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Focus on productivity will be vital under the reformed CAP, says SAC economist
Dr Andrew Barnes (opens in new window)
“However the latest Common Agricultural Policy (CAP) reforms take shape, the focus for farms large and small will be on greater efficiency.” That was the message delivered by senior SAC agricultural economist Dr Andrew Barnes during a recent Defra debate involving key policymakers.
Before an audience that included Secretary of State for Environment Food and Rural Affairs Caroline Spelman and Tassos Haniotis of the EU’s Directorate General for Agriculture, Dr Barnes responded to the European Commission report ‘The CAP Towards 2020” which outlines three possible routes for CAP reform.
Weighing up the first option for reform, which focuses on a more equitable redistribution of payments across farms of all sizes, Dr Barnes said: “One impact of this option could be the encouragement of investment in smaller farms. Recent SAC research work for Defra has found that smaller and medium sized farms could be sitting on a large amount of potential for efficiency improvement and the redistribution of payments may enable them to invest in measures to unlock this.”
“The second option for reform, which proposes a reduction in subsidies and some element of market reform, is much more radical”, said Dr Barnes. He highlighted the experience in New Zealand where productivity has grown at almost double the rate as that in the UK, with only the loss of 1% of its farms.
While stressing that comparisons between different countries should be treated with caution, he said: “Importantly, SAC research has found that in the UK there is a great deal of variance in performance across enterprises of the same type. Option 2 may lead to less of this variance as the least efficient farms restructure to capture more efficiencies.”
The final option is a ‘greening’ of the CAP, in which more payments are made for meeting environmental and climate change objectives. Dr Barnes highlighted the fact the evidence relating productivity growth with environmental improvement is mixed.
“Policy makers and industry should focus on so-called ‘win win’ technologies, which both reduce waste and create income growth, an example of which is adoption of greater benchmarking or uptake of best management practice guidelines,” he explained.
He also emphasised that it is important that we understand the behaviours of different farmers and their perceptions to policy messages which emphasise both food security as well as greater environmental management. “