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Common Agricultural Policy

17 January 2020

Common Agricultural Policy

James Hutton Institute team

Background

 

The EU’s agricultural policy, known as the Common Agricultural Policy (CAP), has been associated with outcomes relating to food security, trade competitiveness, environmental protection, and rural development. It was first brought into force in 1962, and since then has undergone numerous reforms, leading to an evolution of its objectives and delivery mechanisms: from  the food insecurity that affected post-war Europe, to the more recent aims that include having a competitive agri-food sector, sustaining rural communities and landscapes, mitigating climate change and supporting healthy diets and nutrition. The effectiveness of the CAP in achieving (or sometimes overachieving these objectives) is the subject of both long-term and ongoing scrutiny and critique. Despite, or perhaps because of its longevity, the objectives of the CAP are not unambiguously defined nor do the individual policy objectives have clear quantified targets against which to be assessed. The aim of this policy case is to use societal metabolism-based analyses (SMA) to inform these debates, and to facilitate discussions with policymakers to better understand how insights from SMA could be used in improving the evaluation and design of agricultural policies.

 

Methodological Approach

 

Our analysis is based on Quantitative Story-Telling (QST), a hybrid qualitative and quantitative approach used to conduct transdisciplinary research with policy makers. This approach iteratively identifies narratives, the stories used by stakeholders to justify key policy positions. In this case we identified narratives underpinning the CAP. A relevant narrative was selected through discussions with policymakers and was then quantitatively analysed using a ‘societal metabolism’ based methods. Societal metabolism analysis characterises the ‘funds’ and ‘flows’ of societal and environmental resources, highlighting the metabolic patterns, interconnections and dependencies between different human and natural systems. The analysis was conducted at a pan-European level with member-state granularity, in order to inform EU policy. The main dataset used for the analysis is the Farm Accounts Data Network (FADN) dataset that characterises farm systems using data aggregated from individual farms across the EU, supplemented by data from Eurostat and the EEA at member state level. Lastly, the results are presented to stakeholders, whose feedback can be used to inform subsequent QST cycles.

 

Narratives

 

The narrative chosen for analysis with policy stakeholders is:

“CAP aims to ensure European agricultural competitiveness in the world market and aims to deliver public goods such as biodiversity conservation, water quality and climate change mitigation. These aims are in opposition”.

This is not a quote but reflects a synthesis of materials drawn from document analysis and interviews with the Commission and related institutions. This narrative was supported by some stakeholders but contested by others, who had the views that competitiveness and public goods are not always in opposition, or that current CAP policy interventions are addressing these trade-offs.

Other narratives identified and shared with stakeholders were:

  • Reframing CAP: “CAP is a long-established policy that has undergone several re-framings. In the beginning it was very successful in reversing the food insecurity that affected post-war Europe; more recently CAP has also acquired many other objectives. These other objectives include food security, farm income viability, sustaining rural communities and landscapes, satisfying consumer expectations, supporting healthy diets and nutrition, delivery of public goods from land, mitigating climate change, and having a competitive agri-good sector.”
  • Redistribution: “CAP includes a goal for redistribution that favours small farmers (in terms of land-holding size, and in terms of business-size). CAP also includes goals for efficiency and income equality. The goals for redistribution are in tension with the goals for efficiency.”
  • Food policy: “CAP should be replaced by a food policy that considers both production and consumption of food in order to deliver public benefits in terms of good value and healthy food.”
  • Externalisation: “To achieve the EU sustainability goals, the environmental impacts of achieving EU food security will need to be externalized. For example, we protect some potential livestock pasture within Europe, and we import livestock from South America. Protection and conservation of landscapes within Europe thus happens at the expense of degradation in other regions of the world.”

For more information about the identified narratives and the narrative selected for analysis, see this report.

 

Main Findings

 

The full report on ‘Narratives behind CAP’ is available as Deliverable 5.5. The main findings are summarised below:

 

Are the EU farms competitive without CAP subsidy?

