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Tuesday, September 2, 2008

The challenge of integrating environmental requirements into the common agricultural policy

agriculture and environment

Since ratification of the Maastricht Treaty, there has been a legal obligation on the Union to take account of environmental protection requirements when drawing up and implementing Community policies, an obligation which was reinforced by the entry into force of the Treaty of Amsterdam on 1 May 1999.

In the case of the common agricultural policy (CAP), which accounts for almost 50% of the Community budget, the need to take account of environmental concerns is not only a legal requirement but is vital for the very existence of the policy.

Since the process of European integration began, the CAP has contributed to meeting the changing demands of society. In addition to ensuring a fair standard of living for those involved in farming, this has involved, inter alia, increasing production in order to guarantee food supplies to the population and encouraging the modernisation of agriculture. Among the benefits that this has brought to society at large are the transfer of productivity gains to the rest of the economy, the consolidation of internal demand and the release of manpower required in other sectors. Numerous specialists have written of "the crisis of traditional agriculture" and "the silent revolution" in our countryside. The common agricultural policy, just like "modern agriculture", today stands at the crossroads. Building and consolidating a European model of agriculture means developing a farming sector which is at the same time market-oriented, environment-friendly and multifunctional, i.e. which responds to all the demands which society places upon it.

Identifying effects

A number of effects identified elsewhere in this publication deserve to be looked at in more detail. They can be divided into two major groups: past developments and recent evolution, in particular since the 1992 reform.

Past developments

* As regards use of the land and countryside, European farmers directly manage and maintain 44% of European land as utilised agricultural area (UAA), and when the remaining land they own or rent and work is taken into account, they manage more than half of Europe's land surface.

* The area devoted to farming has decreased noticeably over the last two decades. Certain areas of the EU have been abandoned or marginalised, either because access was difficult or because they were no longer suitable for farming as a result, in particular, of the fall in farm prices (a marked economic trend linked to the transfer of productivity gains already mentioned), the pressure of urbanisation and tourism or as a result of general economic developments, a particular consequence of which has been rural depopulation.

* Shaped by geography, history, culture and economic developments, the EU's regions show astonishing diversity. With its wealth of agricultural activities, diversity of regional agricultural systems and different levels and modes of economic development, rural society is multifaceted.

* From the soil to the countryside and from land occupation to land use, everything that affects the territory of Europe forms part of our common heritage. The technical and cultural development of human civilisation has seen human settlements develop from a dependency on food supply sources to almost total freedom from any constraints on location. The countryside is an essential aspect of European agriculture. The countryside and its development include inter alia biodiversity, combating erosion and preventing forest fires. The very concept of the countryside is a complex one.

* The existence in Europe over several decades of an agricultural policy based on intervention to ensure high prices and unlimited and guaranteed outlets helped harness the productive potential generated by technological progress for agricultural intensification and specialisation. This had a negative impact on, amongst other things, the environment, the countryside and the quality of certain products offered to the consumer. To deny this would be just as wrong as to place the blame for it exclusively on the common agricultural policy or on agricultural policy in general.

* On the whole, there was a steady increase in the production of arable crops in Europe. Community aid for cereals, protein crops and oilseeds, together with a fall in the number of grazing animals, has led to an increase in the production of cash crops at the expense of permanent grassland and other forage areas (pasture and areas devoted to secondary cereals). Simplified crop rotation, the increased importance of annual crops and the priority given to financial criteria made possible by improved farming techniques are the principal changes observed in arable farming over the last 25 years.

* Traditional mixed and livestock holdings lost ground to specialised holdings, with the consolidation of large production regions.

* The production-oriented logic of these decades, which were viewed as "miraculous", often led farmers to give priority to financial profitability to the detriment of sustainable farming. Among other effects on crop rotation, one can point to the reduction in the number of traditional crops grown (to the benefit of common wheat and grain maize); the increase in the share of annual crops, including fodder; the appearance in certain regions of almost single-crop farming; the spread of land improvements (increases in the size of holdings, drainage, irrigation, consolidation).

* The intensification of livestock farming has brought larger holdings, greater specialisation, geographical concentration and a reduction in the number of farmers.

* We can only touch on the relationship between water management and agricultural activities, inter alia owing to the lack of data. We have, for example, no data on drainage and the drying-out of wetlands, which means that we must concentrate on irrigation. Since statistics have been available (1961 for the 15 Member States), there has been a strong tendency for the area of irrigable land to increase, even though this seems less marked over recent years. No clear general link (positive or negative) can be established, however, between this and the environment or sustainable development.

