Greening the Common Agricultural Policy

Introduction

1. In October 2011 the European Commission forwarded proposals for reform of the Common Agricultural Policy (hereafter CAP) to the European Council and Parliament, initiating discussions that will last up to mid 2013, when proposals are likely to be finalised during the Irish Presidency.

2. The relevant proposals are to (a) end existing direct payments, replacing them with a uniform but more differentiated system, encompassing a basic income support payment, topped up by further payments to encourage practices that are environmentally sustainable (as well as some other measures, such as payments to small farms and new farmers) (Pillar 1) and (b) reform the Rural Development Policy (Pillar 2), under which Agri-Environment Schemes (AES) sit.

3. The reform of Pillar 1 (vis-a-vis AES in Pillar 2) imagines a range of greening measures, including maintaining 7% of land in areas focussed on ecology ("Ecological Focus Areas", EFAs), encouraging rotations, permanent pasture and organic farming.

4. The current academic consensus is that the pressures of increasing demand for food, coupled with climate change, competition for land and the need to mitigate climate change by reducing carbon costs requires that production needs to be maintained or increased [1-3]. However, for long term maintenance of farm production, environmental sustainability is required. This includes valuing ecosystem services for the roles they can play both in terms of direct values to production (e.g. via soil fertility, pollination, natural pest control) but also the more diffuse environmental services such as biodiversity's cultural value or the contribution to climate change mitigation of carbon sequestered in the soil.

5. Furthermore, the EU is a key player in global food security and what happens to production within Europe has impacts outside [4, 5]. For example, reducing production within Europe does not reduce Europe's demand for food, so any reduction needs to be met with increased production elsewhere in the world. This implies the scope for decreasing local environmental impacts, but exporting environmental costs to other parts of the world (typically Latin America, Sub Saharan Africa or SE Asia), where environmental regulation may be lower, inherent biodiversity is higher and environmental fragility greater, leading to amplification of costs.

6. As a result, recent thinking calls for "sustainable intensification" of production systems globally, not disregarding Europe [1]. A recent interdisciplinary meeting of leading European academics called for both sustainability and production to be at the heart of European thinking due to Europe's position as a global player in the food system [6] (reproduced as Annex 1).

7. The definition of "sustainable agriculture" is one of considerable debate at the moment, due to the increased recognition of the possibility for "non local" effects. For example, a production system that decreases yield, whilst having a local benefit, may be more or less sustainable depending on the way the reduction (i.e. shortfall) in yield is made up necessary to compensate for no change in demand. Similarly, "local production" may be more sustainable or not according to its impact on overall transport and energy costs (e.g. locally grown greenhouse tomatoes may have a higher carbon footprint than ones grown where sunlight is more available). Likewise, local dairy production may have low environmental impact, but if it relies on feed from the tropics it may contribute to environmental degradation by driving deforestation for soy or palm oil (Raphael Didham, UWA Perth, unpublished case study on New Zealand dairy industry). If "sustainable" is hard to define in operational terms, so also is sustainable intensification. The "producing more.with less" is shorthand for producing more food with fewer inputs, with the implication that "fewer inputs equals lower environmental impact".

8. Recent work suggests that taking into account any reduction in yield to make an area more sustainable, without reducing demand, alters the view of whether practices may be more or less sustainable because of the need for extra land somewhere else to increase production. For example, [7] showed that if organic yields decrease below 80-90% of intensive yields, a typical UK landscape can produce more of both biodiversity and yield by specialising land within the landscape to production land and biodiversity land, rather than by farming the whole area organically. This debate has been termed the "land sparing vs land sharing" debate: as land sparing (farming intensively and thereby sparing some land for nature) is contrasted with land sharing (farming and managing wildlife on the same land) [8, 9] -though, of course, the strategies are at either end of a spectrum. In short, if farming practices reduce yield but decrease local negative impacts on the environment it is not clear whether they are more sustainable; only if yield stays the same or increases AND environmental impacts decrease is sustainability necessarily improved.

