The common agricultural policy 2021-2027: A new history for European agriculture

de Castro, Paolo; Miglietta, Pier Paolo; Vecchio, Yari Article The common agricultural policy 2021-2027: A new history for European agriculture Italian Review of Agricultural Economics (REA) Provided in Cooperation with: Firenze University Press Suggested Citation: de Castro, Paolo; Miglietta, Pier Paolo; Vecchio, Yari (2020) : The common agricultural policy 2021-2027: A new history for European agriculture, Italian Review of Agricultural Economics (REA), ISSN 2281-1559, Firenze University Press, Florence, Vol. 75, Iss. 3, pp. 5-12, https://doi.org/10.13128/rea-12703 This Version is available at: https://hdl.handle.net/10419/325609 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Italian Review of Agricultural Economics Vol. 75, n. 3: 5-12, 2020 Firenze University Press www.fupress.com/rea REA ITALIAN REVIEW OF AGRICULTURAL ECONOMICS ITALIAN REVIEW OF AGRICULTURAL ECONOMICS ISSN 0035-6190 (print) | ISSN 2281-1559 (online) | DOI: 10.13128/rea-12703 Citation: Paolo De Castro, Pier Paolo Miglietta, Yari Vecchio (2020) The Common Agricultural Policy 2021-2027: a new history for European agriculture. Italian Review of Agricultural Economics 75(3): 5-12. DOI: 10.13128/rea-12703 Received: November 30, 2020 Revised: January 19, 2021 Accepted: February 08, 2021 Copyright: © 2020 Paolo De Castro, Pier Paolo Miglietta, Yari Vecchio. This is an open access, peer-reviewed article published by Firenze University Press (http://www.fupress.com/rea) and distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. Data Availability Statement: All relevant data are within the paper and its Supporting Information files. Competing Interests: The Author(s) declare(s) no conflict of interest. The Common Agricultural Policy 2021-2027: a new history for European agriculture Paolo De Castro1,3, Pier Paolo Miglietta2, Yari Vecchio3 1 Committee on Agricultural and Rural Development - European Parliament, Brussels 2 Department of Biological and Environmental Sciences and Technologies, University of Salento, Italy 3 Department of Veterinary Medical Sciences, Alma Mater University of Bologna, Italy Abstract. Contributing to the ongoing debate on the future of European agriculture and rural areas, the study states that, in the light of the present historical contingency, the Common Agricultural Policy (CAP) will need to support the reconciliation between the target objective of competitive agriculture with that of a resilient agri-food system able to develop constant benefits for the entire EU community. Historically, flexibility has been the main incremental feature of the European CAP reforms. For the programming period 2021-2027, the European Commission has presented a completely new model of CAP governance characterized by less detailed rules and more attention to performance, which implies a greater freedom of action for each Member State, but also greater responsibility. The CAP has evolved over time and so today the criticized limits of the European intervention can be considered outdated. Keywords: Common Agricultural Policy, European Green Deal, New Delivery Model, environment, climate change, value chain management. JEL codes: Q15, Q18, O13, O21, O52. 1. INTRODUCTION The challenges connected with land, food supply and agriculture are unavoidably central in the today’s global agenda. Addressing these issues from various perspectives (economic, social and cultural, environmental, agronomic and climatic) is useful, but unfortunately a holistic approach, including the crucial issue of politics, is rarely adopted (De Castro et al., 2013). In recent decades, the European Common Agricultural Policy (CAP) has changed its skin several times, going through various stages that have gradually transformed its objectives and instruments. One of the features that has characterized and united the different reforms, starting from the Mac Sharry one up to the last proposal for the CAP 2020, has been the marked flexibility introduced to take into account the different needs of the individual EU Member States. The new CAP 2021-2027 seems to continue in this direction. The first step of the path for the definition of the new CAP 2021-2027 took place on 2nd February 2017, when the European Commission launched 6Paolo De Castro, Pier Paolo Miglietta, Yari Vecchio a three-month public consultation to collect the views of European citizens on the post-2020 CAP. The results of the public consultation were presented on 7 July 2017 in Brussels, at the European Conference on the future of the CAP. Subsequently, on 29 November 2017, the European Commission presented the first official proposal document entitled The future of food and agriculture, in which the guidelines on the future of the CAP were communicated. In May 2018, the European Commission presented an ambitious proposal for an innovative Multiannual financial framework (MFF), aimed at incorporating rapid developments in the fields of innovation, economics, environment and geopolitics. Immediately after the MFF proposals, on 1st June 2018, the European Commission presented the legislative proposals on the CAP 2021-2027. The European Commission proposals on the CAP have been traditionally inspired by three general objectives: promoting a smart, resilient and diversified agricultural sector that ensures food