A vision for EU’s agriculture – what’s next for CAP?

For the shortest month of the year, this is a topic which is anything but. Negotiations for the 2028-32 CAP will soon start, and will go on, and on, with proposals, amendments, votes, delays and prolongations, in trilogues between the EU Commission, to the Parliament, to the Council of Agricultural Minister.

After last year’s Strategic Dialogue group produced its report in September, the EU Commission’s President’s “Vision for Agriculture and Food” to be published in Ursula van der Leyen’s first 100 days – imminently – will be the first real insight into what might lie ahead for CAP.

Even then, it will be difficult for farmers, who are first concerned by the Common Agricultural Policy, to know what sauce they will be eaten with for quite some time.

Strategic dialogue

The Strategic Dialogue on the Future of EU Agriculture recommendations are an insight into what might be proposed for the next CAP.

This report summed up the deliberations of and consensus reached by 29 major stakeholders from the European agri-food sector, civil society, rural communities and academia. Its declared ambition: finding ways to create socially responsible, economically profitable, and environmentally sustainable agri-food systems.

The report does a good job of outlining the complex global climate, environmental, geopolitical, economic and social context farmers currently have to operate in.

It recognises that many European farmers have already made important advances in the transition to greater sustainability to meet “the needs of the present without compromising the ability of future generations to meet their own needs”. It asserts the world leading food quality and safety standards of Europe, and recognises European agriculture’s diversity of landscapes, of foods, and its rich culinary heritage.

The report acknowledges the feelings of powerlessness and even anger of farmers, as expressed in protests all around Europe in the last couple of years.

Finally, it recommends a variety of directions for Europe’s agriculture. This includes the benchmarking and continued enhancement of sustainability on farms, greater empowerment of consumers to make more sustainable food choices, promotion of organic, high nature value and animal welfare European production systems, the development of a European Observatory for Agricultural Land to monitor land transfers, use rights, soil quality, erosion; the need to promote generational renewal and the employment attractivity of the sector; and improving access to and adoption of knowledge and innovation.

Regarding the future CAP, the report recommends focusing income support payments on the active farmers who need it most – these are identified as farmers in areas of natural constraints, small farms, young farmers, mixed farms and new entrants. It also stresses the need to promote positive environmental, social and animal welfare outcomes for society, and to invigorate rural areas. Finally, it proposes the creation of a temporary Just Transition Fund to accelerate the sector’s sustainability transition. This fund, the report says, should be established outside of the CAP, and should support investment in the form of loans or grants for transition over a limited period of several years.

A Vision for Agriculture and Food

Since the publication of the Strategic Dialogue document in September 2024, and with the new EU Commission taking office shortly thereafter, EU Commission President Ursula von der Leyen has announced the imminent publication of a Vision for Agriculture and Food. The vision is meant to replace the Farm to Fork strategy from the previous administration, and is to be published within the first 100 days of the new EU Commission taking office.

So that would be… in a matter of days. In fact a sneak preview based on a leak was only just published by ARC2020.

The main points:

• • Income support payments are to be subjected to more degressivity and capping – i.e. more redistribution – and be more targeted, with priority to farmers “who contribute to food security” and farmers who need the payments for economic viability. It is unclear how one defines a farmer as contributing to food security…
  • Simplification is a huge theme with a comprehensive simplification package of the current CAP promised for the second quarter of 2025, to include greater flexibility for member states in operating their National Strategic Plans (the national implementation framework for CAP). And it seems it may trump some of the green measures. As part of the simplification, there is to be more flexibility, including potentially involving farmers in designing the sustainable farming practices that are most suitable for their farms. It appears that the ambition for simplification goes beyond CAP, with a declaration that it “will help farmers and food businesses to become more competitive and resilient”.
  • As part of the simplification of CAP, a voluntary benchmarking system is to be developed to enable farmers to assess their on-farm sustainability, and quantify their ecosystem service provisions by recording data “only once”. This presupposes a great deal of interoperability and compatibility between the various technologies used on farms – a worthwhile ambition which will require a great deal of co-operation from suppliers of agtech.
  • On trade, there is a strong declaration of the importance of a fair global playing field, with alignment expected from trading partners to Europe’s production standards, animal welfare, pesticides prohibitions and more. This could be challenging to achieve in the current geopolitical climate, especially with likely rocky years ahead as the Trump administration threatens free trade with tariffs, and global stability with wild foreign policy initiatives.
  • On funding agriculture sustainability, the Vision stresses the importance of drawing on all potential sources, with public investment used to de-risk private capital – institutional investors, the banking sector in particular. The role of carbon farming, the development of nature credits, recourse to renewable energy production are again stressed as potential income streams for farmers. Last but not least, the Vision will stress the importance of farmers getting a better deal from the marketplace, with unfair practices forcing farmers to sell below cost in the crosshairs.
  • From a consumer perspective, we get a repetition of the desirability of short supply chains, including through promotion of locally produced foods in the public procurement process, and a review of School schemes.

All the above gives strong déjà-vu vibes, but there are a few new initiatives – many front loaded for development in 2025:

• • A strategy for generational renewal is to be developed.
  • An EU observatory of agricultural land, as recommended by the Strategic Dialogue report, is to be developed to monitor land use, transfers, prices and much more.
  • The Vision promises the development of a “roadmap” for agriculture, to include pesticide regulations, a new strategy for the livestock sector and a new protein plan.
    Interestingly on pesticide, regulations could become more nuanced, where alternatives are not readily available. The development of biopesticides is to be promoted and access fast-tracked.
  • Finally, the importance of rural areas resilience is stressed with the promise of a rural action plan.