9. That land sparing has recently seen to be a good option [7, 8] does not imply that a landscape needs to have large blocks of land created as nature reserves with farming geographically separate. Much of the natural biodiversity of EU agricultural landscapes has co-evolved with agriculture and lives within and on the margins of it (over 70% of agricultural biodiversity is found outside field centres). Because the scale for which population management is required is greater than the field- or farm-scale, a well-connected landscape made of a network of margins, hedges, green lanes, copses etc, with specialist nature reserves to provide habitat for non-agricultural specialists may be highly beneficial for biodiversity [5, 10]. Furthermore, there are positive ecological benefits from integrating management at larger scales (i.e. an isolated organic farm may have -12% higher biodiversity, but a landscape with many organic farms may have "20% more [11]. Thus, ensuring landscape-level conservation measures has been a focus of some recent publications [5, 6, 11-16].

10. The consensus "landscape view" view of recent ecological research is also that the landscape context is key to the way that biodiversity responds to management [11, 17-23]. What is the best strategy for one landscape, with its geographical setting and the mix of farm enterprises, may not be the best strategy for another area. The optimal management strategy will vary with landscape context, leading for a necessity for local tailoring of specificities of schemes to make maximum gains.

Will the proposed direct payments for greening be beneficial?

11. The proposals aim to (a) generate a compulsory amount of non-cropped EFAs of 7% of the total farmed area, across the landscape, (b) encourage heterogeneity by stimulating production of multiple crops (including permanent pasture). The former has the potential to

generate landscape-level networks of ecological connectivity, and so has a great potential benefit. The latter has a potential to stimulate greater within-field biodiversity by encouraging landscape-scale heterogeneity by producing a range of within-field habitats at the same time. Both of these interventions have been suggested many times over the last decade as positive interventions e.g. [16].

12. Ecology typically requires a larger scale for population viability than single fields or margins, and ensuring landscape level effects has been a consistent call on agri-environment schemes [11]. The UK Curry report in 2002 called for "broad and shallow" interventions, and ensuring that all farms manage EFAs is consistent with this approach. Similarly, the requirement for crop diversity ensures both spatial heterogeneity (i.e. habitat varies across space) and also temporal heterogeneity (i.e. the whole landscape is not harvested at the same time), both will enhance biodiversity [16].

13. In support of this, a recent report by PBL (The Netherlands Environmental Assessment Agency) suggests that the greening measures will be beneficial for species richness, to the order of a few percent [24]

14. Climate change is signalled as an important issue for the CAP for the first time in these proposals, which is to be welcomed. Some measures should assist towards reducing greenhouse gas emissions. Examples are the new cross compliance (Good Agricultural and Environmental Condition) standards on maintaining soil organic matter and protecting wetlands and carbon rich soils and the earmarking of funds in Pillar 2.

15. Thus, depending on the details (see Para 25 below), the greening of Pillar 1 should have positive benefits for sustainability and the proposals are a welcome action to promote environmentally friendly land management at the landscape scale.

The impact of additional greening requirements on food production and the competitiveness of the agricultural industry;

16. This PBL report also states: "There would be a clear trade-off between biodiversity gains and production losses. According to model calculations, greening the CAP would lead to a decline in agricultural production, for example, of two per cent for grass and four per cent for cereals, by 2020, in the EU27. This is mainly due to the projected extensification of grassland and ecological set-aside on arable land." Within this report, they assumed an ESA amount of 5% (cf 7% in the proposals).

17. This report interestingly suggests that farm income will remain static as, despite reduction in production, as demand remains the same the supply-demand forces will result in increased farm-gate prices.

18. Contrary to the PBL report, Matthews [25] records that DG Agri impact assessment figures indicate that whilst prices may increase, farm incomes will fall (by on average 2.8%) as prices will not increase enough to cover the direct cost of greening coupled with the reduction in yields.

19. The investment in Pillar 2 into the new European Innovation Partnership initiative for agricultural productivity and sustainability could be an important factor stimulating the development of innovative solutions that promote increased food production but in a way that is compatible with the delivery of the full range of ecosystem services. Hence, there is a mechanism for enhancing innovation and promoting "more with less" which may mitigate against farm income reduction.