* With regard to water quality, the problems of nitrate, phosphate and pesticide pollution have been studied. The role of intensive agriculture is not in doubt, even if other sectors of the economy may also be the cause of a large proportion of pollution problems.

Recent evolution, in particular since the 1992 reform

* The 1992 reform of the CAP introduced support measures for agri-environment measures at European level to encourage more environment-friendly production methods. These measures affect one European farmer in 7 and cover 20% of the agricultural area, well beyond the objective of 15% set by the Fifth Environmental Action Programme 1.

Participation by the Member States is unequal ; while some (Finland, Austria, Sweden, Germany) are above average, others (Belgium, Denmark, Greece, Spain and the Netherlands) fall below. Among the reasons put forward to explain this are the innovative nature of the measures, their complexity, the problems caused for certain administrations, political priorities, the balance in certain Member States between central and regional governments, budgetary difficulties in certain Member States (or regions) in providing the necessary part-financing, the cultural reticence of some farmers and the economic benefits of continuing to practise intensive agriculture.

Among the innovations contained in the measure are the importance given to subsidiarity (the Member States draw up their own programmes), the fact that the participation of producers in the programmes is entirely voluntary and the multiannual nature of the programmes.

* Since the 1992 reform, organic farming has been growing in importance, today accounting for 1% of holdings and 2% of the utilised agricultural area, which means that organic holdings are of above average size. Here too, the situation varies enormously from one region to another. In general, livestock farming (despite delays in adopting Community legislation) followed by fruit and vegetable growing seem to attract organic farmers more than arable farming.

* Natura 2000 today covers approximately 9% of European territory. Contrary to a commonly held view, it is not a question of creating complete nature reserves or of freezing all human activity. Quite the contrary, the areas concerned are "semi-natural" areas, created and maintained by human activity, which might even disappear if farming ceased. Experience so far shows that it is not only desirable but also perfectly possible to develop farming practices that maintain, and even improve, the nature value of habitats and species.

* Agriculture is at the same time a cause, solution and victim of climatic change. It is certainly the principal source of methane and nitrous oxide emissions but is overall responsible for only 8% of greenhouse gas emissions. Furthermore, the increase in woodland in Europe helps absorb carbon dioxide. Between 1993 and 1997, more than half a million hectares were reafforested in the European Union.

The example of methane is a perfect illustration of the complexity of the problem. To reduce emissions while maintaining production levels would initially mean reducing the dairy cattle population, i.e. intensifying production. Taking the argument to the extreme, the use of bovine somatotrophin might even be considered. Such intensification would aggravate the environmental problems of excess nitrogen, the abandonment of vulnerable areas, public and animal health, and product quality, leaving aside animal welfare considerations.

* The 1992 reform marks a point of no return. Farmers changed the way they operated and rational farming increased. There was less use of fertilisers and pesticides, and techniques changed. The use of inputs, which already marked time during the 1980s, initially fell following the fall in prices and the disquiet and uncertainty felt by the agricultural world following the reform, and then rose when world and Community market prices increased. It is still too early to gauge the impact of the changes in prices (rising in the middle of the 1990s and falling at the end of the decade) on the use of inputs.

* The importance of technological change cannot be ignored. It has an influence on the volumes of inputs used, their composition, their methods of application and their environmental impact. Thus an increase in production potential can lead to a rise in the volume of inputs used per hectare but a fall per unit of product obtained and, given the cost of labour, mechanisation can, all things being equal, bring an increase in the amounts applied.

* Another measure with a potentially positive impact on the environment, if the system is correctly managed, is the obligatory or voluntary set-aside of land. Initially left to apply set-aside as they pleased, farmers were gradually led to incorporate it into their crop-rotation systems. In the case of fixed 60-month or long-term voluntary set-aside, the areas released could be used for genuine environmental measures including cover for game.

* The production of non-food crops has soared, especially on land participating in the various set-aside programmes. Approximately 15% of set-aside areas are utilised for such crops.

* Biomass remains the principal renewable energy source. Wood from forests is the oldest and most widespread biofuel, but the agricultural sector provides an increasing share of the biomass used for energy production. Indeed, woody crops are gradually becoming established on what was originally agricultural land, in particular under mechanisms introduced as part of the 1992 reform, such as support for the afforestation of agricultural land and set-aside.

The rural contribution to other renewable forms of energy involves above all hydro-electricity, from small dams, wind energy, which now has the wind in its sails, and solar energy.

* Of the non-food crops grown on set-aside land, oilseeds for the production of biodiesel cover the greatest area. Biofuels face competition from fossil fuels and their development depends on suitable tax instruments applied as part of energy and/or environmental policy.

