Policy
The report analyses the potential impact of different policy approaches to a future CAP
©EU, 2017
Dec 18 2017
A positive future for food and farming with a strong EU agri-food sector also depends on an effective Common Agricultural Policy (CAP).
Scientists have applied three exploratory policy scenarios to characterise future visions for the CAP up to 2030. The ‘no-CAP’ scenario - removing all budgetary support to farmers - could lead to a strong decline in farming income by 2030, less jobs in agriculture and a return to the EU as a net importer of agricultural products. Whatever policy choices are made, smaller farms are likely to be more heavily impacted by changes to regulations and subsidies.
Using economic modelling tools, the report also considers:
- An Income and Environment scenario: maintaining the CAP budget at its current level with stricter environmental rules. This could result in an overall higher income (with some job losses) while avoiding an increase in greenhouse gas (GHG) emissions;
- A Liberalisation & Productivity scenario: a strong reduction in subsidies and a shift to productivity-increasing measures and further trade liberalisation. This could lead to a drop in farming income, job losses and agricultural production. The lower GHG emissions would be mostly offset by higher emissions in other regions of the world.
The JRC’s scientific insight helps policymakers understand the scope and impacts of potential efforts to ensure CAP is fit for today’s world: a policy that is focused on meeting the challenges of a fair standard of living for farmers, preserving the environment and tackling climate change.
Policy choices: finding the right trade-off
The study assesses the market impacts on production, demand, trade and prices of policy scenarios, as well as impacts on land use, the environment and farmer income from the global to the farm level.
The analysis considers increases in agricultural production and farm income as positive policy outcomes and increases in GHG emissions and nitrogen surplus as negative ones.
The vulnerability of small farms is emphasised - in particular in marginal areas of the EU, where agriculture (and its subsidies) is far more important economically than market income. The trade liberalisation scenarios reveal opportunities for some but risks for even more agri-food sectors.
What modelling tools did scientists use?
The analysis of the social, economic and environmental impacts of various options for the next CAP employs the iMAP platform models MAGNET, CAPRI and IFM-CAP in an integrated manner covering different spatial scales (global, European Union, Member State, NUTS 2 region and individual farm levels). The use of three different models and their (soft) linkages adds complexity, particularly when trying to compare results across models (e.g. different commodity categories).
Background
The Common Agricultural Policy (CAP) faces the challenge of evolving towards a multifunctional policy that responds to the constantly changing needs of society. The CAP must respond to demands related to increased market efficiency and competitiveness; fostering jobs and ‘smart’ growth; contributing to climate change mitigation while adapting to a changing climate; ensuring responsible and sustainable biologically renewable resource management; and still respecting its initial aim of ensuring food security.
On 29 November 2017 the European Commission published a communication on "The future of food and farming" which outlined aims to modernise the CAP with a tailored rather than ‘one size fits all’ approach, with simpler rules and a more flexible approach. The communication followed a public consultation which showed support for a strong but simpler and more flexible CAP.
In this context, the present report analyses the impact on the agricultural sector of stylised scenarios, reflecting the main drivers of the policy debate and thus providing a framework for further exploration of the process of designing the future CAP.
The report was carried out by the JRC and external experts in the context of the JRC’s analytical support to the Directorate-General for Agriculture and Rural Development. While the scenarios presented do not represent real policy options, they underline the potential for changes to current agri-food policies to address societal challenges and demands.
The policy process for the future shape of the CAP, taking into account the Multi-annual Financial Framework will culminate with legislative proposals in the middle of 2018.
The JRC will continue to support the formal Impact Assessment using the same economic modelling tools of the iMAP modelling platform to address alternative scenarios.
Links:
The JRC’s report ‘Pathways for the European agriculture and food sector beyond 2020’
‘Pathways for the European agriculture and food sector beyond 2020’ report summary