Common Agricultural Policy

Authors:	Ruta Landgrebe, Sandra Naumann
Editor:	Alexandros Kandalepas

Editor's note 23Apr13: Source D141 (common sections), D241, D341.

History and status quo

The European Common Agricultural Policy (CAP) was first introduced in the 1950s with the aim then of ensuring stable supplies of affordable food. The initial CAP offered payments guaranteeing high commodity prices, thus providing incentives to intensify production and maximize outputs. By the 1980's the CAP had not only eliminated post-war food shortages but also resulted in surpluses of the major agricultural commodities.

Through a series of reforms since 1992, market support has been reduced and replaced by direct payments to farmers. The Agenda 2000 reform established the two pillars of CAP: the first pillar provides direct farm payments and limited market intervention measures; the second pillar supports rural development more broadly, including several compulsory agri-environment schemes. Since 2003, and with the exception of areas threatened by abandonment, payments to farmers are no longer determined in relation to the area or volume of production (decoupling). Instead, "single farm payments" are linked to environmental, food safety and animal welfare standards, the compulsory "cross-compliance". Further changes under the 2009 Pillar I Health Check, included the abolishment of arable set-aside, increased modulation rate (in favour of the Rural Development Fund) and added new requirements to the GAEC-standards to retain the environmental benefits of set-aside and improve water management. They also strengthened the CAP's contribution towards environmental challenges such as climate change, bioenergy, water management and biodiversity.

Aims and objectives

The objectives of the CAP set in the Treaty of Rome (Art. 33) are to :

• increase productivity, by promoting technical progress and ensuring the optimum use of the factors of production, in particular labour;
• ensure a fair standard of living for the agricultural Community;
• stabilise markets;
• secure availability of supplies;
• provide consumers with food at reasonable prices.

These objectives are now complemented by environmental and sustainability objectives including:

• be a living policy reflecting the needs and expectations of European society;
• promote a sustainable agriculture offering safe, quality products while protecting the environment and animal welfare;
• support the multifunctional role of farmers as suppliers of public goods;
• promote the growth and creation of jobs in rural areas;
• reinforce a competitive and innovative agricultural sector that can respond to the challenges of the world market
• be managed by simple and transparent rules

Structure and components

The CAP instruments which are the most relevant to soil conservation are cross compliance requirements and rural development programmes

Cross Compliance covers (a) compliance with statutory management requirements (SMR) related to 19 environmental EU Directives and Regulations covering public, animal and plant health; animal welfare and the protection of environment (Nitrates, Sewage Sludge, Groundwater, Birds and Habitats); and (b) compliance with standards for Good Agricultural and Environmental Condition (GAEC). GAEC standards first introduced in 2003 are particularly relevant to LEDD as they cover soil erosion, maintenance of soil organic matter, soil structure and minimum levels of maintenance. Member States are also required to maintain permanent pasture at historic levels (i.e. no reduction in the area coverage is allowed).

Table. GAEC framework (source: Annex III of Council Regulation (EC) No 73/2009)

Issue	Compulsory Standards	Optional Standards
Soil erosion: Protect soil through appropriate measures	Minimum soil cover Minimum land management reflecting site-specific conditions	Retain terraces
Soil organic matter: Maintain soil organic matter levels through appropriate practices	Arable stubble management	Standards for crop rotations
Soil structure: Maintain soil structure through appropriate measures		Appropriate machinery use
Minimum level of maintenance: Ensure a minimum level of maintenance and avoid the deterioration of habitats	Retention of landscape features, including, where appropriate, hedges, ponds, ditches, trees in line, in group or isolated and field margins Avoiding the encroachment of unwanted vegetation on agricultural land Protection of permanent pasture	Minimum livestock stocking rates or/and appropriate regimes Establishment and/or retention of habitats Prohibition of the grubbing up of olive trees Maintenance of olive groves and vines in good vegetative condition
Protection and management of water: Protect water against pollution and run-off, and manage the use of water	Establishment of buffer strips along water courses Where use of water for irrigation is subject to authorisation, compliance with authorisation procedures

Rural Development: Pillar 2 has the potential to prevent soil degradation through:

Axis 1: Improving the competitiveness of the agricultural and forestry sector

• Advisory services, training and advice: Measures promoting the diffusion of knowledge, information and expertise with regard to sustainable farming/ forestry practices in general and to LEDD in particular and.
• Modernisation of agricultural holdings measures may be used to introduce technologies that improve environmental performance, including soil protection.
• Measures to restore agricultural production potential damaged by natural disasters and introduce appropriate prevention actions

