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The poised relationship between farmland and the Common Agricultural Policy of the EU

22 June 2021

One might ask, why go to great efforts to keep the agricultural landscape alive, diverse and vibrant both socially and environmentally? It all starts with the realization that land is not a simple commodity. It is not just a financial asset, but, first and foremost a finite natural resource.

The poised relationship between farmland and the Common Agricultural Policy of the EU

  (Attila Szocs - Ecoruralis) June 2021     One might ask, why go to great efforts to keep the agricultural landscape alive, diverse and vibrant both socially and environmentally? It all starts with the realization that land is not a simple commodity. It is not just a financial asset, but, first and foremost a finite natural resource. Over the last decade, this natural resource has become ever more massively and rapidly concentrated and depleted all over Europe in both quantity and quality. It continues with the understanding that land is a living territory with strong social, cultural, environmental and economic functions, and a critical piece of the puzzle in implementing the transition to a new generation of ecologically regenerative farmers. At a moment when the ageing farming population in the European Union (EU) is about to exit from farming on a massive scale, there is a critical need to secure access to land for the next generation of peasants, small-scale farmers and rural workers. Only in this way, will we achieve food sovereignty in the European regions.   Furthermore, land has to be seen as a commons or territory at the heart of our societies, that safeguards ecosystems and cultivated biodiversity and that should be protected. The right and access to land is, therefore, crucial for the preservation of human rights - a fact which has been recognised in a growing number of international instruments, which highlight that land issues are cross-cutting and relevant in every country of the EU.     How the Common Agricultural Policy drives land concentration   The EU claims to have no direct and clearly stated authority over land use. However, European policies have a significant impact on agricultural land. The Common Agricultural Policy (CAP) officially aims to encourage family farming and to increase income for agricultural workers, but the way it is implemented – particularly the fact that subsidies are linked to the number of hectares farmed accelerates land concentration and affects land prices.   The CAP, the EU’s largest budget item since its creation (accounting for around 30% of the EU’s total budget),  has had a particularly notable impact on land concentration inside the Union.  Indeed,  the aid per hectare formula encourages wealthy farmers to adopt a funds concentration strategy and an expansionary mindset.   As a result, the concentration of land is proportional with the concentration of subsidies in the hands of ever fewer and bigger land holdings. Current area-based payments benefit large commodity producers, driving up land prices, encouraging land concentration and making it harder for new entrants to access land. In 2016, 6.9 % of the EU’s farms were 50 ha or more in size but together worked two-thirds (68.2%) of the EU’s Utilised Agricultural Area (UAA).   Increasing land concentration and inequality have particularly affected Europe’s small farms. The EU lost 4.2 million farms (one quarter) across the Member States between 2005 and 2016, about 85% of which were farms under 5 ha.   A farm receiving high EU payments is more likely to grow than farms with more meagre financial means. Both the Single Area Payment Scheme (SAPS) and Single Payment Scheme (SPS) have been shown to favour land concentration by providing large producers with greater financial capacity and surplus capital for land purchases, and by providing an incentive for agricultural enterprises to acquire larger areas of land.   The logic of payment per hectare creates a positive feedback loop since land concentration in turn  leads to a concentration of support. While the reasons for land concentration and land grabbing are  multiple and sometimes linked to local contexts (e.g. land consolidation agendas in Eastern European countries, corruption, off-farm investments, urbanisation, green energy, etc.), the impact of the payment per hectare model should not be underestimated. This drive towards farm size expansion is the stated policy aim of DG AGRI, who view this as an intended and necessary process of structural adjustment brought about by CAP.     Land concentration leads to CAP aid concentration   This is underpinned by a particular understanding of who is a viable and ‘active farmer’ (or “genuine farmer” as it will be known in the new CAP) and therefore eligible and deserving to receive aid. At present, many European farms are also just too small to access CAP payments, highlighting the orientation of the CAP to industrial farming. This orientation is driving land concentration and excluding small and peasant food producers who will be key in achieving the goals of the F2F Strategy. Small farms should not be excluded from direct aid eligibility, but should be prioritised due to the social and ecosystem services they deliver.   