The common agricultural policy (CAP) has been supporting European farmers for over 50 years, but its reach goes far beyond the 28 member states. Many other countries across the globe look at the CAP as a possible model for their own agricultural sector, while in Europe the focus is now also on how best to use EU policy instruments such as the CAP to support the Union’s external goals, including sustainable economic development.
The CAP has always been a policy with global reach. In its initial post-war form it was designed to stimulate European production and support European farmers but the trade-distorting effects of that policy clearly had an impact on the rest of the world. Successive reforms of the CAP have seen all these effects disappear as the policy became more market-orientated, and with tougher global rules at the international level through the World Trade Organization (WTO), the impact of the CAP on the developing world is very different than in the past.
The focus now is firmly on supporting our partners in the developing world as well as farmers closer to home. For example, Europe offers extremely favourable market access conditions for countries across the developing world, giving duty-free and quota-free access to all Least Developed Countries (LDCs), and offering unilateral concessions to developing countries. Export subsidies for European producers have long since disappeared, and all exports are now firmly market driven.
Myths still persist
And yet the myths about the distorting effects of the CAP on the developing world persist. It is often easier to blame supposed imports from the EU for declining national production than to address the real causes, which can be anything from government policy to supply chain issues to animal or plant health issues such as avian influenza. The EU is also far from being the only global agri-food player, and imports from other countries such as the US, China or Brazil may in fact be the real culprits.
Even the EU’s domestic policy actions through the CAP can come in for criticism from abroad. Market measures are still permitted, in limited forms, to support specific sectors in times of crisis. This was the case for the dairy sector for example in 2015 and 2016, when the European Commission intervened by buying up stocks of skimmed milk powder (SMP), sales of which were severely hit by Russian ban on SMP imports, among other factors. Without this action, many European dairy firms would have collapsed.
But concerns that the stocks of SMP will now somehow be ‘dumped’ on Africa are completely unfounded. The simple fact is that African production of SMP is not enough to meet growing demand: self-sufficiency rates in Sub-Saharan Africa, for example, vary from 79% in Malawi to 39% in Nigeria. Many African countries have a substantial shortfall of a number of agricultural products, such as milk, which is an important source of nutrition, and which can only be met through imports, from whatever source. The reality is that less than 10% of EU exports of SMP are destined to Sub-Saharan Africa. Moreover, these are private sales, and do not come from EU public stocks. And if the product is not available from private sources in the EU, it is usually sourced from other milk producing regions of the world, such as New Zealand.
Encouraging trade from developing countries
Europe has developed Economic Partnership Agreements – trade agreements – that are carefully crafted to allow partner countries in the developing world to protect their sensitive agricultural products from liberalisation. This means in effect that many sensitive agricultural sectors are excluded entirely from such agreements – ensuring local production is not destroyed by imports – or that governments can react quickly and effectively to support sectors that hit by sudden increases in imports.
As a result, the EU is not only the world's largest agri-food exporter and importer, but is also the world's largest importer of agricultural products from Least Developed Countries (€3.5 billion in 2017, more than US, Russia, China, Japan and Canada together).
The development of local agriculture in the developing world requires policies and investments, which should address structural factors such as cost of inputs, disease control, infrastructure, improved breeding, logistics, and reliable energy supplies. But these developments take time, and immediate shortfalls in domestic production can only be met by imports. In other words, agri-food products exported from the EU to Africa are responding to African demand, and are purely market driven, by private companies that receive no public support from the EU.
Rural development just as important
The CAP is not simply about farming and farmers; it is also about helping and developing the wider rural communities in which they operate. The EU does this through its rural development policy, which focuses on a wide range of issues - anything from support for start-ups in rural areas and access to broadband to specific environmental or societal challenges faced by the rural population. This approach to supporting and tackling specifically rural issues is increasingly seen as a model that could work for the rest of the world too, and the EU frequently shares its experiences with its international partners, for example at the G7 and G20.
Conscious of its role in the world and its international commitments on sustainable development, tackling climate change and addressing the causes of migration, the EU is increasingly looking at how policies such as the CAP need to be adapted to meet these new challenges.
That is why the future CAP, as clearly set out in the recent Communication on the Future of Food and Farming, will place far greater emphasis on these key issues of global reach: tough new standards on sustainable agricultural production and environmentally friendly farming practices are to be expected, as is an increased level of ambition within rural development programmes to address these key concerns.
Some 70% of the world's poor live in rural areas where agriculture - and in particular small-scale farming - is the main source of income. To address this challenge, the EU has put food and nutrition security and sustainable agriculture as a key priority for the support to developing countries. It is the focal sector of EU assistance in 60 developing countries, in particular in Africa. This means €1 billion for agriculture in developing countries until 2020 mostly benefitting smallholders. Our support goes to developing value chains and access to markets for small holders to local, national and regional markets. As farming remains largely a private sector activity, the private sector, responsible agribusiness investments have also a major role to play.
And the future CAP will also step up its efforts to support the EU’s partners in the developing world to accelerate the development of their agri-food sectors, creating more jobs and greater economic growth – in turn helping to tackle one of the root causes of migration. A number of options are on the table in this regard, from deeper cooperation on agricultural research and innovation or increasing the number of training and exchange projects to enhancing strategic policy cooperation and dialogue with the African Union on issues related to agriculture and rural development.
One practical example is the recent decision to create a Rural Africa Task Force, a group of EU experts in the area of development and agriculture issues, whose focus will be on how best to work together with the African Union in particular at encouraging job-creating economic development in agriculture, agri-business and agro-industries.
28 February 2018