One of the aims of the CAP is for the agricultural sector to be competitive, and the European Commission refers to competitiveness as the ability of firms to sustain and gain in market share through producing goods and services that are both desired by the consumer whilst profitable to the business. Following this understanding, we explored the competitiveness of EU farms in terms of the financial productivity of farm sectors or member states per hectare or per hour, with and without CAP subsidies. The intent was to explore the degree to which CAP’s financial support is directed to more or less productive sectors or member states. This analysis speaks to the absolute and relative need for subsidies in underpinning the competitiveness, and therefore the desirability of the continued existence of production systems across the EU in their current form.

An example of the analyses carried out is illustrated by Figure 1, which shows, for Spain in 2016, the hectares and the productivity, with and without subsidies, for different farm types that in aggregate receive more than 100M € per year in CAP subsidies. The effects of subsidies is clear: productivity is larger with subsidies, and the increase in productivity depends on the production systems. While in some cases subsidies move farm types from negative to positive Farm Net Incomes, in some cases the subsidies are in effect a windfall adding to already profitable returns. The question then becomes: what is the return to the public for the investment of such funds, since it is apparent that such business are already competitive and productive?

When presenting these results to stakeholders, they were particularly interested in the differences in productivity between countries.

 


Figure 1.  Extent and Intensity of Productivity per ha for Farm types (production systems) in Spain in 2016 and how much they are subsidized.

 

 

Is competitiveness correlated with intensive farming?

When analysing the pressures of farming on the biosphere, it is important to consider the aggregate pressures from whole production system, as it can be misleading to focus on single farms. For example, a single intensively managed farm within an otherwise extensive system of management has an outcome different to a situation where all farms are managed in a moderately intensive way. The charts below present the relationship between intensity of fertilizer inputs (N in kg/ha), and intensity of outputs (wheat yield in kg/ha) and milk yield (in litres per cow), aggregated for each member state. The first chart shows a clear positive relationship between fertilizer inputs and wheat yield, meaning that any significant overall reduction in inputs would seem to require an acceptance of less output. This relationship is clearer for cereals than for milk production, where the use of imported feed weakens the relationship between productivity and local intensity of management. The nature of these relationships suggests that policies for achieving environmental outcomes would benefit from focussing less on production systems efficiency or productivity and more on demand-side management. This could include reducing demand through eliminating food waste, excessive consumption, or a change in the balance of diet all of which would have further public good benefits in reducing pollution or public health outcomes. These results were not seen as surprising by stakeholders, and therefore not very useful or relevant, yet would potentially require a refocusing of CAP expenditure or regulation to achieve them. Other outputs which presented counterintuitive findings received more sceptical queries and resistance but perhaps are ultimately seen as more interesting and could start desirable processes of conceptual change.

 


Figure 2: The relationship between input and output intensity for wheat and the average competitiveness of specialist cereals (Sp.COP) businesses in 2016.

 


Figure 3: The relationship between input and output intensity for milk and the average competitiveness of specialist milk (Sp.Milk) businesses in 2016.

 

 

What is the impact of EU farming on delivery of public goods?

Analysing the environmental pressures of a farming system requires knowing not only the intensity (or rate per unit or area or volume) of a pressure (e.g. tonnes of soil eroded per hectare per year), but also the cumulative extent of the pressure (e.g. tonnes of soil eroded per year in an entire member state). For instance, the cumulative effect of lower intensity pressures across large areas can undermine the delivery of policies that focus only on intensity indicators. The chart below presents the extent of soil erosion (in tonnes), highlighting member states where there are larger areas subjected to the problem, and the intensity of erosion (in tonnes per ha per year). Understanding the environmental impacts of a farming system requires not only knowing the pressure generated by the system, but also the vulnerability of the environment in which they occur, and the nature of any other production system present. The horizontal markers in the chart below are thresholds identified by the EEA, indicating the likelihood of the rate of erosion to be unsustainable.