To this day, small-scale agriculture remains the backbone of European food and farming systems  and is where EU agricultural subsidies are most needed, yet CAP support largely ends up concentrated in the hands of large enterprises. It is clear that the CAP has to undergo a radical reform, going from an export-oriented policy framework to one that focuses on crisis-resilient small and medium farming, as well as environmentally friendly farming practices.   On average in the EU today, 80% of direct payments go to only 20% of beneficiaries, with even higher levels of concentration in several countries. This figure is 94% in Slovakia,  89%  in the  Czech Republic,  85%  in Hungary and 84% in Romania.  In total,  more than 30% of the total amount of direct aid is paid to just 131,000 of the 6.7 million farms in the EU (i.e. 1.95%).   To date, farms that are 100 hectares or bigger represent only 3% of EU farms but cover 52% of the  EU’s utilised agricultural area. Between 2003 and 2013, 96% of the farms that disappeared were less than 10 hectares and today, two thirds of all farms - those classified as small or medium - cover only 11% of the land. This trend is all the stronger in the Member States that joined the EU in 2004 or 2007. When CAP direct payments were introduced in these countries, rent and land prices increased, as did farm size. This was particularly the case in Bulgaria where land prices increased by 175% between 2006 and 2014 and the average size of large farms is 671 hectares compared to 300 hectares in the EU.   Thus, a future CAP must redirect basic payments based on the farm’s size in hectares to prioritise small and medium-sized farms, as well as young farmers and new entrants, with payments being conditional on the delivery of positive environmental and social outcomes, including the number of farmers employed. To this end, annual direct payments should be capped and there should be a progressive reduction of payments for large farms until the system of untargeted area-based payments is completely changed.     New entrant access to land and the CAP   The EESC evaluation on CAP and Generational Renewal identified several challenges also for young farmers and new entrants. The biggest obstacle for young farmers is still the availability of land to buy or rent. In the reformed CAP, however, access to land through the market remains the only tool foreseen to build new farms or support smaller ones. Thus, many other access to land possibilities making community land available to young farmers to developing policies to curb land speculation, are not envisioned as part of the CAP despite their obvious relevance to EU agriculture and the nine CAP objectives.   Similarly, social innovations to support new entrants and access to land, pre-emption rights for agroecological farmers, the creation of an EU Land Observatory, real greening of the CAP and gender equality in agriculture could all be better facilitated through more equitable distribution of CAP spending.   Although the objectives and aims outlined in the Green Deal, Farm to Fork Strategy and the CAP are encouragingly ambitious, land politics – who controls what land, how is it used, for how long, for which purposes and to whose benefit – will be key in determining the overall success of these initiatives.     For a fairer CAP   As outlined in the report, entitled Roots of Resilience: Land Policy for an Agroecological Transition in Europe, policymakers must integrate long-standing land policy demands from peasant and civil society organisations as well as recommendations on land from the European Parliament to ensure access to land for small-scale and peasant farmers, guarantee transparency around land transactions and tackle systemic causes of land grabbing and land concentration. CAP basic payments linked to farm size must be redirected to prioritise small and medium-sized farms, as well as young farmers and new entrants, through capping and redistributive payments.   Moreover, eco-schemes - a support paid to farmers that meet environmentally friendly criteria beyond the legal minimums – seem to be less ambitious than expected. First, they should be compulsory in all Member States and not deemed voluntary for farmers. Second, they will represent just 20-30% of the direct aid received by Member States from the EU, which is as much or less than the current CAP greening measures (30%). Furthermore, eco-schemes are expected to focus on allowing farmers and Member States to choose specific practices without requiring farms to convert their production system. This implies the risk that large farms with solid financial resources will be more able to make necessary investments, while small and medium farmers may be excluded.   A model of food sovereignty, agroecological farming and fair land stewardship must be embedded within the European Green Deal and Farm to Fork strategy, alongside with the CAP. This includes moving away from the negotiation of Free Trade Agreements which are damaging to the planet and to sustainable food producers around the world. It also requires the implementation of European-level tools and legislation, such as a European Land Observatory, an EU Land Directive and a high-level task force or permanent civil dialogue initiative to assess the impact of land related policies and to inform future policymaking. This in turn will set the tone and encourage Member States to develop national and regional land policy that facilitate democratic and transparent access to land for agroecology.            

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