Consistency of the greening proposals with the CAP simplification agenda;

20. A single direct payment to farmers based on area, and with sufficient prescriptions as to how the ESFs be organised (Para 25) could reduce the farmer- and agency-administrative overheads and therefore be a simplification of CAP administration.

How greening pillar 1 can be made coherent with agri-environment schemes,

21. The PBL report [24] states: "Greening the first CAP pillar seems an attractive option as it pairs simplicity with CAP legitimisation. However, it holds few possibilities for targeting specific biodiversity in specific areas (e.g. most-threatened red-list species). Agri-environmental measures from the second pillar would offer more possibilities in that respect, although transaction costs would be relatively high - at least under the current bureaucratic regime."

22. Agri-environment schemes have the benefit of specificity, whereas Pillar 1 direct payments are a one-size-fits-all option. Much of biodiversity in agri-environments will benefit from generic measures that may result from Pillar 1 (which may bear similarity to current ELS). Agri-environment schemes can therefore be designed to target specific taxa (cf habitats) of concern, or specific habitats associated with place rather than agriculture. Current AES prescriptions, where they have been researched and have an evidential basis for success, could be used as suggestions for management of the EFAs under Pillar 1.

23. Nonetheless, relative to the money invested, AESs have not be notable in generally increasing biodiversity in farmed habitats partly as they may address the wrong scale and partly as they do not address landscape specificity [21, 26-29]. There have been notable successes where AESs have targeted specific species, where population increases have been produced (e.g. cirl bunting).

24. Thus, investing in greening of Pillar 1 may ensure a mandatory level of "greening" that may be equivalent or better to ELS. The Pillar 2 budget would therefore not longer be required for "entry level schemes" allowing a greater targeting of existing AES money to higher level schemes and ones preserving specific taxa.

Recommendations for improving the greening proposals.

25. The "ideal" implementation of the Pillar 1 reforms would be to encourage landscape measures that created a "well connected" ecological landscape of the EFAs (with patches of suitable habitat sufficiently close for dispersal/movement from patch to patch), with multiple linear habitat types creating the connectivity (flower rich margins, grassy margins, hedgerows) and with patches of land for non-agricultural specialists (e.g. woods, grasslands, wetlands). Furthermore, the specificities of the "ideal landscape" will vary from location to location, depending on the local habitat, geography and biota. Thus, there are four requirements: (1) amount of habitat, (2) its extent over a large scale, (3) its spatial distribution and the connectivity it brings to a landscape, and, (4) its location-specificity. The current proposals address (1) and (2).

26. Given the production-sustainability needs, it remains unclear whether 7% EFA is the optimum proportion. If the EFAs were properly managed and specified (see Paras 25, 27) it may be possible to have a similar impact with a lower percentage.

27. The devil is within the detail: if the EFA is left as unmanaged set aside, it will have rather less ecological value than if it were managed as grassy margins, flower-rich margins, hedgerows, coppices etc) and therefore the greening proposals will have little benefit. Conversely, if the land is managed well, and to encourage biodiversity, a landscape with a 7% network of "green veins" could be highly beneficial. Thus, the management prescription is key. If the direct payments included a results-payment rather than a prescription-payment (thereby allowing land managers to undertake what they are interested in doing) this may have the greatest effects by creating productive partnerships between farmers and agri-environment advisors is agencies or NGOs, although will be the most expensive to administer.

28. The issue of spatial layout is key. A connected landscape requires that there is sufficient connection between habitats for a range of organisms to live, and disperse along/between linear features or patches. Thus, ensuring there is a mix of features, patch sizes and habitats is crucial to developing a connected landscape (7% as a single block will not be as good as 7% as a network).

29. Similarly, within the proposal encouraging crop diversity, from a "sustainability" perspective it makes little sense for "arable land to consist of 3 different crops simultaneously" on each farm (as a very large farm could comply but still maintain areas of homogeneity greater than on small farms). Ecologically, a landscape-level of heterogeneity would be positive rather than a farm scale. Therefore there is a requirement for a specific scale to be identified (e.g. 5x5km landscape).

