The finding also holds true for spending reduction, even under conditions of budgetary crisis. Third, this case highlights two tactics commonly employed by reformers seeking to retrench the welfare state: 1) introducing reforms that correct programs functioning inefficiently or unfairly and 2) corralling support for the reforms by simply buying off member states or by offering special policy exemptions and alternatives to those who are opposed to particular aspects of the reform package. The biggest achievement of the MTR, the introduction of an income support system that was not based on production, was achieved by constructing the reform around correcting an existing program that was inefficient and unfair rather than trying to get member states to agree to completely abandon the old system and support an entirely new policy. The old direct payment program was inefficient, environmentally destructive, and expensive. It incentivized farmers to produce as much as they possibly could no matter the cost to the environment and then stuck the EU with the bill for storage and dumping of surplus product. The old program was also unequal. Because payment was based on output, a small percentage of farmers received the majority of CAP payments. Moreover, those farmers who received the most payments were also those who were already internationally competitive and did not need CAP support. By ceasing to pay farmers based on how much they produced, the new income support system corrected the inefficiencies of the old program, eliminating incentives that encouraged environmentally damaging and wasteful over production,growing strawberries vertically and made progress toward a more egalitarian system of support payments.
The MTR saved the CAP budget and strengthened the position of the EU in the Doha Round of WTO negotiations. Full decoupling and a transition to area-based payments prevented the CAP budget from ballooning out of control once the ten new member states from Central and Eastern Europe joined the EU. The reform of the income support system also put the EU in compliance with WTO subsidy rules. By completing these reforms in advance of the Doha Round, the EU avoided a repeat of the GATT Uruguay Round when EU officials had to negotiate a trade deal under the burden of an agricultural support system that violated existing rules. Even with the extraordinary circumstances that opened the political ground for more reform, the costs of marshaling the support necessary to enact change were high. While the SFP was a dramatic change in how farmers were paid and marked a stronger commitment to the greening components of the CAP, this reform had little effect on the total amount of support received by farmers. For example, the proposal to cap the total amount of annual support any individual farmer could receive at €300,000 was defeated. Some version of this initiative has been put forward by agricultural commissioners since at least the 1980s and has been defeated in every round of reform. Even when conditions were ripe for major change, a pet policy of agricultural commissioners failed. Even in the best conditions, it is difficult if not impossible to retrench farmer support. These reforms to the payment system neither significantly affected the total level of support received by farmers nor resulted in much change in allocation of support between countries and across farmers . Under the Fischler reforms, inefficient farmers benefited from the decoupling of support from production; they would now be paid no matter how much they produced. While large and highly efficient farmers would no longer be able to drive up their support payments through efforts to produce as much as possible, they successfully avoided a limit being placed on their overall annual income payments. This victory was especially important for those farmers with the largest holdings.
Historic yield based payments meant that these farmers still stood to earn a hefty payment, and with the proposal to limit total CAP support defeated, those payments would not be garnished. Finally, while all farmers earning above the €5,000 threshold lost some money directly though modulation, these funds stayed almost entirely in their own member state’s rural development program, and could be channeled back to the farmers though other programs and initiatives. Ultimately, offering exemptions, exceptions, and monetary incentives was a crucial component in successfully concluding the reform negotiations. In order to wrangle the cooperation of farmers who were leery of the effects of new programs, including the costs and burdens imposed by newly adopted environmental standards, reformers repeatedly relented, offering them monetary compensation for compliance and lowering expectations for meeting environmental standards. The next chapter of my dissertation examines the most recent reform of the Common Agricultural Policy, agreed to in 2013. This reform, which established the framework of the CAP until 2020, is more similar to that of Agenda 2000 than the Fischler or MacSharry reforms. With no major outside pressures or crises, CAP reform reverted to politics as usual, and little change was made.As part of the Europe 2020 strategy, the 2013 CAP reform sought to make big changes to the CAP, bringing it in line with the modern, dynamic, and innovative European Union that the Commission envisioned. These reforms endeavored to address long-standing complaints that the CAP was too complex, unfair, and environmentally destructive. To that end, the oft-repeated mantra by CAP reformers was that they desired a CAP that was fairer, simpler, and greener. In reality, the 2013 CAP reform fell well short of these objectives. It made some progress on improving fairness, but also made the CAP far more complex and did little to improve environmental standards.
