EU2020: an elephant in the room?

Is agriculture headed for a downsizing?

Less than a month remains before the European Commission launches its proposals for a new economic strategy, dubbed ‘EU2020′. And less than a month remains for goals such as food security, the maintenance of farm livelihoods and rural land stewardship to be meaningfully inserted into the paper.

Key insights into the new strategy came in the form of President Barroso’s comments to EU leaders at the February 11th informal summit in Brussels.

The Commission chief indicated that the new plan should take on the mantle from the defunct Lisbon Strategy by enabling a full transition to a “smarter, greener economy”. This means raising r&d investment, upping education spending, and prioritising hi-tech sectors and high value-added jobs in the bid for growth and international competitiveness.

The CAP, currently deploying more than 40% of the EU budget, is the elephant in the room.

Agriculture is only directly referenced once, as one of the sectors which should seize ‘green growth’ and resource efficiency, under the auspices of a new “Industrial Policy for the globalisation era”.

Writing on the wall for next budget

Meanwhile Barroso has insisted that the post-2013 EU budget “fully reflects the agreed political priorities” of the EU2020 strategy.

In other words, the current political exercise will identify sectors with high growth potential and prioritise public and private investment in them; and if a sector is not deemed among these, then its share of the post-2013 budget is earmarked for the chop.

This means allowing over-arching strategic goals to reign supreme over the nitty-gritty of budget items and whether they are individually considered to merit more, less or equal spending in the next multi-annual EU budget.

With the Commission clearly intent on bolstering funding for the designated growth areas, and recession-stricken member states unlikely to agree to raising the overall EU budget, taking from the CAP booty becomes an almost inevitable solution.

Structural funds given post-Lisbon blessing

Cohesion policy is the only area that currently rivals the CAP on budgetary outlays, but is likely to be spared the same scrutiny.

In a recent document aimed at dissecting the failings of the Lisbon strategy, the Commission singled out ‘Lisbonised’ structural funds as a rare success story in channelling EU funding to “growth-enhancing investments such as innovation, R&D and business support”. There is in fact said to be scope for mobilising more of the EU budget to support the holy duo of “growth and jobs” in these sorts of ways.

Regional Policy Commissioner Johannes Hahn said this week that cohesion policy needs to “get on the train” and ensure it is not left behind by the EU2020 strategy. However, with structural funds pulled intact from the Lisbon post-mortem, it is the CAP which risks being left standing on the platform.

With more than 80% of farm payments granted primarily as a form of income support, agricultural spending is clearly aimed at a unique strategic sector with its own challenges and its own assets. Unfortunately for farmers, these do not correspond directly to what is described in the EU2020 blueprints.

Can Ciolos rebrand the CAP?

Although only two weeks into the job, Farm Commissioner Dacian Ciolos clearly has a job on his hands to convince President Barroso and his fellow commissioners to insert goals related to the primary sector into the new economic agenda. Instead, the CAP – or what remains of it – will have to respond to a logic of growth and competitiveness which has been drawn up with other economic activities in mind.

While a forward-looking strategy is never likely to be focused on income support itself, there may still be ways to salvage a meaningful place for the CAP within the new strategy.

There are a few buzzwords for the CAP to hook itself onto, and especially Barroso’s focus on ‘green growth’. In her final months in office, Ciolos’ predecessor Mariann Fischer Boel made continued reference to the term as some kind of lifeline for the CAP in the imminent budgetary battle. In this case it is the CAP’s ‘rural development’ side which takes precedence, namely its array of agri-environmental, diversification and competitiveness schemes.

Rural development is the sort of cross-cutting policy framework which is likely to sit well with a strategy aimed at supporting innovation while managing resources efficiently. Only this week Competition Commissioner and Vice-President Joaquín Almunia talked about all EU subsidies needing to respond to “horizontal objectives”. CAP payments which address food and environmental security while supporting innovative rural companies and producing/reinventing jobs seems to fit the bill more readily than traditional farm support.

So while the definition of ‘green growth’ is still up for grabs, Ciolos may choose to brand rural development accordingly. Doing so could ensure that the CAP, or at least an element of it, has a firm foothold in the EU2020 quicksand, and can dig in for the subsequent budget battle. Rural Development would become the standard-bearer of what the CAP is or can be about.

The risks are obvious: pursuing the green growth/rural development approach at this stage could pre-judge the shape of CAP reform, and lock Ciolos into shifting a bigger share of its payments into the rural development framework, or even applying agri-environment style principles to all farm payments (for more on eco-conditionality see my last blog entry).

Plan B: frontal attack on EU2020

However, a more frontal attack may be launched on the EU2020 vision à la Barroso, and the idea of devoting every penny of the EU budget to mobilising growth and jobs.

There are certainly grounds for questioning the thrust of an economic strategy which does not address the farm sector. Arguably, a true ‘industrial strategy for the globalisation era’ should be aimed at supporting existing jobs and livelihoods in sectors where globalised exchanges pit the EU most brutally against lower cost production models.

Whether this argument will be made hinges on how many of the EU’s decision-makers ultimately see maintenance of farm livelihoods and production in vulnerable areas as a priority equal to increasing r&d in high value-added sectors.

If Ciolos does decide to launch a challenge along these lines, he would likely have the support of 22 member states and large swathes of the European Parliament. And behind them the strength of the EU’s vocal and organised farm unions.

Changing the thrust of the new guidelines may be an impractical goal, but the argument could at least be spelled out for keeping the EU2020 strategy and the 2013 budget talks on two parallel but separate tracks.