the cap and eu enlargement: a missed opportunity la pac et l’élargissement de l’union...

Carmen Hubbard, Matthew Gorton and Lionel Hubbard

Ten countries (Cyprus, CzechRepublic, Estonia, Hungary, Latvia,Lithuania, Malta, Poland, Slovakia andSlovenia) joined the European Union(EU) in 2004, and a further two(Bulgaria and Romania) in 2007,bringing the number of memberstates to 27. While previousenlargements of the EU weresignificant for agricultural and ruralpolicy, the accession of a large partof Central and Eastern Europe (CEE)was manifestly different due to thenumber of countries involved, theirsocio-economic characteristics andthe historical legacy of socialism.Although it was recognised from anearly stage that agriculture and ruraldevelopment in the enlarged EUpresented a special challenge, theoutcome has been disappointing.Rather than fostering Europeanintegration through mutualadaptation and adjustment, a processof emulation has occurred, wherebythe new members have sought toimitate the behaviour of theestablished members. This has led toa poor match between the CommonAgricultural Policy (CAP) and the realrural development needs of the NewMember States (NMS).

European integration byemulation

European integration is a processleading to the homogenisation ofeconomic and political structures(Page, 2003). The CEE countries wereoffered the possibility of accession tothe EU on two conditions; first,meeting criteria defined by existingmembers, and second, adapting to

EU policy structures. Applicationswere to be judged on the countries’administrative capacity to implementthe full body of the acquiscommunautaire, the EU’s legislativecorpus. However, the accession ofCEE countries ‘raised the bar’ interms of conditionality andinflexibility compared with previousenlargements and at the centre of theprocess has been an emulation ofWestern European institutions(Jacoby, 2004). This emulationreflects a high determinacy of rules,a disparity of power between theemulator and emulated, andresistance to mutual learning andadaptation in the lead agent.

The NMS have had minimal leewayin the implementation of EUregulations. Vast swathes of EU law,

in which the CEE countries had noinvolvement, have been downloadedat the national level, bypassing thenormal legislative process. Moreover,the existing acquis reflects WesternEuropean problems, interests andexperiences. Within this, the CAPconsists largely of a set of rules, theimplementation of which in CEE haspromoted emulation.

The CAP and its transfer to CEE

The nature of agricultural and ruralpolicy in the NMS is now tightlybound to reform of the CAP.However, historically, the prospectof future accession of CEE countriesplayed only a minimal role in thereform process. For example, theoriginal decision (subsequently

The CAP and EU Enlargement: A MissedOpportunity

La PAC et l’elargissement de l’Union europeenne : uneopportunite manquee

Die GAP und die EU-Erweiterung: Eine verpasste Gelegenheit

Apricot collection

ª 2011 The Authors EuroChoices 10(1)ƒ 37

EuroChoices ª 2011 The Agricultural Economics Society and the European Association of Agricultural Economists

reversed) regarding direct payments,which now constitute the maininstrument of the CAP, was that theywould not apply to farmers in theNMS. Similarly, whilst Agenda 2000was motivated by a desire to preparethe EU for further enlargement, witha focus on budgetary implicationsand the establishment of a ruraldevelopment policy (Pillar II) todeliver ‘multifunctionality’, the CEEcountries had minimal influence inguiding the reforms. Importantly,Agenda 2000 did lead to the creationof SAPARD (Special AccessionProgramme for Agriculture and RuralDevelopment) to support theapplicant countries undertakestructural change and help themcomply with the acquis. However,the process of establishingoperational SAPARD agencies tooklonger than expected, reflecting inpart a lack of managerial andtechnical capacity of CEE nationalgovernments to implement CAP-likemeasures. Consequently, attentionfocused on the implementationsystem for direct payments, ratherthan on the budgetary lessimportant and administratively morecomplex rural developmentmeasures. As part of final accessionnegotiations, direct payments wereto be introduced in the NMS but ata lower initial rate. This criticaldecision minimised the impacts ofagricultural policy reform for themain existing beneficiaries of theCAP, while limiting the budgetarycost of enlargement. Althoughcausing consternation in the NMS,acceding countries had littleinfluence because of the disparity inpower between the emulator andemulated. Acceding states were, ineffect, presented with a ‘take it orleave it’ package.