This “more carrot, less stick” approach gives the sense that Ursula von der Leyen is trying to mend the relationship with farmers badly eroded by the previous Commission, its Green Deal and its policy tentacles, especially Farm to Fork and the complex and bureaucratic CAP measures it influenced. It is also clear that there has been a realisation that food security is at least as important as, and goes hand in hand with, climate and environmental action.

Funding of CAP

Funding is key in every CAP negotiation, is going to be even trickier here.

Once upon a time, CAP was the only common budget of the European Communities. In 1980, it accounted for 73% of the EU budget, by 2023, it has gone down to less than a quarter. While the overall budget has increased, the number of farmers it supports has skyrocketed, reflecting expansion of the EU into new member states with large farming populations made up of small farmers. In 2020, there were 9.2m holdings in the EU, of which 64% were under 5ha, and 32% located in Romania!

CAP funds have had to be shared among many more beneficiaries with high dependency from an economic viability perspective. Funds which were initially almost exclusively destined to support farm incomes to secure affordable, quality food supplies, have acquired multiple additional environmental and social functions. But EU funding for agriculture is now also in competition with many other policy areas, and contributions to the EU budget meet increased reluctance from member states.

The Multiannual Financial Framework (MFF) and NextGeneration EU finance a multitude of EU-wide programmes under six main headings: Single Market, Innovation and Digital; Cohesion and Values; Natural Resources and Environment (including agriculture and maritime policies); Migration and Border Management; Security and Defense and Neighbourhood and the World.

Migration and defense are two high profile areas we know the EU has come under greater pressure to fund in very recent years. Decarbonisation of all sectors to reach the EU target of -51% by 2030, never mind net zero by 2050, will also mobilise significant EU funding.

Add to this a plan to fundamentally reform the EU budget and MFF, away from separate joint-funds and towards individual member state plans, and you can see that despite the good intentions, there could be real pressure on the funding of the CAP in future.

What of the temporary “Just Transition Fund” to support farmers’ transition to more sustainable practices? This is to be separate from CAP funds, but where will the funds come from?

It is interesting that the EU Commission plans to have more private initiatives involved in supporting farmers, including carbon farming or ecosystem services remunerations – but there is a lot of work yet to be done to actually present workable frameworks farmers can tap into.

Some not so new ideas

Generational renewal: Agriculture the world over suffers from an aging crisis. Ireland and the EU are no exception. The 2013 and the 2023 CAPs also prioritised incentivising young people to come into farming. Previous CAPs featured retirement schemes, and installation aids, which did not appear to be sufficiently connected, and did not change the trend.

The fact is that generational renewal requires the farming business to remunerate two generations, for a period of time. This requires connected policies which enable older farmers to transition out, while younger farmers transition in. While schemes, incentives and policies will help, this does boil down to the economic viability of the holding, and its attractiveness as a place to work to retain the younger generation.

Simplification was already the buzzword for the CAP in 2006. Arguably, the trajectory has been in the opposite direction, with considerably more bureaucracy involved in cross-compliance by farmers from 2013. The 2013 CAP became infamous in Ireland for the number of new Statutory Management Requirements (SRM) and Good Agricultural and Environmental Condition (GAEC) related points which required inspections and compliance.

In more recent years the EU Commission claims to have reduced by 50% the number of on-farm inspections by national authorities – in part by using new technology. Very recently, it has exempted farms of less than 10 hectares from certain compliance obligations, and trumpets dedicating €98bn to payments for voluntary environmental, climate and animal welfare actions. So, what will “simplification” mean in the new CAP?

Strengthening the farmers’ position in the value chain. This became a mantra in Europe especially around 2009. At that time, a major dairy crisis hit, with a crash in demand linked to the global economic crisis. Milk prices collapsed to around 21c/l, well below production costs in all EU member states. While Ireland’s dairy sector is mostly oriented to export, pressures from farmers in the rest of Europe more dependent on the domestic market focused on the failure of the retail chain to return viable prices. Major farmer protests led to the development of policies to strengthen farmers’ power in the retail chain. Among other measures, the EU introduced a Milk Market Observatory to improve price transparency, Producer Organisations (PO) rights to enable dairy farmers to better negotiate prices without falling foul of competition legislation, and new regulations to outlaw Unfair Trading Practices.

These were good initiatives, but their impact has been limited. Market information transparency is vastly better now than it was, but it falls short of the type of information the US Department of Agriculture (USDA) is legally mandated to collect and publish. There are greater strictures on retailers on their trading practices, but they are still at liberty to pressurise suppliers into agreeing to contracted practices that are not necessarily all that fair. It is still the case that farmers around Europe feel they remain price takers, at the tail end of the chain.

Economic viability key for future of EU agriculture – and a bit of recognition would be nice, too!

The Vision for Europe’s agriculture and the next CAP must prioritise economic viability for farm holdings. This does not mean compromising on climate, environmental or social actions. Farms must be capable of generating sufficient income as the pre-condition to secure sustainable food supplies, be attractive to retain young people and appeal to new workers, adopt technologies and practices at the required speed to reduce emissions, nutrient losses, increase biodiversity, improve animal health and welfare and respond to other societal expectations. European food production must retain its world leading status in quality, variety, but also economic, social and environmental sustainability.

Reducing the cost and complexity of compliance, rather than compromising on and reducing obligations; promoting opportunities to generate other income streams; incentivising sustainable action and investment must all be part of this.

The new CAP must also come forward with a strategy for the sector to better communicate its importance to food security and to society’s well-being, including its critical role in securing social peace at global level.

It is quite legitimate for farmers, too often unfairly demonised by environmental commentators, to expect a bit of recognition for the multiple contributions they make to society, and for the significant progress they are making in sustainable food production. It is also the job of the EU’s agricultural policy to ensure that European consumers, who are also voters and taxpayers, understand the importance of the sector.

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© Catherine Lascurettes, Cúl Dara Consultancy