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Greening the #CAP: Income support more complex and not yet environmentally effective, say EU Auditors

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Payments designed to encourage farmers to “go green” are unlikely to enhance the Common Agricultural Policy’s environmental and climate-related performance significantly, according to a new report from the European Court of Auditors. The auditors found that the new payments added more complexity to the system but had led to changed farming practices on only about five per cent of EU farmland.

Greening is a new type of direct payment introduced with the 2013 reform of the Common Agricultural Policy (CAP). It was designed to reward farmers for having a positive impact on the environment which would otherwise not be rewarded by the market. It is the only direct payment whose main stated objective is environmental.

The auditors examined whether greening was capable of enhancing the CAP’s environmental and climate performance in accordance with EU objectives. They conducted interviews with the authorities in five member states: Greece, Spain (Castile and León), France (Aquitaine and Nord-Pas-de-Calais), the Netherlands and Poland.

“Greening remains essentially an income support scheme,” said Samo Jereb, the member of the European Court of Auditors responsible for the report. “As currently implemented, it is unlikely to enhance the CAP’s environmental and climate performance significantly.”

The auditors found that the European Commission had not developed a complete intervention logic for greening payments. Nor did it set clear, sufficiently ambitious environmental targets for greening to achieve. Furthermore, the budget allocation for greening is not justified by the policy’s delivery of environmental and climate-related objectives. They also found that greening was unlikely to provide significant benefits for the environment and climate, mainly because a significant share of the practices subsidised would have been undertaken anyway without the payment. The auditors estimate that greening led to changes in farming practices on only around five per cent of EU farmland.

Finally, they found that the policy’s results were unlikely to justify the significant complexity which greening adds to the CAP. Part of this results from overlaps between greening and other CAP environmental requirements.

The auditors recommend that the Commission develop a complete intervention logic for the CAP’s contribution to EU environmental and climate objectives in the next CAP reform. In its proposals for the reform, the Commission should follow the following principles:

• Farmers should only have access to CAP payments if they comply with a set of basic environmental norms. Penalties for non-compliance should be sufficient to act as a deterrent;

• agricultural programmes to address environmental and climate needs should include performance targets and funding which reflect the costs incurred and the income lost as a result of activities going beyond the environmental baseline, and;

• when member states can choose among options for implementing the CAP, they should have to demonstrate that their selected options are effective and efficient in achieving policy objectives.

The EU spends €12 billion per year on the new green payment, representing 30% of all CAP direct payments and almost 8% of the whole EU budget. For farmers, this translates into an average rate of around €80 per hectare per year. When greening was introduced, the European Parliament and the Council shifted the greening funds over from other direct payments. The total budget for CAP direct payments has therefore remained relatively stable.

Greening is under shared management, with the European Commission retaining overall responsibility for the execution of the EU budget but delegating implementation tasks to the Member States.

Special Report No 21/2017: “Greening: a more complex income support scheme, not yet environmentally effective” is available on the ECA website in 23 EU languages.

Agriculture

CAP: New report on fraud, corruption and misuse of EU agricultural funds must be wake up call

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MEPs working on protection of the EU's budget from the Greens/EFA group have just released a new report: "Where does the EU money go?", which looks at the misuse of European agricultural funds in Central and Eastern Europe. The report looks at systemic weakness in EU agricultural funds and maps out in clear terms, how EU funds contribute to fraud and corruption and undermining the rule of law in five EU countries: Bulgaria, Czechia, Hungary, Slovakia and Romania.
 
The report outlines up to date cases, including: Fraudulent claims and payments of EU agricultural subsidies Slovakia; the conflicts of interest around Czech Prime Minister's Agrofert company in Czechia; and state interference by the Fidesz government in Hungary. This report comes out as the EU institutions are in the process of negotiating the Common Agricultural Policy for the years 2021-27.
Viola von Cramon MEP, Greens/EFA member of the Budgetary Control Committee, comments:   "The evidence shows that EU agricultural funds are fuelling fraud, corruption and the rise of rich businessmen. Despite numerous investigations, scandals and protests, the Commission seems to be turning a blind eye to the rampant abuse of taxpayer's money and member states are doing little to address systematic issues. The Common Agricultural Policy simply isn't working. It provides the wrong incentives for how land is used, which damages the environment and harms local communities. The massive accumulation of land at the expense of the common good is not a sustainable model and it certainly shouldn't be financed from the EU's budget.
 
