AESI Conference, Dublin, Oct. 2010

Plenary Session: CAP 2013Plenary Session: CAP 2013

David HarveyCRE & School of Agriculture, Food & Rural Development

AESI Conference, Dublin, Oct. 2010

Plenary Session: CAP 2013Plenary Session: CAP 2013

David HarveyCRE & School of Agriculture, Food & Rural Development

Caveats: Our analysis may be no better than yours

Caveats: Our analysis may be no better than yours

CAP History & Policy DependencyCAP History & Policy Dependency

Source: : EC, DG Ag. & Rural Development, 2009

Strategic Dependency -> CAP origins (early years) Support Dependency -> CAP Persistence (crisis years) Programme Dependency -> CAP Resilience (1992 ff Reforms)

Source: : EC, DG Ag. & Rural Development, 2009

Strategic Dependency -> CAP origins (early years) Support Dependency -> CAP Persistence (crisis years) Programme Dependency -> CAP Resilience (1992 ff Reforms)

CAP Funding HistoryCAP Funding History

Source: : Hanniotis, 2009 Source: : Hanniotis, 2009

CAP Support HistoryCAP Support History

Source: OECDSource: OECD

CAP Reform – the “Consensus”?CAP Reform – the “Consensus”?

Source: HSBC, Forward Planning 2010 Source: HSBC, Forward Planning 2010

CAP Reform – the SFP issueCAP Reform – the SFP issue No academic, independent, or ‘objective’ support for direct

payments Other than as explicitly targeted and conditional payments Very unevenly distributed within and between MS And are already ‘nationalised’ – at least for NMS SFPs are obsolete - phase them out completely.“Unless justification (for the SFP) is fully credible, it will not be politically

sustainable. And if it is not politically sustainable, it will not stick, and then the uncertainty among farmers will persist. But policy uncertainty is just about the worst thing one can inflict on a sector whose health so much depends on long-term planning.” Tangermann, 2010

But How can SFPs be phased out or eliminated?

No academic, independent, or ‘objective’ support for direct payments

Other than as explicitly targeted and conditional payments Very unevenly distributed within and between MS And are already ‘nationalised’ – at least for NMS SFPs are obsolete - phase them out completely.“Unless justification (for the SFP) is fully credible, it will not be politically

sustainable. And if it is not politically sustainable, it will not stick, and then the uncertainty among farmers will persist. But policy uncertainty is just about the worst thing one can inflict on a sector whose health so much depends on long-term planning.” Tangermann, 2010

But How can SFPs be phased out or eliminated?

CAP Reform: Key Distributional IssuesCAP Reform: Key Distributional Issues

CAP Reform Debate: Critical IssuesCAP Reform Debate: Critical Issues

Member state shares could dominate negotiations

Design & Implementation of RD and CARE problematic

‘Simplification’ aspiration endangered

There is no ‘perfect storm’ in prospect for radical reform

CAP Bond - a ‘deal maker’?

CAP Bonds – a way forward?CAP Bonds – a way forward? Elimination of SFPs is Politically impossible

(too many farmers are too dependent on the support)

So, convert the SFP to fixed payments for a fixed term

& convert the fixed payment stream into a Bond

First formally proposed in 1991 (EP, LUFPIG)

echoed in the Buckwell report (1997) of TAA

Failed in 91 (Swinbank & Tranter, 2004) because:

Poor timing & confusing; Lack of coalition building & Commission fears of re-nationalisation and capitalisation of support

CAP Bonds – The Benefits:CAP Bonds – The Benefits: Farmers’ present viability secured

But with added flexibility & fungeability

C.f. uncertain phased reduction – eventual elimination?

+ continued debates & efforts to resist reform

Markets adjust & adapt – revealing needs for, e.g.:

Stabilisation and insurance assistance;

Environmental payments

Ends support dependency, encourages & assists transition and development – what more do you want?

ConclusionsConclusions

Serious negotiations needed about level and distribution of SFPs anyway

But currently hopelessly confused by the (absence of) serious political legitimacy for continued payments

Bonds (fixed level and term of payments) break support & programme dependencies

And provide much needed confidence, capacity and capability for farmers to adapt and adjust to market realities.

The Solution?The Solution?

Thanks for your attention. Comments & Questions?