More than ever, let’s take care of what’s on our plates

Economic opinion

Taking up the ecological challenge – more imminent now than ever, as demonstrated by the health crisis – and the importance of reforming the Common Agricultural Policy are overdue. Although agriculture is not solely responsible for greenhouse gas emissions, to meet this ecological challenge the EU has, among other things, the CAP at its disposal. This is a major opportunity which will determine whether we achieve our objectives of carbon neutrality, the future of what’s on our plates, and also, naturally, the lives of our farmers, who must be supported more than ever as part of of this necessary reform.

Four key principles

This reform is intended to result in a simpler CAP for the future, and is a huge undertaking, but for now it appears that there will be complex discussions between the Commission, the Council and the European Parliament, and these have dragged on and on. Its implementation, initially planned for 2021, has been postponed to 2023.

The CAP of the future is therefore slowly but surely taking shape through the refining of a set of principles. Thus, the European Commission intends to offer member countries a common European framework with objectives and indicators to be achieved. For their part, Member States will then be responsible for identifying their own needs, quantifying their objectives and implementing targeted interventions to achieve them. Transferring many of the decisions regarding applying the CAP to the Member States has the advantage that its application is adapted to the local situation. This is the first major principle of this reform and this opportunity should not be missed.

The second main principle is that of eco-schemes, i.e. that a proportion of the aid (20–30% of total direct payments) granted to farmers will be linked to mandatory environmental programmes. In the same vein, the third principle, the European Parliament would also like to see at least 35% of the rural development budget of the countries concerned devoted to environmental and climate-related measures.

In order to protect the smallest farms, a fourth principle is to progressively reduce annual direct payments to farmers above €60,000 to a maximum of €100,000.

Green means go

Although the triumvirate of the Commission, Council and Parliament have yet to reach agreement, the main principles of this reform have been decided upon, with a pronounced hint of green, which is in keeping with the constraint of a reduction in budgets following the departure of the United Kingdom and, above all, with the objective of meeting the requirements of the Commission’s Green Deal. Also, this commitment by the European Commission to deliver on the Green Deal is undoubtedly the cornerstone of this policy, which represents 34.5% of the EU budget. This is why it is so important and why its objectives are so ambitious, since they aim to allocate 30% of agricultural land to organic farming and reduce the use of pesticides by 50% by 2030.

Defining what will be on our plates in the future requires such reforms, but it is clear that given the challenge, not everything can rest on the shoulders of EU farmers. Society as a whole will have to be involved, and the consumer will have a key role to play. And it is not for nothing that the Commission speaks of a “farm to fork” strategy.

Sustainable acceleration in Wallonia

Even though agriculture is only responsible for 10% of greenhouse gas emissions in Wallonia, the south of the country has started asking itself questions and leaning towards more sustainable agriculture, without waiting for this new version of the CAP.

It is clear that under the impetus of the EU, the changes underway will require an acceleration in this process, particularly with the new eco-schemes system, which encourages good agricultural practices aimed at combating global warming and maintaining biodiversity.

Our farmers will have to continue to adapt their structure and activities in order to participate, in their own way, in the collective effort to take up this environmental challenge, a challenge facing our society as a whole.

To ensure a transition in the agri-food chain, close cooperation between all stakeholders is essential. Credit institutions, education, interest groups, social organisations, etc. also play an essential role in this transition. Likewise, public authorities have a major role to play through financial support and a solid endorsement of the importance of a strong agricultural sector, guaranteeing food independence. At our level, we consumers have a responsibility to consume more locally and to tackle food waste.

The road to tomorrow’s CAP is therefore broadly marked out, but it is up to us to make it greener and therefore more efficient, while providing our farmers with the support, knowledge and know-how needed to adapt their operational management and make it even more environmentally friendly.

Disclaimer:

Any opinion expressed in this KBC Economic Opinions represents the personal opinion by the author(s). Neither the degree to which the hypotheses, risks and forecasts contained in this report reflect market expectations, nor their effective chances of realisation can be guaranteed. Any forecasts are indicative. The information contained in this publication is general in nature and for information purposes only. It may not be considered as investment advice. Sustainability is part of the overall business strategy of KBC Group NV (see https://www.kbc.com/en/corporate-sustainability.html). We take this strategy into account when choosing topics for our publications, but a thorough analysis of economic and financial developments requires discussing a wider variety of topics. This publication cannot be considered as ‘investment research’ as described in the law and regulations concerning the markets for financial instruments. Any transfer, distribution or reproduction in any form or means of information is prohibited without the express prior written consent of KBC Group NV. KBC cannot be held responsible for the accuracy or completeness of this information.

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