The cereals farmers reasoned that Fischler’s reform, with cuts to price supports being compensated for by direct income payments, was far better than the uncertainty of an unreformed CAP. They feared that if left unreformed, the CAP would be subject to dramatic price cuts in the future to bring it into alignment with budgetary standards, and that no compensation would be offered for the price cuts. In addition, given that the French cereals sector was highly efficient and competitive independent of inflated prices, they believed that the new system would allow them to conquer additional market share. Farmers from other member states would be less competitive without inflated prices to support them. In exchange for its support for the reform, Germany was able to secure a concession that allowed for the SFP to be based on a regional calculation, as opposed to historic production receipts. The EU’s proposed historical method of calculation tended to perpetuate past inequalities across products, producers, and regions . Under Germany’s regional model by contrast, all farms in a region would be eligible to be paid the same amount, regardless of what they had produced in the past. This model was preferred by Germany in large part because of internal diversity in its farming community. Of course, there was a large gulf between the west and the east, but more importantly there was diversity within the same region depending on the type of farming undertaken and the location of a farm within a given region. The regional model, then, would eliminate the inequalities in payment perpetuated by the historical model and ensure that all farmers in a given region were paid the same. The calculation for payments under the regional model was based on all eligible hectares of agricultural land in the region. This method allowed both grassland and arable land to be included in the calculation,40 litre plant pots potentially increasing the amount of support included in the financial envelope for each region.
After calculating the amount each region was entitled to, member states using this calculation method could, if they wanted, move money from one region’s financial envelope into the envelope of another region. For example, the government had the option of redirecting some of the money owed to farmers in the most fertile regions, such as Bavaria, to farmers in areas that would earn far less under the regional calculation, such as those farmers in the difficult to cultivate lands around the Alps and to the large but inefficient farms of the East. This modification of the regional calculation method was intended to help counties address disparities in farmer incomes within their country. France, Italy, and Spain also extracted amendments to the decoupling proposal allowing member states to avoid full decoupling in certain sectors if the member state believed that “there may be disturbance to agricultural markets or abandonment of production as a result of the move to the single payment scheme” . In other words, if countries feared that the transition to full decoupling might result in many farmers abandoning their land or would “disturb agricultural markets”, a vague phrase, left open to interpretation, they could avoid the transition to full decoupling. This concession essentially allowed member states to protect nationally important or favored sectors. The sectors where partial decoupling was permitted included: cereals and arable crops, sheep, goats, suckler cows, and slaughtered cows. In the end, the reforms passed with the support of every country but Portugal, which still wanted a higher milk quota . The final agreement on the MTR achieved Fischler’s goal of implementing the reforms necessary to save the CAP. The Single Farm Payment changed the way farmers received income support, weakening the link between these payments and production.
By implementing this reform, the CAP would be able to continue to function once the new member states were fully incorporated in the CAP income payment scheme. The level of production in the current EU was already financially unsustainable if support was coupled. Adding the new member states, with a larger percentage of the population employed in agriculture and higher levels of production, to the existing system would explode the CAP budget. The final agreement also included modulation and cross-compliance, two programs intended to strengthen the environmental objectives of the CAP, addressing public dissatisfaction over unsafe food, agricultural pollution, and inequalities in CAP spending. Modulation re-directed a percentage of a member state’s income support funds into programs that supported rural development and environmental objectives. Some of the funds collected through the modulation system could also be re-distributed amongst the member states in an effort to correct inequalities in allocation of CAP support across the member states.Despite their importance for the long-term survival of the CAP, these policies were only agreed to after many concessions and revisions were made to Fischler’s initial proposals. Table 5.1 highlights these concessions by comparing Fischler’s initial proposal to the final outcome.As part of the Europe 2020 strategy, the 2013 CAP reform sought to make big changes to the CAP, bringing it in line with the modern, dynamic, and innovative European Union that the Commission envisioned. These reforms endeavored to address long-standing complaints that the CAP was too complex, unfair, and environmentally destructive. To that end, the oft-repeated mantra by CAP reformers was that they desired a CAP that was fairer, simpler, and greener. In reality, the 2013 CAP reform fell well short of these objectives. It made some progress on improving fairness, but also made the CAP far more complex and did little to improve environmental standards.