Axis 2: improving the environment and the countryside

• Natural handicap payments for mountain areas and payments in other areas with handicaps. The Less Favoured Areas (LFA) Scheme aims to ensure sustainable and extensive land use. LFA measures are relevant to soil protection through the avoidance of land abandonment that often has negative impacts on soil, such as increased erosion and reduction of soil organic matter quality.
• Agri-environment measures supporting the provision of environmental services beyond the baseline regulatory level set by GAEC standards and SMRs. Farmers are compensated for income foregone or additional costs incurred in providing such services. AEM represent the only compulsory measure for Member States within their Rural Development Programmes.
• Natura 2000 and Water Framework Directive area management.
• Support for non-productive investment aiming to enhance achievements of the commitments undertaken under agri-environment schemes and Natura2000 through support for non-remunerative investments.
• First afforestation of agricultural land and establishment of agroforestry systems on agricultural land which may contribute to soil erosion protection
• Forest Environment Payments and Non-productive investments in forests

Axis 3: Quality of life in rural areas and diversification of rural economy

Axis 4: Build local capacity for employment and diversification (LEADER approach)

Measures of these axes may contribute indirectly to soil protection, for example through the drawing up of protection and management plans for high nature value areas, environmental awareness actions and investments associated with maintenance, restoration and upgrading of the natural heritage, as well as support for food quality schemes where environmental dimension of food production is important. Support for local action groups (LAGs) to implement local development strategies may be used to promote soil-friendly practices, or generally raise institutional capacity.

Implementation process

The CAP is implemented in the context of the EU's seven-year budget cycle or programming periods. The main EC regulations outline the content of each Pillar while Member States retain a degree of autonomy at the national and regional level in order to respond flexibly to different regional and local conditions. Implementation at Member State level shapes the impact of CAP on LEDD. The implementation process for the key instruments in 2007 – 2013 period is briefly outlined below.

Single Farm Payment Scheme in the form of three possible models: 1) the historical model with entitlements calculated on the basis of historical individual reference amounts; 2) the regional model where reference amounts are calculated per region; 3) a hybrid model combining a mix of the two approaches. The regional model normally results in some redistribution between more intensive and less intensive producers, potentially providing more support for more environmentally friendly production.

Cross Compliance: Member States must translate GAEC standards into obligation at farm level, taking into account the specific regional characteristics. This enables Member States to address soil degradation processes flexibly according to national priorities and local needs. Some Member States used GAEC to compensate for gaps in their existing national legislation on soil protection, while others adopted and existing legislative base for cross compliance. In order to control the compliance with SMR and GAEC standards Member States are required to carry out (administrative) checks on cross-compliance at farm level and on-the-spot checks on at least 1% of all farmers receiving direct payments.

Rural Development Programmes: The "Community strategic guidelines for rural development" were first incorporated into Member States' national strategy plans and rural development programmes. Resources were allocated to the various axes taking account of the specific situation, strengths, weaknesses and opportunities of each programme area. Therefore, only the programme level provides an indication of how far farming practices and specific soil degradation processes are linked. Rural development programmes were revised to include Health Check provisions, allocated additional funds for environmental challenges. Agri-environment measures are a particularity as the actual measures are agreed between the implementation authority and a farmer through a contract for a minimum of five years.

CAP relevance to LEDD

Historically, CAP has contributed greatly to farmers; incomes but has also contributed to LEDD through the intensification of production and the marginalisation of less competitive/intensive production methods. These processes have occurred at different scales and intensities: farming has intensified in fertile and accessible areas and production in less accessible or naturally handicapped areas has diminished.

Intensification of production (increasing inputs of fertilisers and pesticides, reduction in crop diversity, intensity of mechanisation), has a strong impact on soil degradation. Soil erosion, soil compaction, decline in soil organic matter and potentially soil and water contamination are associated with poor management of cropland. Actions by farmers to address these impacts and to improve soil protection include:

• reducing the intensity of management;
• applying diversified cropping techniques;
• ensuring appropriate machinery use.

Budget distribution between the Pillars

The CAP has relatively recently begun to address environmental issues in agriculture, including soil degradation through environmental safeguards linked to farm payments and support through rural development and agri-environment measures. However, the lion's share of CAP funding goes to the Pillar 1 (85%), largely based on historic entitlements and with minimal links between support payments and specific management requirements

Thus, while the environmental objectives are much more visible in the structure of the CAP, the achievement of these objectives is limited. Moreover, increasing demand for food and biomass is expected to lead to further agricultural intensification and increased risk for soil degradation in both cropland and grazing land. To counter these drivers, CAP has to provide much stronger support for environmental objectives not only in the design of its instruments but also in terms of budget allocation.