"We cannot continue to allow a situation where EU funds are causing such harm in so many countries. The Commission needs to act, it cannot bury its head in the sand. We need transparency on how and where EU money ends up, the disclosure of the ultimate owners of large agricultural companies and an end to conflicts of interest. The CAP must be reformed just so it works for people and the planet and is ultimately accountable to EU citizens. In the negotiations around the new CAP, the Parliament team must stand firm behind mandatory capping and transparency."

Mikuláš Peksa, Pirate Party MEP and Greens/EFA Member of the Budgetary Control Committee said:   “We have seen in my own country how EU agricultural funds are enriching an entire class of people all the way up to the Prime Minister. There is a systemic lack of transparency in the CAP, both during and after the distribution process. National paying agencies in CEE fail to use clear and objective criteria when selecting beneficiaries and are not publishing all the relevant information on where the money goes. When some data is disclosed, it is often deleted after the mandatory period of two years, making it almost impossible to control.
 
“Transparency, accountability and proper scrutiny are essential to building an agricultural system that works for all, instead of enriching a select few. Unfortunately, data on subsidy recipients are scattered over hundreds of registers, which are mostly not interoperable with the Commission’s fraud detection tools. Not only is it almost impossible for the Commission to identify corruption cases, but it is often unaware of who the final beneficiaries are and how much money they receive. In the ongoing negotiations for the new CAP period, we cannot allow the Member States to continue operating with this lack of transparency and EU oversight."

The report is available online here.

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Agriculture

Commission presents study on impact of trade agreements on agri-food sectors

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The Commission has presented the results of a study on the expected economic effects by 2030 of ongoing and upcoming trade negotiations on the EU agricultural sector. The results are based on a theoretical modelling exercise on the potential economic effects on the agri-food sector, including specific results for some agriculture products after the conclusion of 12 trade agreements. This study represents an update of a study carried out in 2016. The EU trade agenda is set to have an overall positive impact on the EU economy and the agri-food sector.

Trade agreements are due to result in substantial increases in EU agri-food exports, with more limited increases in imports, creating a positive trade balance overall.

Executive Vice President responsible for trade Valdis Dombrovskis said: “The EU has always stood for open and fair trade which has enormously benefitted our economy, including agricultural producers. This study shows that we have been able to strike the right balance between offering more export opportunities to EU farmers, while protecting them from potential harmful effects of increased imports.

"Supporting the EU agri-food sector will continue to be a key element of the EU's trade policy, be it through market opening, protecting traditional EU food products or defending it against dumping or other forms of unfair trade.”

Agriculture Commissioner Janusz Wojciechowski said: “The success of EU agricultural trade reflects the competitiveness of our sector. Reforms of the Common Agricultural Policy have highly contributed to this, supported by a global reputation of EU products as being safe, sustainably produced, nutritious and of high quality. This study, with more positive results than in 2016, confirms that our ambitious trade agenda helps EU farmers and food producers take full advantage of opportunities abroad while making sure we have sufficient safeguards in place for the most sensitive sectors."

 A press release and a Q&A are available online.

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Agriculture

Agriculture: Commission publishes list of potential eco-schemes

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The Commission published a list of potential agricultural practices that eco-schemes could support in the future Common Agricultural Policy (CAP). Part of the CAP reform currently under negotiation between the European Parliament and the Council, eco-schemes are a new instrument designed to reward farmers who choose to go further in terms of environmental care and climate action. This list aims to contribute to the debate around the CAP reform and its role in reaching the Green Deal targets. This list also enhances transparency of the process for establishing the Strategic CAP Plans, and provides farmers, administrations, scientists and stakeholders a basis for further discussion on making the best use of this new instrument.

The future CAP will play a crucial role in managing the transition towards a sustainable food system and in supporting European farmers throughout. Eco-schemes will contribute significantly to this transition and to the Green Deal targets. The Commission published the Farm to Fork and Biodiversity strategies in May 2020. The Commission presented its proposals for the CAP reform in 2018, introducing a more flexible, performance and results-based approach that takes into account local conditions and needs, while increasing EU level ambitions in terms of sustainability. The European Parliament and Council agreed on their negotiating positions on the reform of the CAP on 23 and 21 October 2020, respectively, enabling the start of the trilogues on 10 November 2020. The Commission is determined to play its full role in the CAP trilogue negotiations as an honest broker between the co-legislators and as a driving force for greater sustainability to deliver on the European Green Deal objectives. A factsheet is available online and more information can be found here.

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