Agriculture gets 38% of the EU’s annual budget – that is, 58 billion euros. This amount is channeled into the farming sectors of each Member-State through the Common Agricultural Policy (CAP).

A new report, “Agriculture Atlas – Facts and figures on EU farming policy,” analyzes the CAP’s trends and numbers – and offers severe criticism.

The report was created by the environmental groups Heinrich Boll Foundation, Friends of the Earth Europe, and BirdLife Europe & Central Asia.

1. Direct payments favor big farms

Three-quarters of the CAP’s budget (72%) goes to direct payments for farmers, according to the report. These payments, first introduced in 1992, are meant to complement farmers’ incomes.

There are two types of direct payments: coupled to production, or decoupled from it.

Coupled direct payments are granted to farmers based on the amount produced (i.e. per tonne of wheat). Decoupled payments are linked to the farmed area – farmers don’t need to produce to receive them.

About 90% of payments belong to the latter group: they depend on farmed area alone. This is one of the biggest problems with the CAP, the report’s authors claim.

On one hand, this leads to big farms getting more CAP funds. Indeed, 80% of direct payments go to only 20% of the EU’s farms.

“Untargeted per-hectare payments have fueled an increase in farm sizes and land concentration while hindering the entry of a new generation of farmers,” the report reads.

Another problem is that those who receive these funds are not always farmers. About half of the farmed land in the EU is rented, and landlords often get a part of the payments by increasing rent prices.

The fact that most direct payments are linked to the number of hectares instead of production goals is “inefficient.” Not only does it benefit big farms with often above average incomes – instead of smaller farms that need more help – it also doesn’t solve the problem that causes low farming incomes: low productivity.

What will change in 2021?

The European Commission has proposed to keep direct payments based on farmed land. “This is a missed opportunity,” the report authors defend.

However, the EC has stated that the future CAP will prioritize smaller farms through several measures:

  • A higher level of support per hectare for small and medium-sized farms;
  • To reduce the share of direct payments received above €60,000 per farm and to limit payments at €100,000 per farm, with a view to ensure a fairer distribution of payments;
  • A minimum of 2% of direct support payments allocated to each EU country will be set aside for young farmers, complemented by financial support under rural development and measures facilitating access to land and land transfers;
  • EU countries having to ensure that only genuine farmers receive support.

2. Not enough environmental protection

Another one of the CAP’s goals is to promote rural development, competitiveness, climate protection, and environment conservation.

According to the report, less than one-quarter of the €409 billion budget for agriculture from 2014 to 2020 was assigned to this goal.

In the 2013 CAP reform, climate action became a priority, but its application varies from country to country. In some, it’s minimal.

Here, the study authors criticize the lack of inclusion in the CAP of rigorous measures to reduce CO2 emissions. One way to reconcile food security with climate goals would be to increase organic carbon sequestration in soils.

Currently, the CAP requires that farmers maintain and increase the levels of organic carbon in the soils. “But it does not impose any accounting or reporting measures, and takes no specific action to reduce losses from carbon-rich soils.”

Biodiversity vs Intensification

The authors also criticize the fact that the current CAP budget doesn’t guarantee investment in the preservation of biodiversity, nor does the next budget.

Instead, they say, “nearly three-quarters of the funding (around 293 billion euros for 2014–2020) goes to direct payments that favor the most intensive and damaging forms of farming: cereal and livestock production.”

The CAP also fails in another area: fertilizers. In many parts of Europe, groundwater is highly contaminated with nitrates, especially in very populated countries like Germany and Spain. And one of the main causes is intensive farming.

Here, the CAP’s mistake is in the lack of control. By law, only 1% of farms that get funds from the EU must be inspected. If authorities find a violation, the recipient only risks losing 5% of the money they received.

To solve the problem, the authors suggest larger subsidy cuts to farmers that break rules for water, air quality, and soil conservation, as well as tighter inspection.

What will change in 2021?

There aren’t many details yet, but the European Commission has stated they intend to require more of farmers in the next CAP:

  • Preserving carbon-rich soils through the protection of wetlands and peatlands;
  • An obligatory nutrient management tool to improve water quality, reduce ammonia and nitrous oxide levels;
  • Crop rotation instead of crop diversification.

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