* The fall in cereal prices has made intensive livestock farming more attractive in cereal areas, far from the regions near ports, where problems of pollution often arise. These regions have seen a reduction in the logistical advantage of privileged access to animal feed imported from third countries they used to enjoy because of a system of tariff protection weighted against cereals.

* Other elements may have had a negative environmental impact, at least in certain regions of the Union, in particular, the extension to silage maize of the aid for grain cereals and the system of premiums adopted for beef and veal.

* One can therefore conclude that, from the point of view of the environment, the 1992 reform of the CAP represented a step in the right direction, even if a number of provisions had the opposite effect to that intended.

Conclusions confirmed

The analysis set out in this publication confirms what the Commission stated in its Communication to the Council and the European Parliament: "Directions towards sustainable agriculture 2":

* More than three-quarters of the EU's territory are agricultural land or woodland 3. While the environment and land use vary greatly from the Mediterranean to the sub-arctic regions, there is clearly a significant link between agriculture and the conservation of the environment throughout the EU.

* As commercial activities, agriculture and forestry are aimed principally at production, which both relies on the availability of natural resources and, in exploiting these resources, places environmental pressure on them. Technological developments and commercial pressures to maximise returns and minimise costs have given rise to a marked intensification of agriculture in the last 40 years. The role of the common agricultural policy in the intensification of agriculture must also be recognised.

* A high level of price support encouraged intensive agriculture and increased use of fertilisers and pesticides. This has resulted in water and soil pollution which has destroyed certain important ecosystems and required expensive treatments to the cost of the consumer and the taxpayer.

* Among the other environmental developments accelerated by the CAP price policy are the effects of the changes to the countryside brought about by the intensification of agriculture. The destruction of hedgerows, stone walls and ditches and the draining of wetlands have contributed to the loss of natural habitats for many birds, plants and other species. Intensification in certain areas has led to an excessive use of water in relation to the resources available and accelerated soil erosion.

* During the last 15 years, there has been a growing awareness that the variety of landscapes and the related biodiversity shaped by agriculture over the centuries (a unique semi-natural environment with a rich variety of species dependent on the continuation of farming) could be harmed by the intensification of agriculture. Intensification not only raises problems for the countryside and biodiversity but also threatens the soil, water and the air.

* The abandonment of farmland, mainly for economic reasons, also creates pressure on the countryside and biodiversity. In Europe the abandonment of farming would damage biodiversity and would not normally lead to the restoration of the original landscape. The problems created by both the intensification and the abandonment of farming therefore raise questions about the relationship between agriculture and the environment and the future basis for the European model of sustainable agriculture.

The statistical challenge

This publication shows that, although a large quantity of statistical data is available, there are a number of gaps in statistical systems.

A mass of information is available...

We are better placed to exploit a large amount of statistical data held mainly by Eurostat, supplemented by national or local case studies.

But this source has not been fully exploited. For example, there is still room for improvement, making better use of the results of the structural survey, production statistics and balances and Eurostat's regional database, to take only three of the most obvious examples. Other sources of information, such as the geographical databases managed by the Joint Research Centre and the European Environment Agency or the Farm Accountancy Data Network (FADN) also deserve to be made better use of.

... but there are large gaps

The most recent statistical data on which numerous articles are based is from the 1995 farm structure survey, but these are inadequate for a full assessment in 1999 of structural phenomena such as the impact of the 1992 reform.

Linked to this problem, is that of the frequency of the surveys and the time taken to make the results available. A survey every 10 years does not permit identification of all the small changes taking place in the intervening periods, whose effects can be significant if, for example, market prices change considerably within a period, since the samples selected for the intermediate surveys are only representative of the agricultural sector as it was at the time of the last ten-year survey.

If data is not up to date or is unrepresentative of a dynamic sector, political decision-makers do not have the information required to evaluate the detailed economic impact of their decisions.

The geographical dimension

Since farming deals with living things, the same political measure, the same farming practice, the same approach by a farmer will have environmental consequences which differ completely from one area to another, from one location to another. Thus, for example, the calculation of a driving force indicator for the impact of livestock farming on the territory of a Member State or even of a region (NUTS 2) is mathematically possible but would give relatively little useful information about the real pressure that livestock farming can exert on the environment. The analysis of agricultural data must reflect reality at local level and it is no longer enough to achieve representativity on only a national or regional scale.

The need for analysis at the local level raises the problem of the availability of data at such a level, with the dual problem of the cost of gathering data (which increases) and representativity (which decreases) as the scale is reduced, if the correct level is not chosen.

