It had to be the reform that made the Common Agricultural Policy of the European Union not only greener but fairer and more effective but, a year after it came into force, the same countries and politicians who designed it – with France and Spain in the first, as beneficiaries of their aid – they are now demanding to review and even repeal some decisions to respond to the protests in the countryside.
The level of attacks on the CAP has reached such a point in France that the president himself, Emmanuel Macron, recently had to remember that, although it would be “very easy to throw all the blame on Europe”, the truth is that “without the Common Agricultural Policy our farmers would have no income and many of them would not be able to survive”. The statement is valid beyond the Hexagon and explains the love-hate relationship that exists between European farmers and the acronym PAC.
Created in 1962 by the six founding countries of the European Economic Community, this policy has its origins in the economic context of food shortages that the continent suffered after the Second World War. Then it came to represent two thirds of the common budget. Its weight has been reduced over time and the arrival of new partners, but even today it represents 30% of the European common fund, a total of 400 billion euros for the period 2021-2027 of the of which 47,000 will go to the Spanish countryside. It is the largest item in the EU budget and its oldest policy.
The objective of the CAP was to guarantee the supply of food, which is why Europe invested heavily in interventionist policies at the level of prices and markets to guarantee supply and price stability. The policy was so successful that, in the 1980s, it began to have a surplus problem. Images of mountains of butter and lakes of wine caused outrage in European public opinion as an economic problem was brewing. In 1984, quotas and control measures were introduced to end oversupply, but the CAP price skyrocketed as a result of intervention measures (private storage aid and public purchases) and subsidies for export, much criticized outside Europe.
In 1992, six years after the entry of Spain, the PAC underwent its first major reform, with a strong French accent, like all subsequent ones. The structure of payments changed to a combination of production support and direct subsidies to farmers’ income through payments per hectare and per head of livestock.
In order for activity and prices to become market oriented, in 1999 the weight of institutional prices in the system was reduced. At the same time, the rural development policy was introduced as the second pillar of the CAP, changes that culminated in 2003 with the introduction of a Single Payment to farmers, conditional on environmental requirements and set according to their level production history. The major reform of 2013 – which eliminated milk quotas and introduced adjustments to limit payments to large farms, another recurring complaint about the policy’s failings – was mainly aimed at promoting sustainability.
In 2021, the EU insisted on this direction and conditioned a larger percentage of payments on environmental measures, such as incentives for “eco-regimes” or the certificate of “high environmental value” (a less demanding designation), support for young farmers and, in line with the wishes of Paris, more leeway for national governments to implement the CAP. It was “a historic agreement”, a “good balance”, the Ministers of Agriculture of the Twenty-seven congratulated themselves at the time.
The confluence of the rising prices of raw materials and energy, inflation and the war in Ukraine – in addition to the effects of new emission limits, in some cases linked to the Green Deal, in others to previous commitments – have given that the application of the reform has been more bumpy and controversial than expected. Some problems have a national origin, such as the questioning of subsidized diesel in Germany or France, where the lowering of environmental requirements to access certain subsidies has reduced average payments, but others respond to similar complaints and protests have been widespread.
Although it represents only 1.4% of European GDP and 4.2% of employment, the strategic value and political power of the European agricultural sector has once again been demonstrated. Three days of protests in France were enough for the European Commission to agree to temporarily repeal the condition of leaving 4% of the land fallow, renounce the plan to reduce pesticides and not propose cuts in emissions in the towards 2040.
At the meeting of Ministers of Agriculture of the Twenty-Seven on February 26, measures will be studied to reduce the bureaucracy of the new CAP and simplify life on small farms. They are adjustments, but without major changes in the general orientation, with diagnoses and prescriptions opposed to the right and the left, since some blame environmental requirements and others the liberalization of the markets, some political groups in the Eurochamber bet, instead, for an in-depth reform of this old and changing European policy to adapt it to a more challenging global context.
