What is broken? Nothing less than the biggest policy of EU
What is CAP?
CAP is a well known acronym but how many people do actually know how it works? Most people have heard something about subsidies paid for farmers but that is it.
CAP is about 40% of EU spending the bureaucracy is complicated and not even the farmers understand all of it. The money is divided between two so called pillars. Pillar I is financed totally from the EU budget and it takes up about three quarters of CAP (or about 30% of all EU spending). Biggest part of it are the so called direct payments, most of these are today decoupled from production.
There are also limited possibilities to pay the coupled support and market related measures but their budget is limited. 30% of direct payments is dedicated to so called “greening”: ecological focus areas, crop diversification and protection of permanent grassland. Pillar II finances measures according to rural development plans, including agri-environment-climate measures. Getting dizzy? Read how European Commission presents CAP as a perfect policy: http://europa.eu/rapid/press-release_MEMO-13-631_en.htm
Given share of the budget one would expect that farmers are content but asking them you would often get a different reply. Farmers think the policy is bureaucratic and various requirements, including those meant for protection of environment way too complicated.
If farmers consider environmental conditions too demanding then maybe CAP is indeed good at protecting environment? Not really. “Greening” - the biggest change due to the last reform – is creating some headache to farmers but very little real environmental benefit. The bigger direct payments the bigger risk of pollution. Agri-environmental measures do produce some benefits but they are only a small part of CAP spending.
Direct payments paid per hectare differ significantly between the Member States. The farmers from the Baltic States thus complain about unfair treatment. But farmers from Malta, Netherlands or Belgium are also not content, since their payments are to decrease in time. The reason why are there direct payments does not get much attention in these discussions.
Direct payments are also a case of environmentally harmful subsidy. We will explain this in next blog post. And we will try to think of the future.