The Common Agricultural Policy (CAP) has strengthened Europe’s farming sector and reduced rural poverty, but the EU must now push for the adoption of technology and open source data to drive better outcomes for all farmers, Juergen Voegele told EURACTIV.com in an interview.
Juergen Voegele is the senior director for agriculture global practice at the World Bank Group. He spoke to EURACTIV’s Samuel White in Brussels, after presenting a World Bank report on the EU entitled Thinking CAP: Supporting agricultural jobs and incomes in the EU.
Here are the highlights of the interview:
- The CAP supports farmers and alleviates poverty without distorting markets
- Decoupled payments help provide better-paid jobs in rural areas
- Technology holds untapped potential to help all farmers, rich or poor
- The EU must invest in open source technology and data around the world
- The regional and national focus of the next CAP will drive better results
Do you think it is a sustainable situation today where the average farmer gets 46% of their income from EU subsidies?
The word sustainable is a very weak term in finance. If a society decides that it wants public good outcomes such as poverty alleviation, that it wants better climate and nutritional outcomes, and it invests €60bn in these goals today, do we anticipate that this investment will go down in the future? Not really. In one way or another society will continue to invest in these things. We can’t predict whether funding for the CAP will go up or down, it is a political decision. But we don’t think this is an unreasonable amount of money given the public goods challenges we face here.
Do you not see subsidies as a factor that distorts the price of certain foods or makes them unnaturally cheap?
These are no longer price-distorting subsidies like they were 20 or 30 years ago, with support for specific commodities. Decoupled payments, which account for most of the CAP subsidies, are essentially a social safety net that provides additional income to farmers without distorting prices.
We have found that the CAP reaches every nook and cranny of the EU and that decoupled pillar 1 payments [direct farm support] and pillar 2 payments [rural development support] all increase agricultural productivity per worker and reduce poverty. And with coupled pillar 1 payments [direct support for producing particular commodities] we find no correlation. They are a mixed bag. That is not to say that they do not have a positive effect on other things but they do not do that.
In your study, you said that there is a strong correlation between the CAP, the reduction of poverty in rural areas and the economic strength of the farming sector but it is not a causal relationship. Can you say with more or less certainty that the CAP is to thank for this or are other factors at play?
I think your phrasing is about right. We can say with more or less certainty that yes, there is a correlation. Will it stand up to academic scrutiny in an economics journal, depending on what you look at, maybe not? We have no neutral component to compare it against, but from everything we know and understand, clearly, there is a connection between the two. There is no way to prove it scientifically because we don’t have ten EU countries that don’t get the CAP but we would not publish it if we were not confident that there was a link. And we try to control for every possible variable that could also explain a reduction in poverty or improvement in economic performance.
Such as a country joining the EU in the first place…
Yes, and particular country circumstances, urbanization rates, education, all these things.
You also pointed out that the CAP has helped increase farm efficiency and that there are now fewer, if better paid, jobs in EU agriculture. Is this driving people to the cities or is it simply helping farmers through the urbanization process?
I don’t think you can conclude that urbanization is due to the CAP. In fact, I would say it is quite the opposite, it is slowing the urbanization process down a bit and stabilizing it. In some countries where rapid urbanization is happening, the CAP is supporting those who stay behind in rural areas.
Your report said that new technologies hold untapped potential for measuring the impacts of farming methods and increasing efficiency. Is that an area you think the next CAP should focus on?
Yes, not only farmers but also the Commission need to shift their thinking from one of inputs and policies to the impact they want to achieve, in soil quality, the climate, emissions reduction and so on. That is what the Commission wants, they want to move towards a results-based indicator system, so that is the right direction. It is not easy but technology is evolving that allows you to do that. The data and the instruments available for this are developing very rapidly. You couldn’t have done this five years ago, but with today’s satellite imagery, what happens on the farm is no longer a secret, it is transparent. You cannot go to every plot in every farm in the European Union and start measuring soil carbon, that is not feasible, but the technology will allow you to measure these things. We are very optimistic because this is then a very powerful tool to shift away from input-based to results-based outcomes.
Do you think that greater power to measure results would lead the Commission to demand certain results in return for funding?
I wouldn’t draw that conclusion. This is a conversation we need to continue to have, but the aim is not to play one thing off against the other. The aim is to decide the impact that we want and then design the system so this can be achieved. I don’t see a big risk that certain outcomes will become mandatory.
What about the divide between richer and poorer farmers and those in areas with good or bad broadband coverage? Won’t the adoption of precision farming make this divide even greater?