In addition, while forestry activities are supported under the RD policy, the funding allocation to forestry actions is relatively limited. This relatively limited support for the forestry sector is understandable since forest management has remained primarily within the domain of national policies. Nonetheless, within the context of climate change, it may be necessary to increase EU level coordination and spending activities for forestry actions.

Cross compliance

The scope of cross-compliance makes it an important tool for addressing LEDD processes in both cropland and grazing land (grasslands). Cross-compliance is a potentially very effective tool to ensure a minimum level of compliance with environmental protection since it can be enforced through annual inspections. The implementation so far, however, has had limited effect as the objectives and the scope of cross compliance are not well defined and national GAEC standards are highly variable in scope and are often not detailed enough. The different implementation of the Member States was one reason to adapt GAEC within the CAP Health Check and introduce a differentiation between compulsory and optional standards.

A further shortcoming of cross-compliance is that so far there are no requirements set for the measurement and evaluation of its results. Since cross-compliance provides the regulatory baseline for the setting of requirements within Pillar 2 (in particular for the agri-environment measures), the definition of relevant standards is of particular importance to the delivery of environmental objectives, including soil protection. The more ambitious the cross-compliance standards are the more demanding are also the requirements that need to be fulfilled under agri-environment measures.

The CAP Health Check expanded GAEC standards to include landscape features (hedges, ponds, ditches, trees in line, in group or isolated and field margins) in order to protect existing landscape features and biodiversity as well as to contribute to the retention of environmental benefits from set-aside. Moreover, the introduction of the requirement for the establishment of buffer strips along water courses has the potential to protect against soil erosion both on cropland and on grasslands. Inclusions of provisions of the Water Framework Directive as part of cross-compliance are also being discussed.

With regard to grazing land, cross-compliance requirements for permanent pasture stipulates that Member States have to maintain the proportion of permanent grassland in relation to the total agricultural land as set in 2003 reference year. This does not, however, prevent the ploughing up of grassland and subsequent reseeding; nor does cross-compliance prevent the intensification of grassland use. This has important implications for the biodiversity value of grassland, as well as for the maintenance of soil quality as permanent grasslands are an invaluable carbon sink and crucial for maintenance of water quality (particularly groundwater recharge). A definition of permanent pasture that differentiates between semi-natural permanent pastures and intensively managed grassland would provide better protection against LEDD.

Rural Development Programmes

The impact of rural development programmes on LEDD depends on the priority given to specific objectives (for example, competitiveness versus environment), the funding allocation among the axes and individual measures, the specific design and implementation of the measures and their uptake by farmers. RD policy is important both for both cropland and grazing land management within the EU.

Axis 2 measures can also contribute to soil protection by supporting specific farming practices and farming systems such as organic farming and conservation agriculture (that both have positive effects on soil organic carbon content and soil biodiversity). In most cases, it is impossible to conclude at the EU level to what extent the measures focus on soil quality, since the required level of detailed information, in particular the link between farming practices and specific soil degradation processes, is only available at the programme level. Moreover, the complementarity between agri-environment measures and the (reference level) requirements under GAEC is critical to ensure that incentive payments are not used to compensate for compulsory good practice.

By design, agri-environment measures (AEM's) directly address soil protection issues. and therefore have a direct relevance to LEDD-problems. AEMs can help protect, maintain or improve soil quality through reductions in farming intensity with potentially beneficial impacts for soil conservation. e.g. via reduction of input (e.g. fertilisers, plant protection products), crop rotation, cover crops, buffer strips, conversion of arable land to grassland, extensification of livestock and in specific cases voluntary set-aside. Although quantified information on the impact of AEM measures on soil quality is lacking, initial evaluations for the 2000-2006 programming period suggest that soil quality has improved and soil erosion has been reduced.

With regard to forests/shrubland, the RD measures directly targeting forest ecosystems include measures for afforestation of agricultural land, first establishment of agroforestry systems on agricultural land, forest environment payments and non-productive investments which can all substantially contribute to prevent and reverse LEDD in forest ecosystems. It is estimated that within the programming period 2007-2013, RD funding will allow the establishment of 890,000 ha of new forests, and support 400,000 ha of forests in Natura 2000 areas, as well as provide forest-environment payments for 2,000,000ha of forests.

In summary, the CAP will continue to remain one of the most important EU policies and a key influence over land management and soil quality due to its scope, levels of funding and EU-wide coverage. It contains a range of policy instruments which substantially influence the socio-economic environment for farms and their choices of farming practices. It is a key EU policy which, directly and indirectly, affects LEDD processes in croplands, but also in grazing lands as well as forest ecosystems.

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