Table of Contents

  • Successive reforms have shaped the European Union’s agricultural policy. This report offers an evaluation of the main new features of the Common Agricultural Policy (CAP) over the 2014-20 period. It notes that in many ways the CAP 2014-20 is a continuation of the previous CAP while also offering some novel features. Starting with the description of the new institutional context whereby it was co-signed by Council and Parliament, the report then reviews the new policy features. New compulsory measures are introduced within an overall stable budget. These include the greening payment that is conditional on farming practices deemed to deliver specific environmental outcomes, and also the payment to support newly installed young farmers. The CAP 2014-20 also allows for greater flexibility. Member states may now partly tailor the implementation of some compulsory measures to their own conditions, they may also adopt choice measures from a menu of direct payments. Member states have embraced to varying degrees these new opportunities for flexibility. Their choices are discussed in this report. The OECD Producer Support Estimate (PSE) framework that quantifies policy transfers and the CAPRI model of European agriculture are used to offer an ex ante assessment of public expenditure associated with the new measures.Two policy dimensions are discussed in greater detail, first the provision of risk management instruments and their take up by member states and, second, the menu of environmental measures.

  • This report focuses on the main new features of the CAP 2014-20. It starts by placing the CAP in its institutional context; Chapter 2 offers a description of the main new features of the CAP 2014-20. In Chapter 3, risk management instruments are discussed and assessed. Chapter 4 discusses the environmental measures of the CAP. Based on these elements, the report draws a number of conclusions which are summarised below.

  • The Treaty of Lisbon defined a new institutional environment whereby, for the first time, the Common Agricultural Policy for 2014-20 was adopted by co-decision between the European Parliament and the Council. Co-decision was also the rule for adopting the European Union’s multiannual financial framework (MFF). The MFF sets ceilings for EU spending for the seven-year period between 2014 and 2020 and defines the financial boundaries of the Common Agricultural Policy. Monitoring and evaluation are strengthened in the CAP 2014-20 and tools are foreseen to assess the outcome of the CAP against the European Union’s policy objectives. Results are reported to the European Parliament and to the Council. These new institutional features of the CAP are described in this chapter.

  • In many ways the CAP 2014-20 can be characterised as a continuation of the CAP 2007-13. Its overall funding is almost constant and the two-pillar structure is maintained. At the same time, new measures, increased flexibility and more binding instruments are introduced. This chapter points to those features that are continued from the previous CAP and discusses the new developments. Member states’ implementation choices are described and associated public expenditure are detailed. The OECD PSE framework that quantifies policy transfers and the CAPRI model of European agriculture are used to offer an ex ante assessment of the new measures.

  • Risk management tools aim to address downward income fluctuations. Income risks stemming from weather fluctuations, natural disasters, pests and diseases have always been important in the agricultural sector. In a context of more open agricultural markets, farm revenues are now more directly influenced by price developments than a decade ago, reinforcing the need for a comprehensive risk assessment. The CAP contains several measures that are labelled specifically as risk management instruments, but many more measures and payments directly or indirectly influence the risk exposure of farmers. This chapter reviews these measures and builds on previous work on risk management to describe selected examples of risk management strategies in Spain, the Netherlands, Canada and the United States.

  • Through time, the CAP has developed a range of policy measures that address environmental issues in agriculture. EU farmers are required to adopt certain practices deemed to deliver particular environmental outcomes. A number of voluntary schemes are also available for take up by EU farmers. The CAP 2014-20 introduced a new greening payment with more stringent requirements. This chapter describes the environmental components of the CAP 2014-20 and discusses whether they are innovative or rather represent a continuation of previous policies. The chapter offers an ex ante assessment of the potential impacts of these measures that is based on a review of the literature, on the results of the CAPRI model of European agriculture and on the analysis of farm support using the PSE framework.