a contrast between dietary targets and CAP budget. The CAP should allow for and incentivise innovation towards meeting the dietary targets. Notably, public bodies increasingly recognise the need to shift from saturated fatty acids to unsaturated fatty acids.

Environment

Agricultural land occupation to produce margarines and raw materials for margarines is about half of that to produce butter, and carbon footprint of margarine production is about one third. Yet, the EU agricultural output is significantly biased towards dairy. Taking into account environmental considerations means rethinking diets and adjusting agricultural production accordingly.

Fortunately, as the European Commission Standing Committee on Agricultural Research (SCAR) already concluded: “The promotion of a healthy diet also reduces the environmental footprint of food consumption in Europe and globally” .

Dare to reform

The current evaluation must dare to ask the difficult questions. Is the European farm system with its reliance on small farming 11 equipped to face the environmental and social challenges of the future? Market, environmental, and health considerations should go hand in hand. Only as such can we build a competitive, economically viable and healthy agricultural sector equipped for the future.

You may find the full Imace view here

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