 


Figure 4: Extent and intensity of soil erosion by water in the EU.

 

 

What will we do next? The CAP and the Sustainable Development Goals

 

The project is building on these approaches in the next phase, looking at how policy domains including Water Framework Directive, Energy Directives, Circular Economy Strategy and Natura 2000 Directives interact with the Common Agricultural Policy to enable progress towards the UN Sustainable Development Goal 2 (Zero Hunger). SDG2 (primarily sustainable agriculture), which interacts with other SDGs (primarily SDG6 – water, and SDG15 – life on land). The CAP is considered to have a pivotal role in the delivery of the SDGs, particularly in terms of supporting the goals concerning poverty and food security in the EU. It is also often claimed to help deliver other policy objectives, such as those of the EU’s Water Framework Directive and Natura 2000 network. We apply Quantitative Story-Telling to the agro-food system in the EU, which will allow us to discuss the sustainability of agriculture (particularly in terms of bio-economic pressures); to draw attention to the spillover effects of EU agriculture, including both food security and dependence on the non-EU biosphere and to the need for a food, rather than just an agricultural, policy. This will be reported in D5.1, due in Spring 2020.

 

Find out more:

 

POLICY BRIEF: European Agriculture: Is it possible to promote both competitiveness and environmental sustainability?

NEXUS TIMES: The WEFE Nexus and the Common Agricultural Policy

NEXUS TIMES: What are the tradeoffs in agriculture?

NEXUS TIMES: Balancing food production and biodiversity conservation.

CONFERENCE PROCEEDINGS: Delivering more than the “Sum of the Parts” - Using Quantitative Story Telling to address the challenges of conducting science for policy in the EU land, water and energy nexus

CONFERENCE PROCEEDINGS: Using deliberative societal metabolism analysis to analyse CAP’s delivery of EU sustainability and climate change objectives

CONFERENCE PROCEEDINGS: Science for sustainability: Using societal metabolism analysis to check the robustness of European Union policy narratives in the water, energy and food nexus

SCIENTIFIC PAPER: The role of metrics in the governance of the water-energy-food nexus within the European Commission

 

Teams Involved

Applying the nexus structuring space to characterize the EU food system

Applying the nexus structuring space to characterize the EU food system

Juan J. Cadillo Benalcazar & Ansel Renner

In the MAGIC project, an evaluative framework called quantitative story-telling (QST) was developed as a capable way of generating robust inputs on the science-policy interface. This article demonstrates the potential of that approach to characterize a flexible information space capable of supplying the structured quantitative data demanded by QST exercises. In this article, we focus on examples taken from an analysis of European Union (EU) agriculture.

In diagnostic mode, our analysis evaluated the current metabolic profile of the agriculture sectors of 29 European countries (the EU-27 plus the United Kingdom and Norway). In anticipation mode, our analysis then evaluated the possibility of a dramatic agricultural internalization for each of those 29 countries—what would be needed for near-complete self-sufficiency in foodstuffs, a crude look at downscaling planetary boundaries to the national level under the assumption that current imports become undependable. Across both analytical modes, a semantic interface referred to as the nexus structuring space was developed in which four lenses across four different descriptive domains were used. Fig. 1 summarizes the four lenses used.

