The case for radical reform of agricultural policies

Why do we have subsidies for farming as a sector?  The answer is to ensure that land provides food, as food is inherent in national security: we need to eat, to be healthy and to have economic activity.

Food should therefore be sustainably produced to ensure long term security.  Public spending on agriculture should ultimately be based on providing diets that preserve health (to underpin our economies) in a sustainable manner (so they will do this forever).  

On both global and local levels, our food systems do not foster health and sustainability.  Today, over 50% of the world’s population is malnourished in some way, either with too few calories and nutrients or too many.  Previous generations of agricultural policies have fostered production of cheap food that is calorie-rich but nutrient-poor, and so externalises costs onto both human health and the environment.

Across the world, soils are degraded and biodiversity is being lost; agriculture contributes significantly to greenhouse gas emissions, water and air pollution (agriculture is a very significant emitter of NOx and particulates, PM10) and impacts therefore on a range of ecosystem services that provide public goods.

The CAP, worth about €408 billion, is almost 40% of the entire EU budget; of this almost three quarters are spent in direct payments to farmers to support them (Pillar 1), and one quarter on sustainable rural development, including agri-environment schemes (Pillar 2).  

Recent analysis by Prof Alan Matthews suggests that, of the 12 million farm holdings in the EU, 450,000 of them received over 56% of the total direct payments support: in other words over 96% of farms receive only 44% of the direct payments. This suggests that direct payments go to the farms with the biggest incomes and do less to support smaller, family farms.  

When it comes to the “greening of the CAP”, there is evidence that the CAP reform is unlikely to have improved the delivery of ecosystem services in any significant way.  There are many reasons for this – that measures are insufficient, do not create change at scale, and are applied without reference to context and are not results-based.

So, what do we need?  

In an ideal world, we would have an agri-food policy – one that connects agricultural production to the quality of food that is produced. We would also have a payment system that didn’t simply support the richest, biggest enterprises and only drive large-scale production through intensification. Farming is not a typical industrial sector and deserves special treatment, but the direct payments neither help farmers manage resilience nor sustainability and probably stifle innovation.  

Farmers need a safety net when things go very wrong (e.g. foot and mouth disease outbreaks), mechanisms to help save money from the good years to protect them in bad years, and to manage the significant capital investments required. Changing direct payments should help farm or crop insurance schemes to grow.  

Then, farmers could be rewarded, by reductions in premiums, for taking measures to reduce their risks (e.g. through better soil management). And because farmers manage the land that produces so many public services, they should be rewarded for it.  A “payment by results” framework, complicated though it would be, would empower farmers to innovate to do the right thing, including coping with landscape context and – through neighbourhood coordination – do it at scale.  

Given the amount of money the CAP costs, and its inefficiency at providing a food system that provides nutritious food sustainably, it is time for a root-and-branch transformation.  Reframing the CAP should take several rounds of support to avoid a cliff-edge, but it needs to start now.

Professor Tim Benton, Dean of Strategic Research Initiatives, University of Leeds and Distinguished Visiting Fellow, Chatham House