Ⓒ Olof S. Evaluating agricultural and rural policies: an EU Commission perspective for CAP2020 Tassos Haniotis, Director Economic Analysis, Perspectives

Ⓒ

Olo

f S

.

Evaluating agricultural and rural policies:

an EU Commission perspective for CAP2020

Tassos Haniotis, DirectorEconomic Analysis, Perspectives and EvaluationsDG for Agriculture and Rural Development European Commission

2

CAP reform objectives at a glanceFuture challenges

Economicchallenges

Environmentalchallenges

Territorialchallenges

• Food security

• Price volatility

• Income pressures

• GHG emissions

• Soil depletion

• Water/air quality

• Habitats/biodiversity

• Vitality of rural areas

• EU rural diversity

• Inclusive growth

Equity and balance of support

Contribution to Europe 2020 strategy

Viable food production Sustainable management of natural resources

Balanced territorial development

CAP2020 reform objectives

3

The challenges and risks of CAP reforms

The CAP reform process can be viewed as an effort to address:

• “Jointness” in the delivery of private and public goods– the consideration of economic sustainability as a prerequisite for environmental and

social sustainability in the agricultural sector

• The reality of market failures– the need to address risks that could potentially upset the environmental and

territorial balance of agricultural production in the EU

• The risk of policy failures– the need to ensure an effective and efficient delivery of policy outcomes and the

continuation of the reform process

4

The challenges and risks of CAP2020

CAP2020 needs to address a specific set of unique challenges:

• A cost-driven commodity price boom– the “baseline” to assess the impact of potential policy changes is full of major

uncertainties, mostly of uncertainties outside agriculture

55

Real commodity price indexes…

(2000 = 100)

0

100

200

300

400

500

600

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

Agriculture Food Energy Fertilizers Metals/minerals

Back to index

6

…and their link with EU farm income

Source: Eurostat

(index 1996 = 100, in real prices)

70

80

90

100

110

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Output prices - EU-27 Input prices - EU-27

7

The food supply chain challenge

95

100

105

110

115

120

jan

v-0

7

févr

-07

ma

rs-0

7

avr

-07

ma

i-0

7

juin

-07

juil-

07

ao

ût-

07

sep

t-0

7

oct

-07

no

v-0

7

dé

c-0

7

jan

v-0

8

févr

-08

ma

rs-0

8

avr

-08

ma

i-0

8

juin

-08

juil-

08

ao

ût-

08

sep

t-0

8

oct

-08

no

v-0

8

dé

c-0

8

jan

v-0

9

févr

-09

ma

rs-0

9

avr

-09

ma

i-0

9

juin

-09

juil-

09

Source: European Commission – DG Economic and Financial Affairs, based on Eurostat data

FOOD PRICE CRISIS PRODUCERS’ LAG RETAILERS’ LAG STABILISATION

Agriculturalcommodity prices

Overall inflation(HICP)

Food producer prices

Food consumer prices

8





• A new set of institutional realities– co-decision after the Lisbon Treaty increases the role not just of the EP in the

decision process, but also of the wider public in the consultation process

9





• A new set of institutional realities– co-decision after the Lisbon Treaty increases the role not just of the EP in the

decision process, but also of the wider public in the consultation process

• A parallel process of multiple potential policy decisions – the debate about the future EU budget and prospects for trade agreements takes

place in the context of significant gaps in policy-relevant information

10

Evaluating ex-ante the impact of reform

Main challenges in assessing the economic, environmental, social and administrative impact of the CAP2020 options:

• Option 1 – rebalancing of support– impact on asset values and farm income at MS and within MS needs to be translated

into EU-wide economic, environmental and social effects (with budget unknown)

• Option 2 – greeningOption 2 – greening– impact of “green” measures in pillar I needs to be assessed by taking account of its impact of “green” measures in pillar I needs to be assessed by taking account of its

cost, benefits and link to pillar IIcost, benefits and link to pillar II

• Option 3 – environmental focusing Option 3 – environmental focusing – Shift of support exclusively to pillar II measures needs to assess increased benefits Shift of support exclusively to pillar II measures needs to assess increased benefits

in some of EU territory against costs and risks across the whole EU in some of EU territory against costs and risks across the whole EU

11

Average direct payments per potentially eligible area and beneficiary

Direct payments net ceilings fully phased-in (in 2016)

Source: European Commission - DG Agriculture and Rural Development

0

100

200

300

400

500

600

700

800

Mal

ta

Bel

gium

Net

herla

nds

Italy

Gre

ece

Cyp

rus

Den

mar

k

Slo

veni

a

Ger

man

y

Fra

nce

EU

-15

Luxe

mbo

urg

EU

-27

Irel

and

Aus

tria

Hun

gary

Cze

ch R

epub

lic

Spa

in

Fin

land

Sw

eden

Uni

ted

Kin

gdom

Bul

garia

Pol

and

EU

-12

Slo

vaki

a

Rom

ania

Por

tuga

l

Lith

uani

a

Est

onia

Latv

ia

EUR/ben.EUR/ha

0

8000

16000

24000

32000

40000

48000

DP net ceilings fully phased-in (EUR/ha)EU-27 average (EUR/ha)DP net ceilings fully phased-in (EUR/beneficiary)

12

Indicative figures on the distribution of direct aid by size-class of aid (in 1 000 EUR)

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0 - <0.5 0.5 -<1.25

1.25 -<2

2 - <5 5 - <10 10 - <20 20 - <50 50 -<100

100 -<200

200 -<300

300 -<500

>=500

Beneficiaries Payments


Distribution of direct aids to the producers – EU-27 (in 2008 Financial year)

13





• Option 2 – greening– impact of “green” measures in pillar I needs to be assessed by taking account of its

cost, benefits and link to pillar II

• Option 3 – environmental focusing Option 3 – environmental focusing – Shift of support exclusively to pillar II measures needs to assess increased benefits Shift of support exclusively to pillar II measures needs to assess increased benefits

in some of EU territory against costs and risks across the whole EU in some of EU territory against costs and risks across the whole EU

14

Greening of the CAP: objective

A greener CAPwithin

Resource Efficient Europe(Europe 2020)

Greener Direct Payments

Stronger Rural Development

Enhancedcross compliance

15





• Option 2 – greening– impact of “green” measures in pillar I needs to be assessed by taking account of its

cost, benefits and link to pillar II

• Option 3 – environmental focusing – Shift of support exclusively to pillar II measures needs to assess increased benefits

in some of EU territory against costs and risks across the whole EU

16

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%D

enm

ark

Net

herla

nds

Bel

gium

Fra

nce

Gre

ece

Ger

man

y

Uni

ted

Kin

gdom

Spa

in

Italy

Irel

and

Sw

eden

Luxe

mbo

urg

Fin

land

Cyp

rus

Hun

gary

Aus

tria

Por

tuga

l

Cze

ch R

epub

lic

Pol

and

Lith

uani

a

Slo

vaki

a

Slo

veni

a

Est

onia

Latv

ia

Bul

garia

Rom

ania

Mal

ta

% of total expenditure

First Pillar Second Pillar


The different weight of RD measuresCAP expenditure between pillars (in 2009)

17

Thank you

Documents

Ⓒ Olof S. Evaluating agricultural and rural policies: an EU Commission perspective for CAP2020 Tassos Haniotis, Director Economic Analysis, Perspectives