The Common Agricultural Policy (CAP)

Ireland has benefited from the CAP receiving nearly €44 billion between 1973 and 2008. CAP has allowed farmers to diversity and increase in size. The number of Irish farms has decreased since 1973, however farmers are still important to the Irish economy and they are supported by CAP funding. As well as direct funding through CAP Irish agriculture has benefited from funding through the Regional Development fund and the Cohesion funds and most of this funding has gone into rural areas.

Origins and impact of CAP

The origins of the CAP stem from a need for a reliable supply of affordable food for Europe as well as the security of livelihood for farmers. It was originally negotiated following the Treaty of Rome in 1957.  The goals of CAP as it was first created offered farmers financial incentives to increase levels of productivity. This was successful in allowing the EU to move towards self-sufficiency. However, as outputs increased a new problem developed – over-production and surpluses.

These had to be exported (with the help of subsidies) or stored in the EU. This was expensive and distorted world markets to the extent that it became unpopular with consumers and taxpayers. It was clear that the long-term interests of farmers were not best served.

At the same time society became increasingly concerned about greater food safety and “quality”, for care of soil, landscapes and water. Societies searched for an appropriate response to climate change, for a healthy rural economy and society and for a more positive contribution on the world stage. 

2012 marks the 50th anniversary of the Common Agricultural Policy. A special website has been set up to mark the occasion at: http://ec.europa.eu/agriculture/50-years-of-cap/index_en.htm. It also includes information on events taking place across the EU to mark the anniversary.

CAP future Directions (2013 and beyond)

Europe has changed significantly since its formation and even over the last decade. In order to remain vital the CAP has also adapted to suit the current and future needs of European citizens.  Current reforms to CAP will come into effect from 2013 onwards. In the past the CAP has been seen as being beneficial to farmers only. The reform of the CAP will aim to highlight to all EU citizens the benefits of CAP to them.

There are many reasons why the CAP needs to be updated now. The current economic instability has meant that the current CAP funding which comprises 32% of the EU budget needs to be looked at. Issues such as food security and availability of food at stable prices which were important at the set up of the CAP are again becoming necessary to plan for.

Reform of CAP will need to look at agricultural production security and the availability of food at stable prices. This is particularly important in light of recent food price fluctuations. Food security is also being looked at. Environmental protections such as climate change and biodiversity will also become more important to Europe. The agriculture industry as a sector creates important jobs and provides income in rural areas which will be of importance to CAP negotiators.

One of the main considerations of CAP reform will be the equality of payments. Currently ‘new’ member states receive less than the ‘old’ member states and this will need to be addressed.  Under the terms of the Lisbon Treaty the European Parliament and the Council of Agriculture Ministers will jointly decide on the CAP reform.

On 18 November 2010 the European Commission published a communication on "the Common Agricultural Policy (CAP) towards 2020 – Meeting the food, natural resources and territorial challenges of the future".  This highlights the areas of CAP that will be reformed to make the European agriculture sector more dynamic, competitive, and effective in responding to the Europe 2020 vision of stimulating sustainable growth, smart growth and inclusive growth. The paper outlines three options for further reform. Following discussion of these ideas, the Commission will present formal legislative proposals in mid-2011.

During 2010 the Commission held a public debate and a major conference on the future of the CAP. The outcome of this consultation identified three objectives. These objectives will aim to provide safe and sufficient food supplies, mitigate climate change and environmental damage and support rural areas. These three objectives are:

• Security and viable food production 
• Sustainable management of natural resources and climate action 
• Rural development and diversity

The way in which CAP funding is distributed will also be reformed. The criteria for change will be the importance of redistribution, redesign and better targeting of the support, based on objective and equitable criteria, easy to understand by the taxpayer.  The environment will be a factor as well as economic factors. Support will be targeted towards active farmers. A more equitable distribution of funds should be organised in an economically and politically feasible way with a transition to avoid major disruption.

CAP market measures including public intervention and private storage aid could be improved through streamlining and simplifying procedures. Traditionally CAP was focused on food security and supply but had more recently moved away from these areas and the public stocks of food are now virtually eliminated. Whereas market measures accounted for 92% of CAP spending as recently as 1991, just 7% of the CAP budget was spent on them in 2009. The current CAP payment system is linked to historical data and this means that there are different rules for EU-15 and the EU-12 member states. This is expected to change after 2013 and will be important in making payments more equal.

Rural development has been an essential component of CAP and has contributed to the economic growth of rural areas. CAP reforms are expected to fully integrate environmental, climate change and innovation considerations into all programmes including rural development. 

Agriculture and Climate Change

Agriculture will need to adapt to climate change. Farming depends directly on climatic conditions and the type of farming practised in Ireland is carefully matched to our mild climate. The changes which are predicted due to climate change would bring wetter warmer weather to Ireland. Any changes to the climate here will have an impact on farming practices.

As well as being vulnerable to climate change the agriculture sector is also a significant producer of greenhouse gases such as Methane and Carbon Dioxide which contribute to climate change.  A reduction in the level of greenhouse gas emissions from agriculture is possible and it will contribute to a reduction in overall greenhouse gas emissions.

Ireland is committed to reducing greenhouse gas emissions under the Kyoto Protocol. Changes in agricultural production methods should create a drop in levels while also sticking to the goals of productivity and security of the sector.

Climate change is a key consideration for Europe.  In order to reduce carbon emissions which contribute to global warming all areas of the economy which produce carbon dioxide and other greenhouse gases including methane must be looked at and this includes agriculture. Agriculture greenhouse gas emissions are mainly due to livestock and fertiliser use and to a small extent the energy used in farming (fuel, electricity).

Ireland aims to reduce the CO2 emissions from all sectors including agriculture to 20% below 2005 levels by 2020.  Agriculture in Ireland accounted for a higher proportion of all greenhouse gas emissions than would be the case for the EU as a whole. The significant role of agriculture in the Irish economy is clearly illustrated by this fact.

Production changes such as improved milk yields on dairy farms will mean that fewer cows can produce enough milk and a reduction in the number of cows or the stocking number will reduce the gas emissions as cows are a source of methane.  Restrictions imposed on fertiliser use will also have a positive impact on greenhouse gas emissions.

Farm forestry is another area where significant positive progress can be made. Ireland has a very low level of forest cover compared to the rest of the EU. Increasing forest cover will act as a ‘carbon sink’ as the trees will convert carbon dioxide into oxygen. Deciduous forests are particularly useful as carbon sinks and these are encouraged through grants. The forestry planted also has the added benefit of creating a sustainable forestry industry in Ireland.

Reforms of the CAP in recent years have ensured that national agriculture policies reflect the environmental protection policies of the EU. Incentives and funding are focused on protecting environments that agriculture could potentially harm. Rivers and streams are protected by pollution control measures, wildlife is protected by biodiversity measures and climate change is tackled by reducing greenhouse gas emissions through agriculture.

Sustainable agriculture is a key aim of the CAP agreement. Kyoto targets are one of the main drivers behind climate change measures and EU States including Ireland will need to work hard to reduce greenhouse gas emissions.