security; strengthening environmental protection and climate change action and contribute to the achievement of the EU environmental and climate objectives; and reinforcing the socio-eco- nomic fabric of rural areas. The ongoing reform of the CAP has represented an opportunity to renew these objectives drawing from the scientific literature and its research directions (Recanati et al., 2019). Studies varyin approach and perspective, but their policy recommendations are mostly common: the CAP should promote the EuropeanUnion policy integration and multi-disciplinary research as key strategies to achieve food system sustainability targets (Fig. 1). Starting from the three general objectives, nine specific objectives were identified, reflecting the economic, social and environmental importance of the new CAP. Among these, in addition to the traditional topics found in the CAP (income, competitiveness, sustainability, climate change, generational renewal), are new ones, such as value chains, ecosystem services, employment, bioeconomy, digitization, nutrition and health (Fig. 2). It can also be noted that among the nine specific objectives only some directly concern agricultural productivity, while all the others focus on environmental, social, territorial and health aspects related to the wider concept of agriculture and its sustainability. The promotion of knowledge and innovation represents a transversal objective, as well as that of a clearer and more effective CAP. Fig. 1. Current CAP vs Future CAP. Source: adapted from Recanati et al. (2019) Fig. 2. Key policy objectives of the future CAP. 7 The Common Agricultural Policy 2021-2027: a new history for European agriculture Since the objectives seem to be extremely detailed, the European debate on the CAP focuses mainly on how the new challenges can be faced and the aims achieved, going beyond the mere discussion regarding the enhancement and stabilization of farm income (Ciliberti, Frascarelli, 2018; Severini et al., 2016). 2. A NEW PATH: THE GREEN DEAL On 11 December 2019, the European Commission presented the Green Deal Communication (COM 2019, 640), a document that delineates an ambitious framework of measures aimed at making European society neutral in terms of greenhouse gas emissions by 2050. The cornerstones of this framework are: (i) a European emissions trading system, known as ETS (European Emission Trading System); (ii) a new momentum to be given to sustainable investments; (iii) a new framework of stimuli for research and development activities; (iv) and a fund to help the transition of areas affected by the inevitable negative distributional effects of the transition itself. Within the Green Deal framework, the European Commission is adopting a series of specific strategies, some of which directly concern the agricultural sector and rural areas, in particular the From Farm To Fork strategy, the Biodiversity Strategy, the proposal for a European climate law and a new Action plan to promote a circular economy perspective. The CAP is directly called into question by the Green Deal. The proposed reform of the CAP for the period 2021-2027 establishes the obligation for Member States to clarify how their National Strategic Plans can achieve a more sustainable agriculture, ensure the environmental protection and fight against climate change (art. 92 of the proposal); the Green Deal Communication emphasizes the need for National Strategic Plans to fully reflect the ambitions of the Green Deal, the From Farm To Fork and the Biodiversity strategies, and to be assessed based on robust environmental and climate criteria. Under the explicit request of the European Parliament (paragraph 58 of Resolution 2956/2019), the Commission has detailed the elements of consistency between the CAP legislative reform proposal and the objectives included in the Green Deal, highlighting how the nine specific objectives of the CAP proposal are conceptually in line with the expected contribution of food production systems and the economy of rural areas included in the Green Deal. In particular, the proposal explicitly includes the following objectives: strengthening the contribution of agriculture to climate change mitigation and adaptation; improving the management of natural resources used by agriculture - in particular soil, air and water; in order to promote the protection of biodiversity and the provision of ecosystem services by agricultural and forestry systems; promoting the sustainability of food production systems, consistent with society’s concerns about human health and animal welfare; and, reducing the imbalance of bargaining power along the supply chain, therefore improving the position of farmers. It is clear from reading the proposal how the horizontal nature of these issues is more pronounced than in the past and how the connections between the areas of intervention (direct payments, sectoral interventions and rural development) are greatly strengthened by the provision of a single national plan, explicitly aimed at making the interventions planned under the two pillars of the CAP complementary and synergistic. More in detail, the Commission notes the key role that will be played by the so-called «new architecture of the CAP», whose environmental and climate implications are multiple (Fig. 3). The National Strategic Plans need to highlight the specific contribution to