Why the CAP is poorly targetedat CEE

Lack of similarity in the socio-economic conditions of rural areas.Emulation will be most appropriatewhere there is a set of commonobjectives and problems, linked tosimilar socio-economic conditions.This was tacitly acknowledged in the

criteria for EU membership, withacceding states needing todemonstrate an economic capacityand robustness to fulfil theobligations of the acquis. Economicgrowth in the last decade has, onaverage, been higher in the NMS thanin existing member states and Åslundand Dabrowski (2007) use this asevidence of catch-up andconvergence. Similar evidence ispresented for rural areas by Swinnenand Vranken (2009). However,differences in socio-economicindicators between the rural areas ofthe NMS and those of the EU15 arestriking (see Gorton, et al., 2009) and‘there are still significant disparities interms of income per capita andlabour productivity in agriculture’(Swinnen and Vranken, 2009, p.67).These differences underline thedifficulties of structural change in thepost-socialist countries. In Romania,in 2000, almost half of ruralinhabitants were classified as living inpoverty (World Bank, 2007),representing over 70 per cent of thecountry’s poor. Whilst lifting peopleout of poverty depends, inter alia,on development of agriculture andthe non-farm rural economy, it ishighly questionable whether the CAP,as currently constituted, caneffectively contribute to this goal.

A West European family farm modelof agriculture. Farming in Western

Europe is primarily a family businessand this has been reflected in EUagricultural policy; medium-sizedfarms are perceived as integral to the‘European model of agriculture’. Incontrast, due to their socialist legacy,NMS are characterised either by a bi-modal farm structure of largecollectivised units, typically between2,000 and 3,000 hectares (ha),supplemented by subsidiaryhousehold plots, or by farms whichare very fragmented, either becauseagriculture was never extensivelycollectivised or because of subsequentradical de-collectivisation and landrestitution. These fundamentaldifferences in farm structure acrossthe enlarged EU are likely to remainfor a considerable time.

ƒ‘‘Es ist der EU nicht

gelungen, ihre

ausschließlich

westeuropaische

Anschauung in eine

gesamteuropaische zu

andern.,,Application of the CAP requires acomprehensive system forimplementing direct payments,including a complete land register.

Peasant chicken production, Hungary

38ƒEuroChoices 10(1) ª 2011 The Authors


The NMS had no experience of directpayments during the socialist andimmediate post-socialist eras, andadequate land registers, while takenfor granted in Western Europe, arealso lacking, due largely to thecomplicated land reform of the 1990s.Given the fragmentation of farms,many NMS were confronted with thepossibility of paying trivial amounts toa mass of small-scale farmers. Inimplementing the simpler SAPS(Single Area Payment Scheme), allCEE member states chose one ha asthe minimum eligible size. Below thisthreshold, annual payments werelikely to be less than €50 per farmerand the administrative burden wasdeemed too great. In Romania, thismade around three million farmhouseholds ineligible for EU directpayments. Persons with the lowestincomes in rural CEE tend to bethose restricted to small-scale plots,and the landless, located in regionswithout good employment prospectsin the non-farm rural economy.Unless CAP direct payments generateindirect benefits through, forexample, better job opportunities orimproved services, these vulnerablegroups can expect little gain.

At the other extreme, as directpayments in the NMS align to thosein the EU15, large corporate farms inCEE will receive substantial transfers.

Some of this income will find its wayto those landholders who lease theirland to these corporate farms, manyof whom (re)gained entitlementsunder post-socialist land reformprogrammes and have few currentconnections with agriculture (Latruffeand Davidova, 2006). Thus, theleakage of such payments outside ofagriculture and rural areas is likelyto be significant.

