The proverbial thunderclouds are finally dispersing over the fields and farms of Europe. The protracted negotiations over the European Union’s next Common Agricultural Policy (CAP) budget, which began in 2018, finally concluded in June with a provisional agreement between the EU’s Commission, Council, and Parliament. While the storm is not officially over – Parliament must ratify the deal in the coming autumn – the warring factions have retreated to lick their wounds for the time being, with both environmentalists and small farmers frustrated that the final proposals either did not address their demands or did so in a watered-down fashion. Of particular concern to small farmers’ groups is the mandatory implementation of policies designed to redistribute CAP funds and level the playing field among farmers.
And what an uneven field: in spite of the prodigious sums of money distributed through the CAP, many European farmers still struggle to make ends meet as about 80% of subsidies are distributed to just 20% of farmers. Subsidies are more or less tied to the size of a farm, meaning that the more land you have, the more money you get. It has long been an open secret that the majority of farmers actually receive very little in way of subsidies, which is why around 1,000 farmers leave the profession every day in Europe, according to a recent estimate by Commissioner Janus Wojciechowski.
The European Commission’s repeated attempts to address this issue by breaking or reversing the association between a farm’s size and its share of the subsidy pie have met with stiff opposition over the years from member states whose agriculture is dominated by large farms, such as the Czech Republic and, in former times, the United Kingdom. It has also naturally been a source of tension among farmers, most recently leading to the Czech farmers organisation APF CR to leave the pan-EU group COPA amid claims it was resisting the mandatory implementation of limits on direct payments (a policy known as ‘capping’ or ‘degressivity’) in the upcoming budget.
During the 2014-2020 CAP budget, member states were able to implement a limited version of capping, alongside the Redistributive Payment Scheme for increasing payments to smaller farms. However, just as in the upcoming budget, they were not made mandatory beyond a bare minimum, and as a result, only half of member states used one or both of the mechanisms. Some commentators complained that there would be little meaningful impact, and even the Commission ruefully noted ‘[t]he funds allocated to the redistributive payment are generally much lower than the maximum foreseen in the Regulation’.
But every cloud has a silver lining. The very fact that only some states implemented redistributive policies presents a golden opportunity to measure their effects. Change in these states’ subsidy distributions before and after implementation can be compared with change in countries which did nothing, making it possible to account for the vast differences between countries which influence their subsidy distributions.
In a paper recently published in the European Review of Agricultural Economics, this is what I set out to do. To summarize the main findings, member states which implemented one or both policies saw their share of national subsidies going to the top 1% of recipients decline by approximately 10% as a result, relative to states which did nothing. Meanwhile, the bottom 80% of recipients – the bulk of ordinary farmers receiving small sums – saw their share of the pie increase by a slightly more modest 5-7%. These results were evident even after accounting for a swathe of other policies which might have affected subsidy distributions, and in spite of the relatively modest use of the two mechanisms by those states which did implement them.
In other words, these policy tools are clearly effective at balancing the agricultural playing field and actually doing what the CAP has in theory been intended to do for decades, i.e., giving the money to ordinary farmers who need it most. If such redistributive measures had been more thoroughly integrated into the upcoming CAP budget, this could have made a real difference in favour of small and family farms across Europe. Yet precisely because these policies would help smaller farms, they have been steadfastly opposed by most member states’ agriculture ministries in the Council during the ongoing negotiations, as they tend to be aligned with the interests of larger farmers, who are perfectly happy raking in a disproportionate share of subsidies.
And while wrangling over the details of CAP policy might seem like a niche matter, in reality the issue of farm subsidies matters profoundly for the EU’s legitimacy — in more ways than one. Not only is a third of the EU’s entire budget spent on these subsidies and associated farming schemes, but much of this money is squandered and never makes it into the hands of real farmers, as a recent report by the Greens/EFA group illustrates. With the extravagant CAP edifice increasingly in the sights of environmental campaigners, the EU and those national governments impeding reform must signal that they are serious about making the system work for the many and not the few, if the system is to survive at all. While the ‘Farm to Fork’ concept at least nominally sends such a signal, the best place to start putting words into action is to get serious about trimming off the opulence which only serves to attract opportunists, and to instead share this out equitably to those who need it.
We now know that mechanisms like capping achieve this; what is lacking is only the resolve within agricultural ministries beholden to the interests of the largest farms and landowners. It is not set in stone but in law that the more you have the more you will get, and it is up to Europeans to decide whether they care enough about a fair and sustainable CAP to change this.
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