the achievement of environmental objectives included in other EU legislative acts, such as the 12 directives and regulations on biodiversity, water and air quality, greenhouse gas emissions, energy and pesticides (Annex XI of the proposal). It should also be stressed that the proposal strengthens the obligation of Member States to allocate a share of resources to environmental and climate commitments. In the past, at least 30% of the funds of the second pillar had to be allocated to this sector, but now this allocation will need to meet stricter criteria. Unlike the current programming (2014-2020), compensation for agricultural areas with natural handicaps has been excluded, since it is believed that the link between this form of support and environmental and climate benefits is not direct. Following this approach, there is also a minimum share of expenditure of 20% that will need to be dedicated to Fig. 3. The new architecture of the CAP. 8Paolo De Castro, Pier Paolo Miglietta, Yari Vecchio improving the environmental and climate performance of farmers within the operational programs planned as part of the sectoral interventions dedicated to the fruit and vegetable sector. The Commission, while highlighting the link of consistency between the proposed CAP reform and the Green Deal guidelines, also indicates the opportunity to work on some elements to strengthen this link. In particular, the Commission focuses on two aspects. The first is the opportunity to provide for a mandatory minimum share of the CAP budget to be dedicated to the additional environmental commitments of the eco-scheme. Although the Member States are obliged to activate this component of direct payments, as it appears today the proposal does not provide for a minimum expenditure to be devolved to this measure. The second aspect isthe opportunity to promote the improvement of animal welfare conditions and the reduction of the use of antibiotics on farms, issues to which Annex XI of the current text of the reform proposal does not refer. The Green Deal’s ambitions are projected beyond the horizon of the new common financial framework (2021-2027) and the goal of strengthening the contribution of the agricultural sector to the European ecological transition will be one of the key drivers of future changes in the CAP. Further building blocks are destined to be added to the many that since the first CAP reform in 1992 have redesigned the face of the CAP, favoring its progressive integration with EU environmental policies. 3. THE NEW DELIVERY MODEL With the reform proposal of June 2018, the European Commission has presented a completely new model of CAP governance than in the past, more flexible and result-oriented, with less detailed rules and more attention to performance: with this approach, expressed both in the words of the outgoing Commissioner Hogan during the presentation of the proposal and in the statements that anticipate the proposal, Member States are given greater freedom of action, but also greater responsibility. On the one hand, national governments are allowed to decide which is the best way to achieve the common objectives defined by the proposal. Since the major factors which to lead farmers’ participation in development programs are location and the farmer’s socio-economic features (Capitanio et al., 2011), adapting policy responses to the specific needs of different agricultural and rural contexts is primary. On the other hand, however, the proposal calls for the development of a single national strategic plan, with clearly identified and quantified objectives based on consolidated data and evidence. This approach involves both of the CAP pillars and should ensure synergy and complementarity between direct payments, sectoral interventions and actions in support of rural development. This is the so-called New Delivery Model (NDM) that represents a key element of the new CAP. The Fig. 4. The New Delivery Model. 9 The Common Agricultural Policy 2021-2027: a new history for European agriculture NDM should facilitate the transition from a rulefocused approach (compliance) to a more result-oriented one, with a consequent rebalancing of responsibilities between the European Union and the Member States (Fig. 4). The expression used by the Commission is to move from a single approach for all to one more tailored to the specific characteristics of each Member State. In concrete terms, this means that the EU defines a series of basic parameters (in terms of objectives, types of intervention and minimum requirements), while the Member States, within a common general framework, choose the most appropriate solutions for their specific contexts, to allow for, according to the ambitions expressed by the Commission, the maximization of their contribution to the objectives of the Union. Member States will have to equip themselves with a national strategic plan that includes both the interventions of the first pillar (direct payments and sectoral plans) and the second pillar (rural development), demonstrating the synergies and complementarities between the different interventions programmed. The Commission will have the task of evaluating and approving the National Plans based on the strategic priorities defined at the Community level and the targets for combating climate change that each Member State engages. To date, the main role of the