The confirmation of Ursula von der Leyen’s nomination as Commission President by the European Parliament today may give the appearance of business as usual in the European Union for the coming political cycle 2024-2029. But this would underestimate the pressures for change under the apparent veneer of stability. The political priorities set out by von der Leyen as she sought support for her nomination on this occasion are subtly different to the Green Deal platform on which she sought support in 2019. This also applies in the area of agrifood policy, an area which has been marked by protests and policy reversals in the last year of her previous mandate.
Changing priorities are a response to changes in context and circumstance. These include the wake-up call due to Russia’s brutal invasion of Ukraine which highlighted inter alia an unhealthy dependence on Russia for energy supplies, geo-political tensions including the need to address China’s growing role in frontier technologies, conflicts in the Middle East and Africa which contribute to migration pressures, as well as the increasingly obvious need to adapt to climate change while also pursuing ambitious mitigation goals,
Changing priorities also reflect changed political circumstances arising from the June 2024 election to the European Parliament. Here, conservative and right-wing political groups gained seats at the expense of the liberal and green political groups. These trends are also reflected in the composition of national governments represented in the European Council and the Council of Ministers, where the latter is the other part of the EU co-legislature.
The outcome in the European Parliament elections gave rise to two potential majorities, with the EPP as the king maker in both cases. One majority would continue with the centrist political groups that supported von der Leyen in the previous political cycle (where the EPP, S&D and Renew together would have a majority of 401 seats where 361 is needed, and on some issues could also count on the support of the Greens). The other majority would see the EPP ally with the three far-right groups. However, this would at best give a slim majority (375 seats) and would require a level of discipline and coherence between these four political groups that is hard to envisage. Von der Leyen’s Political Guidelines and her address to the European Parliament earlier today were clearly oriented to cementing her support from the centrist coalition. But there were still important shifts in emphasis compared to her statements in the same situation five years ago.
The battlelines in future agricultural policy
Future agrifood policy will be fought out along seven major axes, although there are significant complementarities and overlaps among them. The first axis is the balance between pursuing farm income or environmental objectives in the CAP. This was the focus of much of the recent debate around the ambition and speed of implementation of the European Green Deal in the agrifood sector. The last CAP reform required that Member State CAP Strategic Plans should show increased environmental ambition and there was significant innovation in the legislative framework underpinning the CAP to support this. Whether the next CAP will continue in this direction and reverse course remains to be decided.
A second axis concerns the purpose of farm income support. Is it intended principally to support the income of small-scale, marginal and less intensive farms and thus maintain farm numbers and slow down the pace of farm consolidation, or is it primarily intended to support productive farming by facilitating investment and offsetting the cost of higher standards and thus, in the view of its proponents, to contribute to food security? This axis relates to the extent to which the redistribution of direct payments initiated in previous CAP reforms will be continued or intensified.
A third axis relates to who should pay for environmental improvements. Should farmers be subject to the polluter pays principle, implying that they should bear the cost of reducing negative environmental impacts, whether through regulation or market-based instruments? Or should it be the responsibility of society to incentivise farmers by paying them sufficiently to make these improvements on a voluntary basis? In the real world, the question is not so black and white, not least because some of the practices that minimise environmental damages may also be associated with positive environmental outcomes that society is ready to pay for. But it remains an open question how best to combine both sanctions and rewards to transition to a more sustainable agriculture.
A fourth axis is the balance between market orientation and market management in pursuing the farm income objective. The market orientation following by the CAP since the 1992 reform lowered guaranteed floor prices to safety net levels while supporting farm incomes through budgetary payments. There are increasingly loud voices calling for a return to higher guaranteed prices (“farmers should receive a fair income from the market and not rely on direct payments”) with the concomitant requirement of greater government intervention in agricultural markets (such as intervention buying, border protection, supply controls, and contract obligations). The proposal that producer prices should be set based on actual costs of production rather than by market forces alone is already enshrined in French legislation (though hardly effective) and France has proposed that this approach should be extended to the Union as a whole. The outcome of this debate will also have implications for the role foreseen for market-based instruments in helping farmers to manage risks associated with market volatility, weather, pests and diseases, although it is clear that the scale of damages from ongoing climate change-related events will also call for increased public resources.
A fifth axis relates to openness versus protection in agrifood trade policy. Discussions on this axis in the previous political cycle focused on free trade agreements, particularly where they related to countries that are significant agricultural exporters such as Australia, Canada or the Mercosur bloc, as well as the unilateral trade concessions granted to Ukraine. The introduction of reciprocity in import standards (‘mirror clauses’) was also a hot topic. In the next political cycle, these issues will continue to be relevant, while the question of the accession of new members, and especially Ukraine, will loom larger.
The sixth axis concerns budgetary issues, both the size of the overall EU budget and the size of the budget allocated to CAP. We already know there will be requirements for additional spending by the EU budget in the next Multi-Annual Financial Framework (MFF), to repay the borrowing for Next Generation EU, to assist countries with the decarbonisation of their energy systems and industrial processes, to pay for increased spending on defence and security, among other issues. Countries that oppose an increase in the MFF ceiling (and here Member States are the key actors as the decision is taken by the European Council, though the final MFF conclusions must also be approved by the Parliament) are almost certainly implicitly arguing for a corresponding cut in the CAP budget. Put alternatively, the CAP budget can be maintained let alone increased only if there is agreement to significantly increase the MFF ceiling.
