The agricultural sector administers large areas, 62 % of the terrestrial area in Denmark and app. 42 % in the EU. Agriculture is thus responsible for essential common values of society.
Copenhagen 3th of June 2010
Why do we need a common European agricultural policy?
The agricultural sector administers large areas, 62 % of the terrestrial area in Denmark and app. 42 % in the EU. Agriculture is thus responsible for essential common values of society. At the same time agriculture is a biological production system which affects nature and the environment in both positive and negative ways. Furthermore there are society-motivated considerations like food-safety and ethically-motivated considerations like animal welfare, and - especially from an international perspective - labour health and safety rights. All these aspects – or public goods – are not considered by marked mechanisms, and should be integrated in a common agricultural policy in the EU – also because national legislation is limited e.g. due to cross-border trade. The common agricultural policy of the EU should also be adjusted to international policy.
What do the people expect from agriculture?
EU citizens demand a broad variety of nutritious and healthy food, in sufficient quantities and at reasonable prices, and many people want organically produced food. They also expect a clean environment, a rich and varied nature, a high level of biodiversity, beautiful landscapes and a high ethical standard in both animal husbandry and work environment. This also includes preservation of viable rural districts. People expect what can be called a real sustainable development in the agricultural sector – environmentally, socially and economically. And it is reasonable to take these expectations seriously, as more than 40 % of the budget in the EU, equalling app. 55 billion Euro are spent in this sector.
Why reform the CAP?
In the course of history the CAP has had a number of various objectives, originally to ensure sufficient food supplies after World War II, and later - as a result to changed demands - to reduce surplus stocks. Today the main challenges are maintaining soil fertility, the environment, the climate, nature, biodiversity and drinking water resources, as well as establishing fair-trade conditions on the international food marked – and the CAP should address these issues. Long-term perspectives and predictability should be given high priority in the policy, in order to enable both individual farmers and public institutions to make appropriate adjustments and investments, thus minimizing the risk of financial problems.
To meet those challenges there is also a call for radical changes in consumption patterns. E.g. a change from fossil fuel to renewable energy and a reduction of animal-based food in order to solve the problems of climate change and sufficient food supplies. At this time, more specific knowledge is required before integrating the right incentives in the common EU policy.
Another important issue is to establish fair-trade conditions on the international food marked. This is played down in the present discussion, probably due to the current financial crisis in the agricultural sector of the EU. But it is important to keep focus on the distorting effect on the market, which is brought about by the EU and other industrialised countries by giving financial subsidies to farmers, thus supplying them with a basic yearly income. Although the subsidies are being capitalised in high prices of agricultural land, thus limiting the benefit of the individual farmer, there is still an obvious contrast to the situation of farmers in developing countries, who do not receive any subsidies at all. And the financial subsidies make farmers in the rich countries more creditworthy, thus safeguarding investments in production machinery and the processing industry.
What tools do we need for the CAP of tomorrow?
The fact that agricultural subsidies have led to rising prices of agricultural land and thereby to increased interest payments, is another argument for reducing subsidies to break the vicious circle, and to contribute to a reduction of land prices in the long term. That makes it also more liable for younger farmers to establish a farm of their own. Along those same lines, the last export subsidies should be abolished.
It is important under all circumstances that a reform of the CAP does not result in new general subsidy schemes, which again can be capitalised and can result in once-off profits for landowners in 2013. Instead of that, subsidies should be given only as a necessary compensation for those farmers who make an extra effort to provide common goods. Thereby it becomes profitable to “produce” these common goods, in the same way as it is to produce food. That means an increase of the environmental subsidies in column 2, by transferring more of the direct subsidies in column 1.
It can be legitimate to subsidize the agricultural sector in Europe and other countries, if the aim is to secure the above mentioned public goods like nature, environment, ethical animal husbandry, etc. But subsidies should be reduced, both out of regard to developing countries and to help reducing the price level of agricultural land, and they should aim to ensure sustainability. They should be on a level appropriate to compensate for expenses caused by those investments that aim at increased sustainability of production, that consider issues of environment, nature and animal welfare, compared to foreign competition.
The support should depend on keeping the demands of Cross-compliance and these demands should be strengthened over time, where also demands of the Habitat Directive and The Water Framework Directive and other coming directives should be integrated. Special support for organic and other types of agriculture considering the environment, e.g. selection of set aside land due to nature and climate change considerations should be given priority under column 2.
To ensure sustainable agriculture in the EU, several other political instruments such as fees, requirements and prohibition against environmentally harmful substances, must be combined. Research and development in the environmental and climate sector, including organic agriculture, should be given much higher priority.