The balance between Pillar I andPillar II. Although direct paymentsare being introduced incrementally inthe NMS, they will soon account forthe majority of CAP support in thesecountries, as well as elsewhere in theEU. Total planned EU27 expenditurefor direct payments (under Pillar I),between 2007 and 2013, is almostfour times larger than planned ruraldevelopment expenditure underPillar II. The income effect of directpayments in CEE is likely to besubstantial. In Hungary, in 2005, totalagricultural subsidies were greaterthan total farm income, i.e. farmincome would have been negative inthe absence of subsidies (Hubbardet al., 2008). Not surprisingly, manyfarmers in the NMS view directpayments as an income supportmeasure, and their provisiondecreases the likelihood of farmhouseholds diversifying by creating

new, non-agricultural businessesor entering the labour market(Chaplin et al., 2004). Directpayments therefore work againstdevelopment of the wider non-farmrural economy.

ƒ‘‘L’UE a echoue a

transformer ses

perspectives d’un point

de vue exclusivement

ouest europeen a un

point de vue pan

europeen.,,Administrative capacity. Historically,rural development policy has tendedto be less developed in the NMSthan in the EU15. As part ofSAPARD, agri-environmental schemeswere included as a compulsorymeasure, but this was due topressure from Western non-governmental organisations and theEuropean Commission rather thanenthusiasm from NMS. Productionistmindsets still dominate mostMinistries of Agriculture in CEE andthis has strongly influenced theallocation of Pillar II funds; non-farming related interests are poorlyrepresented and struggle to beheard.

With weak capacity to implementrural development measures,1 CEEcountries have looked to administerthem in the simplest mannerpossible, which may not be inkeeping with intended outcomes.For instance, expenditure underenvironmental measures is oftenaccounted for by LFA (Less FavouredArea) payments. These are directed atfarmers and paid on a simple perhectare basis. Thus, they reinforcethe allocation of spending to largerfarmers and are viewed by recipientsas top-ups, but insufficiently fine-tuned to support the provision ofspecific biodiversity andenvironmental objectives. Suchpayments may even prove to becounterproductive by supportingmore intensive production.

Peasant plot, Slovakia



A missed opportunity

Minimal reform of the CAP toaccommodate accession of the CEEcountries ensured preservation ofthe existing policy regime. Thisreflected the EU’s stance that itwas the task of acceding countriesto adjust to the EU, rather thanboth sides agreeing a form ofmutual adaptation. However, thedegree of support for CAP-styleprotectionism within CEE shouldnot be overlooked. Granting thetask of drawing up ruraldevelopment plans to nationalMinistries of Agriculture, whichtraditionally have weak capacity inadministering non-agriculturalprogrammes, reinforced the farm-centric bias. This has led toimplementation of Pillar II in amanner which puts intendedoutcomes in question. In most ofthe NMS the main challenge forrural development lies in promotionof the non-farm rural economy.

Expenditure on this is minorcompared to farm-centric measures.Moreover, as direct paymentsincrease over time, the imbalancebetween Pillars I and II will grow.The European Commission (CEC,2002, p.7) ascribes to directpayments ‘a central role in ensuringa fair standard of living and stabilityof income for the agriculturalcommunity.’ It is questionablewhether this assistance, which isbased on a family farming model ofagriculture, will deliver such benefitsin the NMS. The rural poor in CEEare likely to gain little, if anything,from the introduction of directpayments, typically being ineligible.While Pillar II has attracted muchattention for giving member statesa degree of flexibility in choosingmeasures from a menu of options,the greater financial importance ofPillar I is clear. Overall, theunwillingness of the EU to come toterms with the different underlying

historical and socio-economicconditions of rural areas in theNMS has led to the implementationof a policy which is ill-suited formeeting its objectives in anenlarged Europe. An opportunityhas been missed.