Commission has been to check the correctness of the programming and implementational processes. With the NDM, the role of the Commission becomes that of evaluator of completeness and effectiveness of strategic plans concerning national targets, with very limited prerogatives compared to the choices made by the Member States. The motivations behind this choice are many and among these the most relevant have been identified in the need to increase the social acceptability of agricultural policy and the need to give it greater effectiveness, also given the progressive reduction of the CAP budget (Kiryluk-Dryjska, Baer-Nawrocka, 2019). As pointed out by the European Court of Auditors (European Court of Auditors, 2017), there is an urgent need to adopt an approach that is greener, more documentable and more closely linked to performance and results. The increased flexibility granted to the Member States should ensure, thanks to the greater contextualization of interventions, a higher return on the resources invested in terms of benefits for European society. However, several analysts (Matthews, 2018) have highlighted how eventual deficits in institutional capacity or Member States’ interest may produce opposite effects. The rules for the drafting of strategic plans are set out in Title V of the regulation proposal. One of the most challenging steps appears to be the involvement of the competent authorities for the environment and climate, which should be directly and effectively part of the definition of environmental and climate aspects of the Plan (art. 94). Instead, the contents of the Plans are governed by articles 95 to 103 of the proposal. In particular, the plans must open with an assessment of the needs to be addressed concerning the nine specific objectives set out in the proposal. The needs thus identified must then be accompanied by solid welldetailed justifications, functional not only to explain the choices made but also to classify the same objectives by priority. This section of the Plan should also contain possible reasons for needs that may not, or only partially, be addressed by the Plan, even if this possibility is almost excluded for environmental and climate-related objectives. The description of the intervention strategy will have to clarify the link between the proposed interventions (drawing from the menu of the regulations) and the objectives assumed by the plan, showing the coherence and complementarity of the selected actions. It is stressed that in this section it is necessary to make the environmental and climate architecture of the national plan explicit. In particular it should indicate the coherent framework that links, on the one hand, direct payments, measures included in the national eco-scheme, agri-environmental measures activated under the second pillar; and on the other hand, the national long-term environmental objectives established by environmental and climate change legislation. Further aspects that must necessarily be expanded on in the national plans concern the strategies for generational change and, in the case of activation of coupled payments and other sectoral interventions, the request is to justify the choice of the sectors identified and the proposed actions. Finally, the representation of how the national strategy intends to contribute to promoting an integrated approach to risk management is required. It is also essential to describe in detail the system of conditionality. It is necessary to highlight how each of the standards of good agricultural and environmental practices will be put into practice and, in particular, how the choices made will contribute to the achievement of the specific environmental and climate objectives set out in article 6. Also, in this section, Member States will have to provide some detailed definitions for areas where the Commission wants to leave more room for manoeuvring in national strategies. In particular, explicit reference is made to the definitions of agricultural activity, agricultural area, eligible area, farmer, small farm and young farmer. The national plans will need to be accompanied by precise financial planning of the interventions, which should be translated into a real financial plan, devel- 10 Paolo De Castro, Pier Paolo Miglietta, Yari Vecchio oped based on annual allocations, in which any transfers between pillars will need to be specified. Likewise, a detailed description of the system of governance and coordination that the Member States intend to adopt is required. This should include the control systems, sanction mechanisms and monitoring and reporting procedures, as well as the actions to be taken to simplify the CAP. Finally, the plan must describe how the Member State intends to modernize the CAP, clarifying – specifically – how the national plan will contribute to the development and dissemination of knowledge, including a description of the organizational structure of the AKIS (Agricultural Knowledge and Innovation Systems) and the ways in which it provides consulting and innovation services. To this is added the clarification of the strategy that will be used for the development of digital technologies in agriculture and rural areas to improve the effectiveness and efficiency of the CAP strategic plan interventions. 