The seventh axis relates to food policy, and the extent to which governments are prepared to intervene in the diet choices of consumers both to tackle the adverse health impacts of current consumption patterns (especially the role of ultra-processed foods) as well as the environmental impact of the food system (where here the focus is on the role of livestock products in consumer diets). The EU and Member State governments recognise the scale of the challenges, but have so far been reluctant to move much beyond providing consumer information (for example, through dietary guidelines) and entering into voluntary agreements with the food industry to reduce the content of salt, sugar and other harmful ingredients. The attempt to introduce nutrition labelling has become mired in controversy, and to date there has been little appetite for more interventionist measures. But the growing social costs of our food system mean the problems cannot be ignored.
Implications of the European Parliament election outcome
The rightward shift in the centre of gravity in both the Parliament and Council has consequences for the eventual policy position on each of these axes and thus the future direction of CAP reform. I expect this shift to favour farm income over environmental objectives, a preference for small and local production (also supported by those in the green and left political groups), a more voluntary approach to tacking environmental challenges based on carrots rather than sticks, more market management (also supported by some on the left), less openness to trade (also supported by the green and some of the left political groups), and less willingness to tackle the power of the food industry due to reluctance to intervene in and influence consumer choice.
EU enlargement is a more contested topic on the right, with the centre-right and some far-right groups strongly in favour and others vehemently opposed. The budget axis is also an open question, where there is an obvious tension between those conservative and far right groups (but not only) opposed to further increases in the EU budget in the name of defending national sovereignty while at the same time demanding more support for farmers which would require increased resources for the CAP.
We already see some clues as to the future direction of policy in von der Leyen’s Political Guidelines. In general terms, she recommitted herself to the European Green Deal and in climate policy to support for a 90% reduction target in net emissions by 2040 as the pathway to net zero emissions by 2050. The focus has shifted to implementation and the Green Deal is now viewed more through the lens of industrial policy, with a promise to launch a Clean Industrial Deal in the first 100 days of her mandate. In itself, this is a sensible switch as it puts the emphasis on the positive merits of the decarbonisation agenda and its potential to create good jobs in the green tech industries that drive this transition. The implications for agriculture of the 90% target were not spelled out.
To understand von der Leyen’s commitments on agriculture, it is useful to take account of the Strategic Agenda 2024-2029 adopted by the European Council at its meeting in June 2024. While this is often dismissed as a very high-level and therefore inevitably vague document, it is a consensus document intended to set the political priorities for the new political cycle. It is a relatively short 8-page document, and just one paragraph is devoted to agriculture and food. It reads:
“The European Union will promote a competitive, sustainable and resilient agricultural sector that continues to ensure food security. We will champion vibrant rural communities and strengthen the position of farmers in the food supply chain. We will continue to protect nature and reverse the degradation of ecosystems, including oceans. We will strengthen water resilience across the Union.”
While the commitment to a sustainable agriculture in the previous Strategic Agenda 2019-2024 is repeated, on this occasion it is linked to a competitive and resilient agricultural sector. The previous commitment “to fight the loss of biodiversity and preserve environmental systems” is now formulated as a commitment “to protect nature and reserve the degradation of ecosystems”. Specifically, attention is focused on the position of farmers in the food chain as well as on the problem of water resilience. Both of these reflect issues raised in the farm protests earlier this year.
Von der Leyen’s comments on agriculture incorporate these commitments almost to the letter. After the customary nod to Europe’s farmers for their contribution to the supply of healthy and high-quality food, von der Leyen accepts that farmers and rural areas are under pressure “from the impact of climate change to unfair global competition, higher energy prices, a lack of younger farmers and difficulties in accessing capital”. She then makes six specific commitments intended to “show that Europe will protect its own food sovereignty and those who provide for us all”:
- Building on the recommendations of the Strategic Dialogue for Agriculture, to “present a Vision for Agriculture and Food in the first 100 days looking at how to ensure the long-term competitiveness and sustainability of our farming sector within the boundaries of our planet”.
- To defend an EU income policy for Europe’s farmers as “it is vital that farmers have a fair and sufficient income. They should not be forced to systematically sell their products below production costs”.
- To ensure that the common agricultural policy is targeted, “and finds the right balance between incentives, investments and regulation”.
- To enable farmers “to work their land without excessive bureaucracy, support family farms, and reward farmers working with nature,preserving our biodiversity and natural ecosystems and helping to decarbonise our economy on the way to net-zero by 2050”.
- To “correct existing imbalances, strengthen farmers’ position in the food value chain and further protect them against unfair trading practices”.
- To “do more to make agriculture better prepared for what climate change will bring. That is why I will present a plan for agriculture to cope with the necessary adaptation to climate change, and in parallel a strategy for the sustainable use of the precious resource of water”.
I see these commitments as reflecting very much my expectations outlined previously for agricultural policy in the coming political cycle. Income policy is prioritised, with perhaps the most explicit, if unexpected, commitment to the French proposal that producer prices should be linked to production costs. Emphasis is put on incentivising and rewarding farmers for environmental improvements including reducing agricultural emissions rather than the use of regulation. There is no support here for introducing market-based mechanisms such as an emissions trading scheme to bring about this reduction. Her explicit reference to food sovereignty signals less openness to trade.
For more specifics on these issues, and to fully understand what they might mean for actual policies, we must wait, first, for the report of the Strategic Dialogue on Agriculture, and then, by March 2025, the Commission’s proposed Vision paper in response to that report. This will be published just a few months before the Commission will publish its MFF proposal and associated legislative proposal for the CAP for the period after 2027. But the contours of this proposal are already taking shape.
O artigo foi publicado originalmente em CAP Reform.