Notes

1. Axis 2 of the Rural DevelopmentRegulation.

2. This article is an abridged versionof Gorton et al. (2009) where readerscan find more detail.

Further Reading

n Åslund A. and Dabrowski, M. (2007). Europe after Enlargement. Cambridge University Press, Cambridge.

n Commission of the European Communities (CEC) (2002). Mid-Term Review of the Common Agricultural Policy, COM(2002) 394final.

n Chaplin, H., Davidova, S. and Gorton, M. (2004). Agricultural adjustment and the diversification of farm households andcorporate farms in Central Europe, Journal of Rural Studies, 20(1): 61–77.

n Csaki, C. and Jambor A. (2010). Five years of accession: Impacts on agriculture in the NMS. EuroChoices, 9(2): 10–17.

n Gorton, M., Hubbard, C. and Hubbard, L.J. (2009). The folly of European Union policy transfer: Why the CAP does not fitCentral and Eastern Europe. Regional Studies, 43(10): 1305–1317.

n Hubbard C., Podruzsik S. and Hubbard L.J. (2008). Structural changes and distribution of support in Hungarian agriculturefollowing EU accession: A preliminary FADN analysis, in Csaki, C. and Forgács, C. (eds.) Agricultural Economics and Transition:

What was expected, what we observed, the lessons learned. Proceedings (Volume II) Joint IAAE – 104th EAAE Seminar, Budapest,September 2007, IAMO, Halle, pp. 519–527.

n Jacoby, W. (2004). The Enlargement of the European Union and NATO: ordering from the menu in Central Europe. CambridgeUniversity Press, Cambridge.

n Latruffe, L. and Davidova, S. (2006). Viability of the corporate farms in the New Member States in the context of CAP directpayments, Paper presented at the 96th EAAE Seminar, Causes and impacts of agricultural structures, Tänikon, Switzerland.

n Page, E.C. (2003). Europeanization and the persistence of administrative systems. In Hayward J. and Menon A. (Eds.), GoverningEurope, Oxford University Press, Oxford, pp. 162–176.

n Swinnen, J.F.M. and Vranken, L. (2009). Land and EU Accession, Centre for European Policy Studies, Brussels.

n World Bank (2007). Romania: Poverty Assessment, Analytical and Advisory Assistance Program: First Phase. Report No. 40120-RO, World Bank, Washington, DC.

Carmen Hubbard, Centre for Rural Economy, Newcastle University, UK.E-mail: [email protected]

Matthew Gorton, Centre for Rural Economy, Newcastle University, UK.E-mail: [email protected]

Lionel Hubbard, Centre for Rural Economy, Newcastle University, UK.E-mail: [email protected]

ƒ‘‘The EU failed to

adjust its outlook

from being exclusively

West European to

pan-European.,,

40ƒEuroChoices 10(1) ª 2011 The Authors


summary

summaryThe CAP and EUEnlargement:A Missed Opportunity

Accession of Central andEastern European countries

failed to prompt a widespread reviewof agricultural and rural policy withinthe European Union. Despite theunprecedented scale and scope ofthe accession, the existing policyregime was preserved. Rather thanfostering European integrationthrough mutual adaptation, a processof emulation ensured that it was thetask of acceding countries to adjustto the EU. Under the CommonAgricultural Policy, the centrality ofPillar I and its main instrument, directpayments, remain intact. Even underPillar II, farm-centric measuresdominate. This fosters a poor matchbetween the CAP and the real ruraldevelopment needs of the NewMember States. Mitigation of thestructural problems confronting ruralareas in CEE is critical to meeting thechallenge of effective EU integration.Insufficient reform prior to accessionis likely to entrench, at least in theshort to medium term, a farm-centricCAP in CEE, delivering minimalbenefits to those most in need, andhindering wider adjustment of EUagricultural and rural policy. Thatthese issues have not beenadequately addressed reflects a failureof the EU to adjust its outlook frombeing exclusively West European topan-European.