Furthermore, statistical data are often gathered on the basis of administrative divisions which do not fully correspond to the local level at which environmental impact must be evaluated.

The missing data

The complexity of the links between farming and the environment, the necessary geographical dimension, and the fact that the public demand for environmental information is new explain why large amounts of data either does not exist or is not yet available in harmonised form at European level.

Obtaining new data is hampered by the Member States' and the Commission's budgetary imperatives and by the time elapsing between the need for statistics being felt and their availability in a harmonised form at European level, which is, at best, several years.

Conclusions: the necessary political priorities

All these tasks, however necessary they might be, cannot be undertaken at the same time. To be effective, to be able to respond in time to the requests of the political decision-makers and public opinion, managers of statistical data have to tailor their work to the changing needs of the political decision-makers. The statistical tools could be better adjusted to needs if clear priorities were defined. That is why the question of the use and the usefulness of data and indicators in general, and of environmental indicators in particular, must be a priority, from both the political point of view and for the implementation of statistical systems.

The problem of the use of data

The implementation of European policy is changing, becoming more decentralised, with greater subsidiarity. One of the practical consequences of this development is the increased importance of the prior, intermediate and ex post evaluation of policies.

This involves inter alia:

* defining a baseline scenario against which the impact of policies can be measured,
* identifying the real objectives of those policies and ordering them hierarchically,
* assessing the expected impact of public measures sufficiently early,
* stipulating the criteria for judging the success of policies,
* developing indicators which permit not only an assessment of how a situation is changing but also of the impact of the policies being implemented.

One of the most difficult tasks is to isolate the specific impact of a policy from other factors. This involves distinguishing between the impact of policies adopted by the Community and that of inter alia:

* national, and sometimes regional, transposing legislation,
* other Community, national, regional and local policies,
* general economic developments,
* other sectors of the economy,
* developments on Community and world markets,
* major existing trends such as demography, technical progress or technological innovations,
* specific local factors.

The problem of developing agri-environmental indicators

The above fully applies to environmental assessment, particularly of the CAP, and to the development of suitable agri-environmental indicators.

The definition and development of indicators which make it possible to see more clearly and measure the interaction between the environment and farming would clearly be a step forward, helping to ensure that public opinion and political decision-makers were better informed and more aware.

However, the Commission needs to be much more ambitious. The aim must be not simply to improve monitoring but also to provide political decision-makers, primarily Community decision-makers, in good time, with data which allow them to identify causes and effects and on which they can base policy.

The agricultural sector has important characteristics, already referred to in this publication, which differentiate it from other sectors of the economy:

* the fact that agriculture deals with living things. Production cycles are longer - a year in arable farming, but much longer in, for example, fruit growing and cattle and sheep farming - which accentuates even more the need to gather data in good time in order to ensure its reliability. Furthermore, a large number of things such as production volumes, farming practices, input volumes, water consumption and the diversity of fauna and flora, depend on external factors such as the vagaries of the weather, which make data analysis more difficult, or soil characteristics,
* the close link between farming and locality,
* the importance of public policy, and primarily of the common agricultural policy, in regulating economic activity in the sector,
* the ambivalent relation between farming and the environment,
* the decisive importance of local assessment in correctly evaluating the impact of policy.

These characteristics explain why in its Communication the Commission stressed that:

The development of indicators must be based as far as possible on existing statistics. However, it should not be too dependent on the current availability of data. The work to develop indicators must be intensified, and, at the same time, think tanks must be set up to look at new data requirements. It is also necessary to ensure that appropriate statistical instruments are created.

In its Communication, the Commission indicated that this task was "a priority in the work of the Commission over the coming months and years". The Commission, in close cooperation with the Member States and the European Environment Agency, intends to begin implementing a strategy which is, at the same time, ambitious, thorough and realistic.

This publication is a first result. We have attempted to contribute with facts and figures to the debate on the incorporation of environmental concerns in the CAP. As well as providing preliminary conclusions, it paves the way for the work now beginning on inter alia such important questions as water, the countryside, biodiversity and nutrient balances.

We would not wish to round off these conclusions without thanking those colleagues without whom this work would not have been possible. It has been a genuinely collective effort, from the initial work done by the authors, to the patient way they dealt with the many comments from colleagues who read through their work, to those colleagues' efforts to turn their initial observations into positive contributions, often supported by documentation.

This publication is also an invitation to join the debate and help cast light on these issues. If we have succeeded in combating a number of received ideas, stimulating thought and encouraging new work, all those colleagues and friends who have invested so much in this work will feel themselves well rewarded.

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