 

Figure 1: Analytical representation of a modern agriculture sector, highlighting the macroscope (A), mesoscope (B and C) and microscope (D) lenses proposed by the nexus structuring space
 

When adopting a macroscope lens (symbol A in Fig. 1), multi-metric data concerning the absolute and relative sizes of the various societal sectors (the household sector, the manufacturing sector, the agriculture sector, etc.), as well as their respective metabolic characteristics, was generated. In our analysis, the macroscope gathered information on the end-uses of various foodstuffs and related those end-uses to more general societal consumption patterns. The mesoscope lens describes the dependence of the country under study on other social-economic systems. This dependence is evaluated in terms of how much of each agricultural commodity consumed is of local origin and how much is imported. In Fig. 1, two descriptive domains are identified for the mesoscope—symbol B describes the external dependency in terms of primary/secondary products while symbol C describes the external dependence in terms of live animals required to maintain animal production systems. The mesoscope thereby provides rich information relevant for discussions of food security and vulnerabilities to external factors. The microscope lens (symbol D in Fig. 1) describes the pressure exerted by local agricultural activities on the local ecosystem, differentiating between elements under human control (for example, fertilizers, human activity/labor, blue water) from those that are not (for example, green water, aquifers, soil). Finally, the virtualscope lens describes the characteristics of the “virtual” production processes that are required for the production of imported goods. The virtualscope is not visualized in Fig. 1 since, in practice, its characterization depends on the set of assumptions made. For example, the virtualscope can be understood from the anticipatory perspective of saving local biophysical resources (what would be needed for local self-sufficiency) or from the diagnostic perspective of pressure exerted on external social-ecological systems (outsourcing).

In diagnostic mode, the macroscope revealed substantial heterogeneity in the dietary profile of the EU countries, due mainly to a mix of cultural and environmental factors. In Portugal, for example, 21% of food consumed derives from animal products (in energy terms, fat products and marine/aquatic products not included). That same figure is 31% for Sweden. Similarly, 27% of the food consumed in Austria derives from grains, roots and tubers (in energy terms, again). On the other hand, grains, roots and tubers represent a full 46% of food consumed in Romania. The mesoscope suggests that when products are considered in terms of primary product equivalent, most of the countries assessed (20 out of 29) exceeded a 50% self-sufficiency level concerning plant products. That number of countries reduces by approximately half when analyzing animal products. When assessing animal feed (again, primary product equivalent), nearly all countries stand at less than 30% self-sufficiency. In anticipation mode, evaluating the possibility of a near-complete (90%) internalization of foodstuff imports by 2050—considering also population, diet and yield projections—the microscope and virtualscope lenses revealed that countries such as the Netherlands and Belgium would need to increase their agricultural area by 14x and 8x, respectively. In terms of NPK fertilizer usage, those same two countries would expect to increase application rates by approximately 90%. It should be stressed that these figures include in their consideration import for re-export, but also that the obverse (e.g. the elimination of high throughput agribusiness) would imply dramatic economic transformation in some countries.

The results obtained in our application of the nexus structuring space to agriculture in the EU illustrate—across a wide set of biophysical indicators—that the import of low added value agricultural products is an essential lifeline for the EU's contemporary agribusiness model. Our examples prove highly relevant when considering aspects such as the expected dramatic increase in global food demand by 2050 (putting strain on imports), the major agricultural demands being placed on EU agriculture by the European Green Deal, ongoing revision efforts related to the Common Agricultural Policy (CAP) and the uncomfortable fact that the CAP’s nine primary objectives currently imply several mutually antagonistic actions. The objective of "increasing competitiveness", for example, may likely lead to increased biophysical stress, which is antagonistic to the objective of "preserving landscapes and biodiversity". Our approach facilitates the integration of diverse perspectives by researchers and the development of policy-relevant indicators capable of informing the discussion between what is wanted and what can be done. More information can be found in Cadillo-Benalcazar et al. (2020) and Renner et al. (forthcoming).

References

Cadillo-Benalcazar JJ, Renner A, Giampietro M (2020) A multiscale integrated analysis of the factors characterizing the sustainability of food systems in Europe. J Environ Manage in press: https://doi.org/10.1016/j.jenvman.2020.110944

Renner A, Cadillo-Benalcazar JJ, Benini L, Giampietro M (forthcoming) Environmental pressure of the European agricultural system: An exercise in biophysical anticipation. Ecosyst Serv.