A major factor in explaining the limited changes that resulted from this CAP reform is that, other than the need to continue adjusting the CAP to operate in the enlarged European Union, there were no exogenous forces pushing for reform. Both MacSharry in 1992 and Fischler in 2003 used pressing concurrent challenges, such as stalled trade negotiations, to achieve major change. The same option to tie CAP reform to crises and/or concurrent problems was largely unavailable to Agricultural Commissioner Daclan Cioloș in 2013. The budget was not in crisis and the EU was not involved in any WTO negotiations. Enlargement was the one geo-political pressure that affected the 2013 reform. While enlargement to Eastern Europe had been concluded, the consequences for the CAP still required some management. The main issue lingering from the most recent enlargement was the imbalance of payments across countries. This issue proved to be the only source of disruptive politics,30l plant pots providing Cioloș an opportunity to call for changes to the direct payment system. Indeed, the only major component of the final reform would be the provision that addressed the fallout from enlargement. The purpose of this chapter is to account for the content of the 2013 CAP reform and to explain why the reform was so underwhelming30. Cioloș had a very limited mandate for reform, given that he was operating largely under politics as usual. In addition, the new CAP reform was being sorted out at the same time as the 2014-2020 Multi-annual Financial Framework . The MFF delayed CAP reform while the budget was being negotiated. In addition, it undercut the ability of reformers to call for spending cuts or to use the threat of them to leverage reform because once the budget had been set, spending cuts were off the table. The result was a watered down reform, with changes much more circumscribed than initially proposed or abandoned entirely. The final agreement contained two main components. The first and most significant change involved the direct payment system. In order to address vast inequality in the payments received by Western and Eastern farmers, all member states would transition, over a 7-year period, to using the same system for calculating the amount of direct payments owed to their farmers. The program for this transition was ultimately made much more gradual and included far less redistribution than initially proposed. In addition, a proposal to cap income payments was rejected. Greening was the second component of the agreement. While new rules for permanent pasture, mandatory crop rotation, and other measures intended to protect and improve the environment were adopted, they ultimately had very little applicability, with nearly of 88% of farmers exempted. Smaller components of the agreement allowed member states to have more flexibility in directing money towards rural development and modified rules on who counted as a farmer, though the definition remained quite permissive.
Once again CAP reform mirrored the process of welfare state retrenchment, with reformers employing a variety of tactics to slip through any reform and hopefully position themselves to achieve more substantial retrenchment in the future. Nearly every proposal was significantly watered down, and some, like placing limits on the amount of money individual farmers received, were defeated outright. The core reforms, most notably changes to the direct payment system, followed a “vice into virtue logic”. The existing payment system was operating unequally. To address this problem, rather than creating a new program from scratch, reformers worked within the system, amending the method of calculating payments to decrease the gap between new and old member states. Finally, as is typical, the final package included a number of side-payments, concessions, and exemptions in order to facilitate the agreement. For example, greening measures designed to impose stricter environmental standards on a portion of a farmer’s land ended up including so many exemptions that only 12% of European farmers were ultimately subjected to the rules. In the end, this round of CAP reform amount to little more than tinkering around the edges. The 2013 CAP Reform illustrates the importance of disruptive politics for achieving meaningful CAP policy change. The only significant alteration to CAP policy in the 2013 reform was directly linked to the sole source of disruptive politics: enlargement. While no new rounds of accession were looming, the CAP confronted lingering problems from expansion to Eastern and Central Europe. Owing to different available methods for calculation and the rules governing the new member states’ accession to the CAP, the average payment per hectare in the old, Western member states was much higher than in the newer member states in Central and Eastern Europe. In 2013, the average payment per hectare across the EU was €269 . Farmers in Latvia, however, received on average €95 per hectare compared to €458 in the Netherlands . This inequality was politically unsustainable, with Central and Eastern European member states complaining about their second-class status. EU officials, specifically those outside of DGVI , had also taken notice and were increasingly critical of a policy that was badly out of step with the core EU value of equality among members. The other issues that had generated the disruptive politics in 1992 and 2003, economic crisis and stalled trade negotiations, did not drive reform in 2013. Europe did experience an economic crisis, but the crisis actually weakened the hand of reformers and budget cutters. The period immediately before and during CAP negotiations was marked by significant economic volatility. In 2008, agricultural prices peaked, then suddenly dropped as a consequence of the global economic crisis, which caused upheaval and uncertainty in government budgets and commodities markets. Concerns about falling prices increased the pressure on CAP policymakers to return to market intervention and regulation to help hard-hit farmers. In addition, the volatility in the markets induced calls to lessen or eliminate greening requirements so as to not overburden farmers and also to increase support for emergency relief. These proposals would require an increase in spending. Thus, instead of disrupting politics and providing Cioloș with an opening to call for change, the crisis buttressed politics as usual. Stalled trade talks, which were a key pressure for the MacSharry Reform, were not entirely absent from the 2013 CAP Reform. The difference between these two circumstances, however, was vast. At the time of the MacSharry Reforms, the GATT Uruguay Round was struggling to reach a conclusion. The problem was in the agricultural portion of the negotiations, with the design and operation of CAP programs preventing Europe and the United States from reaching an agreement.