30. Farm size per se is probably irrelevant to ecological sustainability (cf field size, and therefore the amount of margins), the benefits come from sustainable management at the landscape scale. Therefore, ensuring landscape-level compliance through encouraging small-scale farmers to work collectively could be very beneficial. Thus, requiring a landscape-level mixture of EFA and crop types would stimulate cooperation between local land managers (as already exists in the UK with farmers within Catchment Sensitive Farming initiative. The cap on the CAP for large farms may also be counter-productive, as, in my experience some of the most efficient and professional farms deliver many of the best environmental management schemes because (a) they can manage at the landscape scale and (b) they can often invest heavily in good management practices.

31. The proposals suggest that organic farming is in automatic compliance with the requirements of the proposals. Organic farming is undoubtedly good for local environmental management, for many reasons, including that farming rotations create heterogeneity of habitat. However, being organic does not necessarily imply this farming practice is the most sustainable one, because:

a. Organic yields may be considerably lower than conventional yields. Ref [4] calculates that increasing organic area to 20% will require an extra 10m ha of land outside Europe to meet our food demands, with the environmental costs that this would entail. Hence encouraging organic production may not encourage global sustainability.

b. As organic yields are lower, organic farmers may utilise a greater area of their fields for production [11] (e.g. by leaving narrower margins). Therefore it is unclear that an organic farm would have higher biodiversity than an environmentally managed conventional farm with 7% EFA.

c. The benefits of organic farming are often confounded by the fact that organic farms are often situated in more wildlife-friendly landscapes than conventional farms [19], and given that yields are reduced relative to other farming (see Para 8) (see also http://www.influentialpoints.com/Critiques/Does-organic-farming-promote biodiversity.htm#vs).

Therefore, modern farming methods (e.g. precision agriculture coupled with environmentally sensitive farming, as espoused by, for example, LEAF http://www.leafuk.org/leaf/home.eb) may actually be as beneficial for wildlife without the production costs. Similarly, other farming systems may have a greater environmental benefit than organic, especially when considering

different area-specialities across Member States (e.g. in the UK Traditional Orchards may be very beneficial [30]) and "low input, low/no till" systems may have a carbon efficiency of up to 1.5x organic or conventional systems [31]. Organic management also qualifies under Pillar 2 (Article 43) for extra payment - again without great evidential support relative to a range of alternative farming systems.

32. Landscape context is important (paras 9 and 10 above). What enhances sustainability in one place may therefore reduce it in another. It is important to have a "uniform framework" for greening of Pillar 1 but allow prescriptions of (for example) how best to encourage and manage the EFAs to vary across the EU at a fine scale (within the UK, for example, there should be different strategies for, for example, the West Country vs East Anglia).

33. It would be good to see the importance of mitigating soil degradation much more strongly brought out in the cross compliance regulations.

34. To avoid disenfranchising land managers who have successfully managed existing AESs, it will be important that the Greening proposals incorporate their practices (e.g. within the EFA) without penalty.

Conclusions

35. The Pillar 1 greening proposal utilises three general measures implemented at the European scale for simplicity. As a result, it is very likely that its efficiency - from an environmental point of view (and also from an economic point of view) - will not be optimal mainly because it is not tailored to local conditions and context. However, it will have the advantage of providing both legitimacy for direct payments and an increase in environmental sustainability (especially if cross compliance is strong)

36. Environmental Pillar 2 measures can then be reserved and targeted to address specific environmental needs (and via the Innovation Partnerships to promote new farm systems and practices). As there is rather limited evidence that AESs have had substantial environmental impacts on agricultural production systems, cross-compliance and greening measures can (should) be viewed as a basic requirement of direct funding, with Pillar 2 AES measures as additional incentives.

37. A final remark: an increased focus on research, research-development and innovation is a welcome initiative. Within this research it is important to focus on a range of areas for innovation: crop improvement (and plant genetics), ecological innovation (enhancing provision of services - like natural pest control - that may aid yields), agricultural and agronomic innovation leading to (new) farm systems and practices etc.

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November 2011