CAP-Reform 2013: Limited environmental impact, high costs

Acker, der teils begrünt, teils frisch angebaut wurde. Die Furchen auf dem frisch bepflanzten Acker sind tief. Am Horizont sind vereinzelte Laubbäume und Himmel zu sehen. Click to enlarge
The CAP has a considerable impact on the national agricultural policy.
Source: Martina Chirnielewski / Fotolia.com

In 2013, the Common Agricultural Policy was reformed with the aim of reducing negative environmental impacts of agriculture. Accordingly, farmers had to comply with certain environmentally friendly farming measures, the so-called "greening", to receive the EU subsidies. Despite high costs, however, the effects of the reform have remained small. This has been shown by a recent paper by UBA.

In 2013, the time of the reform of the Common Agricultural Policy (CAP), very narrow crop rotations dominated in many parts of Germany, biodiversity in agro-ecosystems declined and the area of grassland was shrinking. The greening measures of the CAP- were supposed to counteract this development and improve the state of the environment. For this reason, 30 percent of the direct payments to conventional farmers have been tied to fulfilling requirements for crop diversification, grassland conservation and the establishment of ecological focus areas.

The research project "Evaluation of the CAP reform from the point of view of environmental protection based on a data analysis of IACS data of the German Länder II" used data from the German farm structure survey, the survey on agricultural land use and from the Integrated Administration and Control System (IACS) to investigate how the introduction of greening has affected the environment. The results show that:

  • the introduction of greening measures and the increased implementation of second-pillar measures have halted the decline of ecologically valuable areas that had lasted for years, and the area of fallow land has increased again;
  • the diversity of arable crops at local and regional level has not changed with the introduction of the greening measures. In many regions of Germany, a few crops such as winter wheat, rapeseed and maize continue to dominate arable land use;
  • the area of permanent grassland, after a drastic decrease of more than half a million hectares since 1999, has increased again by about 130,000 hectares between 2014 and 2019 and
  • the implementation of greening measures has led to only a very small decrease in the environmental risk from pesticide applications.

Every year, the EU pays €1.5 billion to German farms for the compliance with the greening measures. However, experts calculate that the cost of implementing the measures at farm level amounts to only 190 million euros, or one-eighth of the overall EU expenditures. At the same time, ecologically valuable greening measures such as the provision of fallow land and flower strips are not sufficiently implemented to achieve marked ecological effects. This inefficient use of public funds for environmental services has two reasons:

  1. for some greening measures, the flat-rate subsidy per hectare clearly exceeds the specific implementation costs for the farms. For example, the cultivation of catch crops causes costs of approx. 50-100 EUR per hectare and year for the farms, but is rewarded with 250-500 EUR per hectare and year through the greening payment.
  2. The cost differences between regions and farms are responsible for the insufficient implementation of ecological ambitious measures. For farms in intensive agricultural regions, the incentive to implement ambitious measures, such as planting flower strips, is low, as for them ceasing the production of market goods induces high opportunity costs. For farms with land on less fertile soils, on the other hand, the current premium is significantly higher than the costs of provision. For this reason, more land is here being taken out of production. As the greening payments are currently compensated by a flat-rate area payment throughout Germany, ecologically valuable measures are rarely implemented in intensive regions.

Negotiations for the next CAP period are currently underway at both European and national level. Important decisions have already been taken, for example on the budget for measures addressing agri-environmental and climate issues in the first and second pillars. Whether this money will have an impact depends on the concrete measures that are linked to it. One thing is clear - only with precisely tailored financial incentives can environmental measures under the CAP be implemented on a significant scale in all regions of Germany. The funding rates for environmental measures in the first pillar should therefore be differentiated according to location and ecological ambition. Making this possible is a national responsibility - a decision on this has not yet been taken.