Cap embodies the EU spirit of compromise and consensus

Call it serendipity, but it seems curiously apt that it fell to the Irish presidency of the EU Council to broker agreement on the new Common Agricultural Policy, almost two years after negotiations began.

Ireland may have successfully re-defined itself as a modern, innovative economy built on a strong flow of foreign inward investment, but agriculture still matters passionately to Ireland and its economy.

This week, the sprawling Cap reform package finally emerged from the laborious EU system and received the sign-off from all three EU institutions. The new Cap proposal represents the biggest change to EU agriculture policy in a decade. A revision to the way the single farm payment is calculated may have the biggest impact on the pockets of Irish farmers, but it is the package's new environmental measures that the European Commission hopes will capture the public imagination.

Thorny issue
Cap is one of the EU's most divisive policies. Beloved by farmers, it is loathed by swathes of the EU population who believe that Cap, through its system of subsidies, represents all that is wrong with the EU. With expenditure on Cap accounting for almost 40 per cent of the EU's annual spend, it is by far the bloc's biggest outlay – expenditure topped €58 billion last year, €43 billion of which was spent on direct subsidies to farmers.

Justifying expenditure on the scheme has been a constant challenge for the European Union. The bloc also faces charges of operating one of world's largest protectionist policies by supporting European food at the expense of products from outside the EU.

Since its inception in the early 1960s, the Common Agricultural Policy has undergone a series of reforms. In its early years the European Union adopted various market support measures, mainly though price intervention. But after over-production led to infamous food-mountains, EU agricultural policy shifted away from market intervention and towards direct support for producers. The de-coupling of direct payments, which broke the link between payments and production, was introduced in 2003, with payments then linked to past productivity.

The latest reform once again seeks to tackle the thorny issue of income support, this time through what the European Commission believes is a ‘fairer’ distribution model based on payment per hectare. In essence, the new system seeks to level out the payment system both between and within member states. This means increasing the payments to newer (and poorer) member states , while also ensuring that, within member states, lower-paid farmers are brought up to a minimum level.

But the biggest drive to change public perception of the policy is in the renewed emphasis on ‘greening’. In a bid to bridge the gap between public perception and the needs of farmers, the European Commission has hit on the idea of the ‘social contract’. It argues that, while EU citizens are the ultimate beneficiaries of Cap through affordable and safe food supplies, farmers also have a responsibility to maintain an environmentally-sustainable landscape. Hence the increased linking of payments to environmentally-sustainable practices such as reducing stock densities, decreasing the use of pesticides and a commitment to cultivating permanent grasslands. For Irish farmers, the new measures will have a limited impact – Ireland is already top of the class when it comes to green agricultural practices, with most of its land permanent grassland.

'Fairer and greener'
Whether the new tag-line of a 'fairer and greener' Cap will be enough to bring a sceptical public onside remains unclear, but the Common Agricultural Policy is likely to remain a feature of the European Union for the foreseeable future. While expenditure on Cap as a proportion of the EU budget has gradually been decreasing, it still represents a hefty 38 per cent of EU spending.

As one of the European Union's oldest policies, Cap has survived for more than half a century. In many ways, its evolution reflects the story of the expansion of Europe – part of the reforms have been an effort to accommodate the different needs of incoming member states.

While three years of negotiation may symbolise to some the excessive bureaucracy of EU policy-making, the painstaking process towards agreement could also be seen as a
necessary effort to respond to the very different needs of 27 member states.

For good or for bad, Cap embodies the EU spirit of compromise and consensus. In the same week as European finance ministers struggle to find initial agreement on new banking resolution rules, they could do worse than look to their agricultural counterparts for guidance.