A major factor in explaining the limited changes that resulted from this CAP reform is that, other than the need to continue adjusting the CAP to operate in the enlarged European Union, there were no exogenous forces pushing for reform. Both MacSharry in 1992 and Fischler in 2003 used pressing concurrent challenges, such as stalled trade negotiations, to achieve major change. The same option to tie CAP reform to crises and/or concurrent problems was largely unavailable to Agricultural Commissioner Daclan Cioloș in 2013. The budget was not in crisis and the EU was not involved in any WTO negotiations. Enlargement was the one geo-political pressure that affected the 2013 reform. While enlargement to Eastern Europe had been concluded, the consequences for the CAP still required some management. The main issue lingering from the most recent enlargement was the imbalance of payments across countries. This issue proved to be the only source of disruptive politics,drainage planter pot providing Cioloș an opportunity to call for changes to the direct payment system. Indeed, the only major component of the final reform would be the provision that addressed the fallout from enlargement. The purpose of this chapter is to account for the content of the 2013 CAP reform and to explain why the reform was so underwhelming. Cioloș had a very limited mandate for reform, given that he was operating largely under politics as usual. In addition, the new CAP reform was being sorted out at the same time as the 2014-2020 Multi-annual Financial Framework . In addition, it undercut the ability of reformers to call for spending cuts or to use the threat of them to leverage reform because once the budget had been set, spending cuts were off the table. The result was a watered down reform, with changes much more circumscribed than initially proposed or abandoned entirely. The final agreement contained two main components. The first and most significant change involved the direct payment system. In order to address vast inequality in the payments received by Western and Eastern farmers, all member states would transition, over a 7-year period, to using the same system for calculating the amount of direct payments owed to their farmers. The program for this transition was ultimately made much more gradual and included far less redistribution than initially proposed. In addition, a proposal to cap income payments was rejected. Greening was the second component of the agreement. While new rules for permanent pasture, mandatory crop rotation, and other measures intended to protect and improve the environment were adopted, they ultimately had very little applicability, with nearly of 88% of farmers exempted. Smaller components of the agreement allowed member states to have more flexibility in directing money towards rural development and modified rules on who counted as a farmer, though the definition remained quite permissive. Once again CAP reform mirrored the process of welfare state retrenchment, with reformers employing a variety of tactics to slip through any reform and hopefully position themselves to achieve more substantial retrenchment in the future.
Nearly every proposal was significantly watered down, and some, like placing limits on the amount of money individual farmers received, were defeated outright. The core reforms, most notably changes to the direct payment system, followed a “vice into virtue logic”. The existing payment system was operating unequally. To address this problem, rather than creating a new program from scratch, reformers worked within the system, amending the method of calculating payments to decrease the gap between new and old member states. Finally, as is typical, the final package included a number of side-payments, concessions, and exemptions in order to facilitate the agreement. For example, greening measures designed to impose stricter environmental standards on a portion of a farmer’s land ended up including so many exemptions that only 12% of European farmers were ultimately subjected to the rules. In the end, this round of CAP reform amount to little more than tinkering around the edges. The 2013 CAP Reform illustrates the importance of disruptive politics for achieving meaningful CAP policy change. The only significant alteration to CAP policy in the 2013 reform was directly linked to the sole source of disruptive politics: enlargement. While no new rounds of accession were looming, the CAP confronted lingering problems from expansion to Eastern and Central Europe. Owing to different available methods for calculation and the rules governing the new member states’ accession to the CAP, the average payment per hectare in the old, Western member states was much higher than in the newer member states in Central and Eastern Europe. In 2013, the average payment per hectare across the EU was €269 . Farmers in Latvia, however, received on average €95 per hectare compared to €458 in the Netherlands . This inequality was politically unsustainable, with Central and Eastern European member states complaining about their second-class status. EU officials, specifically those outside of DGVI , had also taken notice and were increasingly critical of a policy that was badly out of step with the core EU value of equality among members. The other issues that had generated the disruptive politics in 1992 and 2003, economic crisis and stalled trade negotiations, did not drive reform in 2013. Europe did experience an economic crisis, but the crisis actually weakened the hand of reformers and budget cutters. The period immediately before and during CAP negotiations was marked by significant economic volatility. In 2008, agricultural prices peaked, then suddenly dropped as a consequence of the global economic crisis, which caused upheaval and uncertainty in government budgets and commodities markets. Concerns about falling prices increased the pressure on CAP policymakers to return to market intervention and regulation to help hard-hit farmers. In addition, the volatility in the markets induced calls to lessen or eliminate greening requirements so as to not overburden farmers and also to increase support for emergency relief. These proposals would require an increase in spending. Thus, instead of disrupting politics and providing Cioloș with an opening to call for change, the crisis buttressed politics as usual. Stalled trade talks, which were a key pressure for the MacSharry Reform, were not entirely absent from the 2013 CAP Reform. The difference between these two circumstances, however, was vast. At the time of the MacSharry Reforms, the GATT Uruguay Round was struggling to reach a conclusion. The problem was in the agricultural portion of the negotiations, with the design and operation of CAP programs preventing Europe and the United States from reaching an agreement. At the time of the 2013 CAP negotiations, the Doha Round was stalled. This time, however, the negotiations were failing in multiple sectors and agriculture, though one of the points of trouble, was not to blame for delaying the successful conclusion of the entire round.