La PAC etl’elargissementde l’Union europeenne :une opportunitemanquee

Avec l’adhésion des paysd’Europe centrale et orientale,

on a raté l’occasion de provoquer unexamen généralisé de la politiqueagricole et rurale au sein de l’Unioneuropéenne. Malgré l’échelle etl’ampleur sans précédent de cetteadhésion, le régime des politiquesactuel a été maintenu. Plutôt que derenforcer l’intégration européennepar une adaptation mutuelle, unprocessus d’émulation a fait en sorted’assigner aux pays adhérents lepoids de l’ajustement à l’UE. Dans lecadre de la Politique agricolecommune, le rôle central du premierpilier et de ses principauxinstruments, les paiements directs,est resté intact. Même au sein dudeuxième pilier, les mesuresorientées vers l’exploitation agricoledominent. Cela engendre une faiblecorrespondance entre la PAC et lesréels besoins en développent ruraldes nouveaux États membres.L’atténuation des problèmesstructurels des zones rurales de lacommunauté est essentielle à laréalisation du défi que constitue uneintégration effective au sein de l’UE.L’insuffisance de la réforme menéeavant l’adhésion va probablementancrer, tout du moins de court àmoyen terme, une PAC centrée surl’exploitation agricole dans l’UE, quiaccorde des avantages minimes àceux qui en ont le plus besoin etempêchant un ajustement plus largede la politique agricole et rurale. Lefait que ces questions n’aient pas étéréglées de manière adéquate reflèteun échec de l’UE à transformer sesperspectives d’un point de vue ouesteuropéen à un point de vue paneuropéen.

Die GAP unddie EU-Erweiterung:Eine verpassteGelegenheit

Der Beitritt der mittel- undosteuropäischen Länder hat

leider nicht zu einer umfassendenÜberprüfung der Agrarpolitik und derPolitik für ländliche Räume innerhalbder Europäischen Union geführt. Diebestehenden Regelungen wurden trotzdes beispiellosen Umfangs des Beitrittsbeibehalten. Anstatt die europäischeIntegration durch wechselseitigeAnpassung zu fördern, entschied mansich für eine Emulation, wodurch dieLast der Anpassung einseitig denbeitretenden Ländern der EUaufgebürdet wurde. Im Rahmen derGemeinsamen Agrarpolitik blieb diezentrale Bedeutung der ersten Säuleund ihres Hauptinstruments(Direktzahlungen) erhalten. Selbst inder zweiten Säule überwiegen auflandwirtschaftliche Betriebeausgerichtete Maßnahmen. Hierdurchwird ein Missverhältnis zwischen derGAP und den tatsächlichenAnforderungen an die Entwicklung desländlichen Raums in den neuenMitgliedsstaaten begünstigt. Um dieStrukturprobleme mit Blick auf dieländlichen Räume in mittel- undosteuropäischen Ländern abzumildern,ist es entscheidend, die Integration indie EU erfolgreich zu meistern.Unzureichende Reformen vor demBeitritt werden wahrscheinlich zur Folgehaben, dass sich zumindest kurz- odermittelfristig eine auf landwirtschaftlicheBetriebe ausgerichtete GAP in denmittel- und osteuropäischen Ländernetabliert, die den Bedürftigsten nurminimalen Nutzen beschert und diebreitere Anpassung der Landwirtschaftder EU sowie der Politik für ländlicheRäume erschwert. Die Tatsache, dassdiese Aspekte nicht ausreichendbehandelt wurden, zeigt, dass es der EUnicht gelungen ist, ihre ausschließlichwesteuropäische Anschauung in einegesamteuropäische zu ändern.



the cap and eu enlargement: a missed opportunity la pac et l’élargissement de l’union...

Documents