20 CADERNOS DE ANÁLISE E PROSPETIVA CULTIVAR N.º 27 JANEIRO 2023 – Custos de contexto Simplification & the Common Agricultural Policy: a new approach PETROS ANGELOPOULOS, GIJS SCHILTHUIS Directorate-General for Agriculture and Rural Development (DG AGRI), European Commission Introduction Has the reform of the Common Agricultural Policy (CAP) overcome its complexity? Should the policy be further simplified? We were asked to reflect on this question. This is appropriate at the start of 2023, with a new phase in the life of the CAP in the form of national CAP Strategic Plans that now apply. It also provides a good opportunity to reflect on the evolution of the CAP and to extend this reflection beyond simplification. Because public authorities must create rules and regulations that are not merely simple, but also clear in terms of purpose and design, that are efficient and effective in pursuing the policy’s objectives, and that can be implemented and controlled (cost) effectively. The question is whether the CAP meets those criteria. To answer this question, it is important to go back in time, as the nature of the CAP has considerably changed during its history of more than 60 years. Rules on subsidies affecting farmers directly are themselves a novelty and are now combined with an increasingly ambitious policy responding to a society that expects much more from agriculture than simply an abundance of reasonably priced healthy food. Exploring the transformation of the policy and the environment in which it functions, we aim to shed light on the role of the new CAP Strategic Plans in addressing the challenge of creating a simple and effective policy. Evolution of the CAP – increasing complexity? The CAP, implemented since 1962, was based on three central principles: common market organisation, common financing and Community preference. These principles were implemented through market and price policies (domestic support prices that required high border protection, public intervention, export subsidies). The rules and regulations that were established were addressed at parties that traded key agricultural commodities: traders (import tariffs or export subsidies), or processors with storage capacity for public intervention stocks. This support system became more and more complex over the years. The concerned operators benefitted from the support schemes and farmers benefitted indirectly through higher prices. However, simplification was not a dominant theme in farm policy debates at that time. Later, when quota systems were introduced (e.g. for sugar in 1968, for milk in 1984), it seemed that the complexities of quota management were accepted in most Member States as it was clear that the system provided higher, more stable prices for many farmers. Indeed, purpose and design of the policies were clear and not challenged at first. This changed over the years, however, particularly during the 1980s. An accumulation of problems brought an array of domestic criticisms to the CAP as a policy that was ineffective. The image of EU agriculture was one of stockpiled mountains of grain or butter and lakes of wine. At that time, market measures related to support of agricultural products (public intervention and export subsidies accounted for 91 percent of the EU’s agricultural budget). Policy-driven changes resulted in diminishing EU export surpluses in almost all supported commodities, brought about by the lowering of domestic support prices, their downward impact on production and increase in domestic demand, and the diminishing reliance of the EU on export subsidies. This was the start of the policy shift from a market support system to direct income support for farmers, based on the area of land cultivated or number of livestock maintained. The payments would be conditional upon the respect of environmental, food safety, animal health and welfare standards. This policy shift was fundamental and also modified the debate on the complexity and simplification of the CAP. While policy instruments to support market prices were almost entirely abolished, the legislation to make direct support payments to farmers introduced new complexities related to, for example, determination of the basis for payment (number of animals, measurement of area). Complexities that increased with the expansion of conditions and requirements for the payments. The Agenda 2000 reform introduced cross compliance rules, linking direct payments to respect of legislation (Statutory Management Require-
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