4. THE NEW DELIVERY MODEL: BETWEEN THE STATE AND REGIONS One of the issues that is attracting the attention of those working in the sector is how the NDM will operate in practice, especially concerning the competency management of the various authorities involved in governance. It is, in fact, a radical paradigm shift that implies a strong push for a review of subsidiarity and new ways to administer the programming and implementation of the CAP, both on the EU and national levels. In the situation of national systems in which the competences for agriculture and rural development are devolved to regional administrative areas, as in the case of Italy (but also Spain and Germany, which have similar models, each with its own characterizations) the situation is more complicated, both in terms of a legal basis and organizational aspects. Regarding the former, several authors have highlighted how for the Member States, organized according to federal and regional systems, the form in which the National Plans will be approved could be detrimental for the execution of these same Plans. If the approval were to be adopted by the decision of the Commission, not by a delegated or executive act, the ability of central governments to govern the entire process could be questioned by the regional apparatus, which in our Country has primary competence in agriculture (García Azcárate et al., 2020). However, from an organizational point of view, the challenge lies in the ability of Member States to face a radical cultural change in the agricultural policy planning process. The effort of strategic planning that is required calls into question analytical and coordination skills. A management approach to unite regional differences under a single scheme, including administrative coordination, will be an unprecedented effort for those involved, which will require substantial investment both in support of the preparation of strategic plans and in the organization of procedures and operational methods. In particular, the relationship between the State and Regions will need to find a new point of equilibrium, which will not be easy to establish and maintain over time avoiding procedures that allow for the possibility of contrasts and vetoes. A key to reading that can facilitate the mediation process can be represented by the framework of the Green deal, which represents the beacon for the programming of all European funds for the next EU financial framework. The objectives set by the Union in the field of environment and climate change can constitute an anchor for Central Governments and Regions to configure a new overall structure of the programming of European funds, capable of encouraging greater integration and synergies than in the past and in which agricultural policy can find a role of absolute protagonist in the construction of a new approach to strategic planning. Awareness of this role and responsibility can act as a catalyser for creative, intellectual and democratic efforts (Erjavec et al., 2018) which will be decisive given Europe’s ambitions to fight climate change and the unprecedented economic crisis we are experiencing. In addition to the transition to more result-oriented, rather than compliance-oriented, programming Italy also faces the challenge of composing, after years of the regions being the absolute protagonists in the field of rural development, a single national plan for the CAP. The management of these two factors will be decisive in determining whether we will soon have to deal with a modern agricultural policy, capable of responding to the challenges that the sector and rural territories are to face or whether, on the contrary, this ambition will be partly or completely compressed by the choice to move away from the status quo as little as possible. The opportunity to integrate the choices on direct payments, sectoral plans and measures for rural development, into a single, coherent, design relying on unprecedented flexibility in the management of CAP resources, can be seized only if it is considered as building not a single program, but a «common» program with the ability to capture the needs of the agricultural sector and rural areas, translating them into policy responses consistent with the particular histori- 11 The Common Agricultural Policy 2021-2027: a new history for European agriculture cal moment in which it falls. The impacts produced by the COVID-19 pandemic require, in fact, different attention than in the past towards the agricultural sector, which has assumeda new strategic nature, also in terms of national security (Coluccia et al., 2021). This is a complex challenge that is articulated around some main knots: two have been identified here as decisive and around which many of the questions of method and merit that must be addressed to create an ambitious national program are focused. The first is the natural resistance to changes that characterizes agricultural policy networks (Swinnen, 2015; De Rosa et al., 2017) and agriculture particularly, given the consistency of the apparatus that administers the sector. As long as the political circuit that elaborates the proposals remains closed, the same inevitably tends to defend the status quo and so it becomes desirable to have external contributions aimed at promoting new visions of resource planning. One way may be to contaminate the decision-making process, starting from its first steps, with the best skills selected among scholars