European farmers’ SOS (Save Our Subsidies)

The EU’s most powerful agricultural lobbies brace for a battle to save their treasured CAP payments.

Europe’s farmers are digging in for the fight of their lives next year.

Battle lines will be drawn in January when a wide-ranging consultation begins on how to reform the Common Agricultural Policy — the lavish subsidy scheme that pays out 38 percent of the EU budget to farmers.

For years, the CAP has seemed something of a relic: Beneficiaries include English dukes and the co-operative members behind FrieslandCampina, a Dutch dairy giant with billions of euros of sales. The elite 20 percent of beneficiaries receive 80 percent of the total payments, according to the European Commission.

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Now the pressure is mounting for a genuinely streamlined agricultural policy in the next budget review, which must be completed by the end of 2017. Public calls to make it more environmentally accountable are growing louder just as Brexit and the weak eurozone are sapping the EU’s spending power. To many policymakers, cuts now are simply a question of timing.

Farmers, however, have other ideas.

“I hear that all the time — people talking about reform. But who says that we need a reform?” said Martin Merrild, president of the Committee of Professional Agricultural Organisations (Copa), the biggest and most influential farmers lobby. “I would like to just talk about improvement.”

Thomas Magnusson, president of the General Committee for Agricultural Cooperation in the European Union (Cogeca), another powerful farming lobby, also vowed to hit back at attempts to cut back subsidies.

“I don’t think it’s the time now for reducing the Common Agricultural Policy because, like I said, we have so many challenges that we should use the Common Agricultural Policy to deal with.”

Still, the chorus of protest over the way that the funds are allocated is reaching fever pitch. Environmentalists argue that the current system favors big commercial farms that contribute to soil degradation and growing methane emissions.

“Business as usual with a few end-of-pipe technologies to pretend industrial agriculture can be green would be like papering over the cracks,” said Stanka Becheva, food and agriculture campaigner for Friends of the Earth in Brussels. “We need to take the bull by the horns and turn the whole farm policy on its head to support thriving and resilient local markets instead of trying to hopelessly compete on the global market.”

Pillars of the community

At the heart of the battle lies the “two pillars” structure of the Common Agricultural Policy.

Under the first pillar, hundreds of billions of euros go to farmers in the form of so-called direct payments, based largely on farm size. The second pillar payments are aimed at helping farmers to respect environmentally friendly practices such as crop rotation, preserving grasslands and protecting water habitats.

The existing balance massively favors the first pillar, with the cash heading to the farms with big acreages. For the 2014-2020 budget period, the EU will spend more than €360 billion on the CAP, with €278 billion issued in the form of direct payments and €85 billion handed out for rural development needs.

The European Commission is adamant that it wants to shift the balance. Agriculture Commissioner Phil Hogan has insisted that the future CAP “will have to have a higher level of environmental ambition.”

Despite Hogan’s push, officials are well aware that even small shifts from hallowed direct payments will pitch the agriculture commissioner headlong into battle with EU heavyweights such as France and the Netherlands, who are prime CAP beneficiaries. Once Brussels launches its consultation process, respondents will have eight weeks to respond. The Commission must come forward with legislative proposals prior to 2020, when the current budget cycle comes to an end.

Instead of direct subsidies to fight against climate change — for example by paying farmers to leave fields fallow — farmers’ leader Merrild said the best way to promote a cleaner environment was to invest in new technologies such as better ventilation systems in pig farms and storage units that allow slurry to cool off in a way that produces less ammonia.

“It’s easy to reduce the impact on climate and the carbon footprint because we can just reduce production. But the challenge is how can we do it in an intelligent way so that we can both produce more and have a more positive impact on employment and the economy and then still reduce our impact on the climate,” he said. “I think that [pillar one] should be kept at the level it is at now to give that stabilization in the farmers’ income.”

Merrild agreed that there needed to be “more intelligent green management of arable areas,” but denied that the current CAP had failed to promote a more biodiverse landscape. He was also skeptical about money going to farmers for practices such as carbon capture, with the land being restored so that CO2 can be sequestered in the soil.

“I’m not working to reduce our production. I’m here for increasing our production,” he said, when asked if he thought a reformed CAP could include measures to incentivise more carbon capture.

Countryside alliance

This skepticism about the need for root-and-branch reform will likely be at the heart of Copa’s response to questions put to the industry in January’s public consultation.

On the receiving end will be Hogan, whose own party in Ireland, Fine Gael, is also a heavyweight supporter of pillar-one payments. Hogan has been careful not to play down the importance of direct payments, while simultaneously making strong hints that the days of such plentiful first-pillar payments are numbered.

“Direct payments will still play a key role in the CAP but not as much as before,” said an EU official working on the Commission’s reform plans.

To reduce expenditure, the Commission is thinking up ways to provide farmers with new tools to shield them from crises and to push ahead with trade deals to gain access to new markets.

Other measures suggested by advisors to the Commission include reinsurance schemes for farmers hit by natural disasters or severe price volatility. They are also considering plans to shift CAP resources to a risk management fund at the EU level and to promote deeper futures markets for products such as milk powder, butter and pig meat.

Such proposals will come in parallel with the ongoing revision of the so-called multi-annual financial framework, which spells out the amount to be spent in different sectors within the EU budget, a heated debate considering the need for spending in the areas of migration and employment.

“If the political system decided we should put more money in the environment, they can do it. They don’t have to ask us. But what would be the reaction?” asked Magnusson. “We must have a balance with how we work with the environment and how the farmers get income and how we defend the countryside.”