Evaluation of Agricultural Policy Reforms in the European Union

Evaluation of Agricultural Policy Reforms in the European Union
The Common Agricultural Policy 2014-20

OECD, 27 July 2017, Pages: 96

European support to farm incomes has decreased substantially over the past 20 years, according to this report. Farmers earned 22% of total annual receipts from government support over the 2008-10 period, down from 39% annually over the 1986-88 period.

The decline is due to many factors, including high commodity prices, which automatically push down income support, as well as 25 years of Common Agricultural Policy (CAP) reform outlined in the report.

Despite the decline, CAP expenditures nonetheless comprised close to 45% of the total EU expenditures in 2010, or about EUR 53 billion. Overall farm support reached EUR 77 billion in 2010, as measured by the OECD’s Producer Support Estimate, which includes direct payments to farmers as well as the impacts of government policies on prices.

This report provides an overview of the main characteristics and structure of the current Common Agricultural Policy (CAP) and its developments in the last 25 years. It analyses the impacts of policy changes on production, trade, land use, farm structure, the environment and some aspects of rural development.

The recommendations in this report for future EU agricultural policy reform include:

• Remove remaining impediments to the functioning of input and output markets; in particular more open access to the EU market, and transparent EU-wide markets for the sale and lease of land, production quotas and payment entitlements.
• Increase investment in agricultural innovation.
  "Public expenditure to support  education and research services, to contribute to innovation and support its take-up, should be enhanced  as these are fundamental to future productivity gains and increased sector resilience" (page 10)
• Introduce an effective and comprehensive framework for risk management at EU level, though policymakers should steer clear of impeding areas where private sector solutions exist, such as production contracts, insurance and futures contracts.
  "Among the 13 member states who have taken it up, only Ireland attributes nearly 25 % of its knowledge transfers and advisory services to risk management, most of the remaining 12% member states spend less hat 2% of their knowledge and advisory services budgets on risk management measures" (page 61)
• Make targeted efforts to improve the environmental performance of agriculture, including direct payments to farmers, when necessary, for provision of environmental goods and services.

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» Briefing note: The EU Common Agricultural Policy post-2013 (pdf, 4 pages, 145 KB)