and professionals. This would allow for the starting of the process of sharing choices with stakeholders. Instead of starting, as traditionally required, from a request for consensus on a specific proposal, which then leads to negotiations on specific aspects, it would be possible to bring to the table a set of options and discuss the various alternatives. The debate should start from here, otherwise, the risk is to focus on the details, losing the perspective and extent of the change put into place with the new delivery model. This need is felt even more at this particular time when the attention of politics, administrative apparatus and other actors involved in the decision-making process is focused on the Next Generation EU initiative and very little space in the debate is reserved for the 2021-2027 programming. The hypotheses brought to the discussion would inevitably be accompanied by choices on the design of the intervention that are only partially negotiable, as otherwise the overall approach would be devalued. The NDM may imply a rebalancing of the weights between State and Regions in the management of resources allocated to rural development and this can naturally generate tension. In the same way, the approach chosen may imply a partial redistribution of resources between measures and territories and this may contribute and further fuel these tensions and make the defence of current prerogatives prevail over the opportunities for change. The resolution of this node will lead to an understanding of the form of the CAP national plan: (i) heading towards a plan made of national based on the current ones (risk management to give an example); or (ii) towards plans including specific measures for the different regional contexts in which the objectives and instruments of intervention are nationally fixed, but the regional apparatus is responsiblefor the final steps. The wide heritage of experiences, more or less positive, that has settled at regional level in these three programming cycles (2000 - 2020) for rural development can be the basis from which to obtain the most effective formula to implement the national plan. A control room that integrates the most advanced skills of the regional departments also could be functional to promoting collaborative plots and mitigate the intensity of institutional competition. These reflections do not claim to provide the recipe for building the best possible national plan. They simply intend to share with the policymakers the idea that future programming will have a special nature, which requires, in order to achieve maximum efficiency, an innovative effort in the organization of consultation and decision-making processes. 5. CONCLUSION On 21 October 2020, an agreement was reached within the European Parliament on the future of the new CAP. This agreement is particularly ambitious in terms of commitments that the European agricultural sector is undertaking to contribute to the EU’s objectives facing climate change and towards environmental protection. With this decision, the CAP has become a founding pillar of the European Green Deal and embraces the challenges that were announced within the strategies on biodiversity and on food chain circularity (From Farm To Fork strategy). This premise is fundamental for clarifying the cutting remarks that, in spite of everything, have been launched towards this reform by a part of the environmentalist world. The CAP completely changed its structure and objectives, identifying the integration between agricultural and environmental policies as a priority. This is clearly visible in the agreement, whose magnitude is unprecedented in the long history of the CAP, which for the period 2021-2027 contains binding environmental commitments for the Member States and for farmers. The future foresees many changes compared to today and the value of these changes cannot be declassified through facade measures. Clarity and transparency could also help to re-establish the relationship with some environmental associations which have opposed to this reform agreement. The reform introduces mandatory ecological schemes, which did not exist before; strengthens the pi environmental commitments for farmers, so-called enhanced cross-compliance; makes a massive invest- 12 Paolo De Castro, Pier Paolo Miglietta, Yari Vecchio ment in resources for rural development; and promotes climate and environmental measures. Choosing to allocate at least one fifth of the entire farmers’ direct payments for eco-schemes means revolutionizing the system of direct payments in environmental terms. This decision, combined with further significant environmental commitments taken as a basic conditionality for farmers, gives an even stronger meaning to the European environmentalist choice: today environmental payments can be considered 90% green payments. Similarly, climate and environment measures within the rural development program, should absorb at least 30% of the available funding sources while at least 40% should be destined to cover expenses related to natural or other specific territorial restrictions. These new elements offer a different interpretation of the CAP reform history, in which the path towards the integration of environmental and agricultural policies become better defined, structuredand effective. 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