A proposal to reform EU common agriculture policy

An interview with Kai Purnhagen, lawyer and associate professor at Wageningen University, the Netherlands.

The EU common agricultural policy (CAP) is a system of subsidies paid to EU farmers. Its main purposes are to guarantee minimum levels of production so that Europeans have enough food to eat and to ensure a fair standard of living for those dependent on agriculture. In his interview, Paul Vine, a partner in the Norton Rose Fulbright Amsterdam office talks to Kai Purnhagen about his proposal for the wholesale reform of the EU CAP and a blue print for adopting the principlesbased approach to CAP.

Yes, it was called “Principles-based regulation – blueprint for a ‘New Approach’ for the internal agricultural market”.

In short, Perter Feindt, Professor of Strategic Communication, and I argue that the current CAP system suffers from complexity, inefficiency and ineffectiveness; that the normal discussions that attempt to address regulation, bureaucracy and divergence of national interests are not sufficient in themselves to materially improve the system; but that switching CAP to a principles-based system may provide the answer.

Of course such a large undertaking will involve a certain amount of complexity.

However, you must remember that CAP’s scope has grown significantly from its original post-war goal of ensuring food security for Europe.

Now CAP sits within an complex and overlapping policy and legal framework which includes “cross-compliance” (i.e. specific legal requirements to comply with environmental, public and animal health standards and – since the 2013 Ciolos reform – further “greening” standards); general EU law principles (e.g. to provide a high level of environmental and consumer protection under Art 37/38 of the Charter of Fundamental Rights and Art 114(3) of the TFEU); and, through the effect of trade and other market mechanisms, the requirements of comparable systems globally. The resulting complexity, high administrative costs and the general orientation “more towards compliance than performance” has been criticized by the EU’s own auditors, the European Court of Auditors.

Yes, for more than 30 years, EU product safety legislation was structured as classical regulation – certain products and industries had specific prescriptions. For many products, mandatory, detailed and Europeanwide guidelines were introduced that covered the whole lifecycle.

But these standards almost by definition could never be truly comprehensive, were too static and did not take into account the different requirements of consumers and entrepreneurs in various member stages. Overall, they grew into an almost unmanageable entanglement of rules.

Then in 1973, the Low Voltage Directive introduced the so-called “new approach”. Its design was unique and highly controversial at the time. It prescribed only the general and abstract goal of achieving “consumer safety” but left the concrete details and implementation to private standards organizations.

Legally only the goal of consumer safety was binding. Producers could choose to comply with the standards organizations or, provided that they could still ensure consumer safety, develop their own.

Today, we call this principles-based regulation.

If you see CAP primarily as a policy which is concerned with agricultural products and production, then a reform of CAP parallels the “new approach” to create a European framework for high quality farm products.

Our proposal has three parts – a legally binding framework regulation, minimum legal requirements plus voluntary modular add-on standards, and a possible link to agricultural payments.

The starting point would be an EU regulation which would govern the general principles applicable to any activity as a farmer in the EU. Farmers would have to comply with the principles or otherwise lose their market concession. The framework would also set out the institutional framework for monitoring compliance.

The second part would lay down the minimum legal rules that must be followed. These would be abstract, minimum objectives analogous to “achieve consumer safety” in a product safety context.

Sitting alongside the legal rules would be two groups of voluntary, modular standards made available to all farms. The first group of voluntary standards would help farms achieve the minimum legal requirements – compliance with voluntary standards would create the presumption that legal standards were also met. This is key, as the burden of proof is then with the claimant (e.g. the regulatory authority or consumer). The second set of standards, also voluntary, would cover farms that wished to go beyond the minimum – for example, develop organic farming, nature conservation, or animal welfare – and would allow them to use the corresponding quality labelling.

In all cases, farmers could develop their own methods to satisfy the minimum legal rules. However, in any dispute (e.g. product safety issues or environmental claims), the burden of proof will be on the farmer to show that they satisfied the legal rules.

The third limb of our proposal links farm payments to the standards above. With minimum standards, CAP would pay farmers additional costs for meeting CAP/EU requirements above world market standards. In respect of the second, higher quality standards, the basic mechanism could be similar to the current arrangements for organic farming, where certified farms that meet legal requirements receive specific premia.

At EU level CAP reform discussion currently take place in different circles. Peter’s and my approach belongs to the circle discussed mainly in the ZaNexus project, funded by and discussed at the German government level. Our ideas were well-received in Germany. Currently we are working on a follow-up project where we refine these ideas and work on more concrete implementation solutions. Whether our ideas will also reach policy level in the EU, we do not know. We are, of course, lobbying for our ideas through our channels and hope that the German government will implement them at an EU level.