What we are hearing from the folks who know about broadband is that in the next five years – at the latest – everyone on the planet will have broadband access. Everyone, including in Africa. So in Europe, of course, this means even every village in Romania. If we take that as a given, that makes precision farming technology available even for small farmers. There is this notion, which is true right now, those big farmers can afford computerized, self-driving machinery and so on, but there is a lot more to the technology than that. It can also help smallholder farmers tremendously. There are lots of examples around the world of how cell-phone technology can bring benefits. Nowadays you can identify a pest in a field just be taking a photo with a smartphone, and this helps a small farmer as much as a large farmer. At the World Bank, we work mainly with small farmers around the world and we are seeing a lot of technological progress. And we are pushing technology because there is a lot it can do for every farmer, even if they cannot necessarily afford the latest computer-driven combine harvester.
The images produced by the European satellites are free to use. Is open source data something that the World Bank is trying to encourage elsewhere in the world?
Yes. Share the data, it should all be fully open. Things are going in that direction. It needs some initial investment to get things going but in the end, we see the data being free for everybody.
Should the EU play a role in making sure this kind of data is freely available in places like Africa?
It should absolutely have a role to play. It should invest significantly in research, it should invest in this technology, in adapting it and making it available to farmers in ways that are useful to all, absolutely. And that is clearly the trend. Of course, there are lots of private companies that make money with various bits and pieces. But the future is open source, it is sharing data. For me, there is no way around that. It will take a bit of time but the EU certainly has a role here because the data is a public good. It may be a private investment initially but clearly, it needs to be shared.
And more broadly, the Commission’s latest CAP communication showed they are keen to drive it down this public goods direction, and this is a very positive development. More impact on the environment, more impact on nutritional outcomes, so we very strongly support this general trend. Conceptually the CAP needs to make the shift from a subsidy to an investment. When you get a public good outcome you are no longer talking about a subsidy, you are talking about an investment. And if the farmers can benefit at the same time as delivering that public good outcome, then that’s a good thing. This is a win-win-win. You have not only poverty alleviation but you also have a better landscape, better climate outcomes, hopefully, better nutritional outcomes. And this makes the CAP a very powerful tool.
So for you, the enhanced regional or national aspect of the next CAP is very positive when it comes to delivering results.
It is essential. It is fantastic. A lot of other countries around the world are looking to the European Commission right now as a good example. They used to be very critical. Europe has achieved a more than 20% reduction in greenhouse gas emissions from agriculture while raising productivity by 10%. And when we get asked by agriculture ministers around the world how to do this – be they from China, Brazil, Nigeria – we say how the European Union has done it. About 30% of the CAP funding now goes towards this goal [greening] but we hope it can be more in future. We strongly support that because the rest of the world needs this approach too and they can learn from Europe.
You have touched on nutrition already as an issue that will have to be dealt with at some point in the future. Do you see the CAP as part of a future food policy?
Each country needs its own broad food policy and the CAP is an instrument in that policy debate. But it is clear that nutrition is a huge challenge going forward. Right now globally around 50% of the world’s population is malnourished. Every second person on the planet is either undernourished, vitamin deficient or obese. So clearly the food system globally does not deliver on food outcomes. In Europe, this is true to a certain extent. We have a problem with obesity on the rise, and agriculture and the food system have a role to play.
Right now agriculture and food are not focusing on that, but our suggestion is that is should begin doing so. This can be achieved through diversification and cropping patterns, by focusing on research, there is a whole raft of things that can be done. The shift from coupled to decoupled subsidies is part of this and we fully support it.
Most global subsidies go to five main crops, which makes them cheaper and it means that poorer people cannot afford the fruits and nuts they should be eating as part of a healthy diet. But this is not the case with the decoupled subsidies in Europe.
20 years ago the rest of the world didn’t look at Europe as a stellar example of agricultural policy but that is changing. The world is changing. Every country around the world is struggling to support its agricultural community. It is a real challenge and there are not that many good examples but here we are beginning to see some really positive examples of how to do this right.
When you give your advice based on the European model to other countries, does this include the poorer countries in Africa that struggle to produce enough food to feed their populations?
Yes absolutely. They want to learn to avoid some of the mistakes that have been made in the past, such as coupled subsidies for a limited range of crops and fertilizer subsidies. Fertiliser subsidies are always inefficient. The EU gave them up a long time ago, but for others, there is still a lot to learn. In Rwanda, we designed the national agriculture policy based on the EU rural development programme: competitiveness, natural resources, and rural livelihoods. It is much better than just putting a certain budget into fertilizer subsidies, which is always very inefficient and always ends up just helping the rich. Europe has gone way beyond that stage and there are a lot of positive things to say about its agricultural policy.