Ken Ash, Head, Trade and Agriculture directorate, OECD
Frank van Tongeren, Head, Policies in trade and agriculture Division, OECD
Catherine Moreddu, Senior Agricultural policy analyst, OECD
Jorge Núñez Ferrer, Associate Fellow, CEPS
Chair: Jo Swinnen, Associate Senior Fellow, CEPS & Director, LICOS Centre, University of Leuven
Date: 5 October 2011
The OECD study “Evaluation of Agricultural Policy Reforms in the EU” was launched at CEPS on October 5th. After a brief introduction by Jo Swinnen (CEPS Associate Senior Fellow & LICOS Director), Ken Ash, Frank van Tongeren and Catherine Moreddu (respectively, Head of Trade and Agriculture Directorate, Head of Policies in Trade and Agriculture Division and Senior Agricultural Policy Analyst at the OECD) recalled the substantial steps taken by the EU in the more recent reforms of its Common Agricultural Policy (CAP). Indeed, since 1992, there has been a shift from price support to income support measures, and increased market orientation, which have all resulted in fewer distorting effects of CAP support, greater income transfer efficiency, and a closer alignment of domestic prices to world prices.
Despite these overall positive effects, major policy challenges remain. The targeting of CAP support is still weak (single payments are still skewed towards relatively large and wealthy recipients and benefits tend to be capitalised into land values). This results in huge inequalities in the way support is distributed across the EU (25% of the largest farms receive 75% of payments). As pointed out by Jorge Nunez Ferrer (Associate Fellow CEPS, discussant), budgetary discussions and other non-agricultural political considerations have been the driving forces behind successive CAP reforms, rather than the challenges agriculture is facing, such as climate change, global food security, market volatility, etc. As a result, the purpose and the existence of direct payments have remained largely unquestioned, and their role in addressing future challenges is poorly addressed.
In this context, the OECD study underlined today’s tremendous opportunity for change, not only because the next reform cycle (2013) is approaching, but mostly because we are in the presence of pro-reform factors: intense budgetary pressure, growing demand and higher real prices. This context should reduce farmers’ dependency on subsidies, and encourage the shift in policy emphasis from farm income support towards sustainable improvements in farm productivity, profitability, and long-term competitiveness. For this to happen comprehensive data on the EU-27 agricultural sector should be available, especially on farm income, as income support still represents a large share of the CAP budget. In concrete terms, this means redirecting available funds to research and development, risk management, sustainable resource use and the enhancement of rural community well-being.