Common Agricultural Policy or money to Youth Policies?

Article published on Sept. 20, 2014
Article published on Sept. 20, 2014

Millions of young Europeans are unemployed, without a perspective, especially in southern European countries like Spain, Greece. EU programs trying to change the current state don’t exist. Instead, billions of Euros are poured into agriculture. Result: lakes of milk and mountains of butter. What about a redistribution: Give the money to Europe’s youth and not to Europe’s fields

The story so far…

The question of subsidies for European agriculture has been a hot issue for some time now. It’s a common ground that the budget structure of the Common Agricultural Policy (CAP) was a "historical relic"[1]as CAP was born just as EC had emerged from over a decade of severe food shortages during and after World War II, facing the urgent need to secure enough amount of food for the European population. Leaving old memories behind, the last years, CAP has mainly been criticized on the grounds of its cost, around 40% [2]of the total European budget and its environmental impact.

Every generation has its challenges and for the European youth definitely shortage of food is not a concern as it is the lack of jobs. As the financial music makes a lot of noise in Europe, is legitimate to ask: should EU give the money directly to youth policies and stop financing farmers, fields and products of agriculture? Is CAP an anathema? The Greeks I talked to persuaded me that this is a false dichotomy even though the country has one of the highest unemployment rates in Europe for 2013.

For Grigoris Stamoulis, 30, a Greek resident whose family business has profited for many years from agricultural subsidies, the above quiz, misdiagnoses the problem, “putting CAP opposite of the youngsters is not a good dipole. One policy should not exclude the other”. “Let us ask ourselves what would have happened without farm subsidies? If not subsidized the sector, will increase production costs and eventually the prices of products.”

Demetris Iatrides, special secretary to the Greek Ministry of Agriculture, states that through CAP is the Greek youth that is enhanced as Pillar II[3] gives the possibility to young people to receive up to 20.000 euros for starting their own agricultural activity. Later, the young farmer will have the chance to become an investor. For Iatrides, the situation is not black or white, CAP has already helped massively in the rural development and for the future, he sees exciting opportunities to come. “There is the trend to help investments and give opportunities to entrepreneurs. Statistically, the beneficiaries are young people. The important thing is to leverage in the right way all these tools. In the future there will be a revolution in agricultural sector”.

However, the management or the mismanagement of the CAP in the past, has raised serious objections; due to huge overproduction resulting from product subsidies, the CAP was becoming expensive and wasteful with farmers being paid to produce goods for which there was no market, resulting in the famous butter mountains, tons of unwanted sugar, lakes of milk and wine, that the Commission had to buy back.

Besides this, the national administrative complexity involved, invited fraud. Kyriakos Stamoulis, the senior of brothers Stamouli said “money was given in the wrong way. If all these years’ subsidies were distributed in the right way, today, we would have better products and better production in general and maybe we wouldn’t need today any subsidies at all. It wouldn’t be just profitable for the producer but for the whole state economy”. The entrepreneur estimates that for the future, “fortunately, in the new provisions for 2014-2020, there are many green “factors” concerning the environment and the provisions include studies of farmland capability”.

Conditions for lakes of milk, no longer hold true

Vaggelis Divaris has been for years a European Commission CAP officer based in Brussels and looking back, he acknowledges that “unfortunately, up to now, we created the “agriculture of the armchair”, actually, we paid the people in order not to come in the city” which may sound as a mayhem but on the other hand, now, is compatible with the scope of Pillar II, which definitely seeks rural development... with young people. “There is always room for improvement as there is for critic”, Divaris continues. His main point is that we shouldn't lose sight that CAP works. It’s how it works that needs exploration.

A policy that harbors other policies

Even with that spectrum recognized, CAP has always been a central element in the continent’s growth and not unfairly. CAP is not just one policy but a policy that includes others. Traditionally, CAP was conceived for producing cheap products, not just any food products but those to find in everybody’s table, full stop. Probably what is not evident is that money for CAP is also money about environment protection, sustainable rural development and most important euros poured to boost incentives, tools and paths to secure -a priori- the way people will make use of the environment and not just a policy which will stream funds for aposteriori reparation. It is the main tool of redistribution of resources from European cities to European rural areas. The citizens of the European countryside are the ones who take care of our forests, the sea, rivers and lakes that provide us with food, water and clean air.

Revisiting the basic principle and objectives, CAP was intended:[4]

1.   To increase productivity by promoting technical progress and ensuring the optimum use of the factors of production, in particular labour (protection of social cohesion within EU)

2.   To ensure a fair standard of living for the agricultural community

3.   To stabilise markets

4.   To secure availability of supplies and provide consumers with food at reasonable prices; cheap agricultural products for all, everybody needs (cheap) food!

Those objectives were written in 1958 and have never been amended. Which ones would you tick as “done”?

Add to those:

5.   Protection of the environment

6.   Sustainable management of natural resources

7.   Combating climate change

8.  Open the way for further investments

9. Incentives to young people not to abandon the european countryside, secure a balanced territorial development

A blessing in disguise? Post-2013 CAP what of the future

Let us think about two buzzwords of our time: start-ups! It is time to think seriously about the potential of the agricultural start-ups. According to the European Commission,[5] “under the second pillar which enhance competiveness at farm level include restructuring and modernization measures as well as start-up aid for young farmers”.

Furthermore, “there is a focus on bridging the gap between science and practice via the Farm Advisory System, as well as training and innovation programs. These instruments are aimed at helping the farm sector to adapt to new trends and technologies, thus becoming more resource efficient, cost effective and capable of adapting to emerging challenges”.

Add it all up, can CAP release reservoirs of creativity? As the world moves to tech and faced with an ageing farming population[6], from 2015, all young farmers entering the sector will have the opportunity to get an additional first pillar payment, which can still be complemented by a start-up aid under the second pillar.

Seen in this light, the new CAP can push young people away from their parents’ house, indeed, much further, in another city or village where they have the chance to start over an innovative agricultural start up. We urgently wait for someone to disrupt the sector! Emphasis on the potential.

[1] A 2003 report, commissioned by the European Commission, by a group of experts led by Belgian economist André Sapir stated that the budget structure was a "historical relic".

[2] The direct aids and market related expenditure make up 31% of the total EU budget. The total CAP budget is 42% of the EU budget (31% -direct aid + 11% – Rural Development). It represented 48% of the EU's budget, €50 billion in 2006, up from €48.5 billion in 2005.The CAP budget is constantly shrinking: from 71% in 1984 to an expected 39% in 2013.

[3] The 'Agenda 2000' reforms divided the CAP into two 'Pillars': production support and rural development.

[4] Treaty of Rome

[5] Overview of CAP reform 2014-2020

[6] only 14% of EU farmers are under 40 years of age

The article was originally published in German at The European