As with past reforms, the Commission’s proposal to place a cap on direct income payments was completely rejected due to widespread opposition from the member states. The final result of the Commission’s proposal income payment cap was a form of degressivity, under which payments over a certain threshold may be reduced. Degressivity was left to the member states as an option, with a very small level made mandatory . Moreover, member states could choose to garnish their total national envelope, as opposed to applying degressivity directly to their largest earnings, allowing them to reduce or entirely eliminate the loss to large farmers. Finally, greening measures were watered down, the end result being that most farmers were exempted from compliance, and overall standards were lowered. Essentially, anything that was contentious or in some way resisted by a member state was handled one of three main ways: the standards for the policy were lowered; the qualifications for an exemption were widened; or discretion for what standards to set and how to enforce the policy was given to the individual member state. In the end, nearly 50% of arable land covered by the CAP and just under 90% of arable goods farmers were exempted from the new greening rules and standards. The remaining more minor elements of the initial reform proposal were also adjusted in the final agreement. Those member states whose direct income payments were 90% or more below the EU average were afforded more flexibility in transferring funds between Pillar 2 and Pillar 1 . The proposal to more rigorously define who counts as a farmer and thus what land can be considered agricultural was significantly weakened. The Commission’s effort to restrict a base payment to individuals engaged in farming as their primary source of income was also completely defeated,hydroponic grow systems meaning anyone with agricultural land could receive this payment, even if they were a non-farmer. A.2.3 which summarizes the changes for these small proposals can be found in the Appendix.
The MFF agreement, which fixed the budget and also included some CAP provisions shaped the course of the CAP negotiations that operated concurrently and ultimately subsequent to the battle over the budget. This effect was perhaps most profound in the area of greening. Greening measures to support the environment and battle climate change were, at least at one point, considered an essential part of justifying the increasingly criticized direct payment scheme. In the initial stages of the CAP reform, when the process began in 2010 before the MFF talks were underway, it was expected that farmers would be required to provide a direct, clear, “public good” in the form of following particular environmental practices in exchange for the receipt of direct payments. However, once the MFF was agreed, the greening push was fatally weakened. With the budget fixed, the threat of imposing cuts if greening standards were not raised was no longer credible. The greening case was hurt more broadly by the fact that there was general uncertainty of the extent to which these measures would deliver real, significant environmental benefits. In addition, many worried about the added financial costs for farmers and more broadly the bureaucratic cost of administering these programs. In the end, the final agreement fell well short of initial proposals. A perhaps overly pessimistic view was expressed by multiple DGVI officials who lamented that rather than making the CAP fairer, greener, and simpler, reform left the CAP still unfair, barely greener, and far more complex . This characterization understates the reform. In fact, there were meaningful changes to reduce systemic inequalities. That said, the reform did make the CAP far more complex and also did little to improve greening. The previous four chapters have explored the major rounds of CAP reform, illustrating my claims about the conditions that affect policy reform, the nature of farmer power, and the links between welfare state reform tactics and agricultural policy reform, including the key strategy of pairing compensation with reform. These chapters have demonstrated that reforming agricultural policy is an exercise in navigating farmer power.
Theories of welfare state retrenchment help to explain how and why the process of agricultural policy unfolds in the manner that it does. Most often, reformers rely on the kinds of strategies described by Paul Pierson in his analysis of welfare retrenchment: compensating farmers, making smaller adjustments to correct existing policies , and introducing changes that may open the door to more far-reaching shifts down the road . When CAP reform is initiated at a time of disruptive politics, like trade negotiations or enlargement, it is much more likely to succeed. The 1992 MacSharry and 2003 Fischler reforms occurred at times of disruptive politics and the end result was major reform to the operation of the CAP payment system. Of course, as my argument requires, these reforms 1) were paired with generous compensation and 2) largely consisted of recalibration, in which the modes of payment were changed, but the amounts remained the same. Under politics as usual, reform proposals are almost always defeated. The 1999 and 2013 CAP reforms occurred in “normal” times- no trade negotiations were occurring and enlargement was not looming. In both cases, despite proposals for extensive change, the CAP remained virtually unchanged. Any minor reforms that did occur were either accompanied by extensive compensation or qualified by massive exemptions. The previous four chapters have demonstrated how theories of welfare state retrenchment, combined with an awareness of the broader context of the reforms, can help explain the process and outcome of the CAP reform. The question remains, however, if the analytical efficacy of welfare state retrenchment theories stems from circumstances particular to the CAP and the EU or if this approach can be applied more broadly. In order to assess the analytic usefulness of my approach, I test it under a variety of different conditions and circumstances in three mini-cases: austerity-driven domestic policy in Europe, domestic agricultural policy reform in Japan, and agricultural trade policy negotiations in the GATT Uruguay Round.
My claims about the politics of agricultural policy reform and farmers’ influence over policy making are not restricted to the CAP and the specific circumstances of EU politics. They can also explain agricultural reform at the domestic level. To make this case, I explore domestic politics and policy making in the wake of the 2008 financial crises. The mini case proceeds in two parts. I begin with a close look at France, focusing on domestic policy reforms, which are not specifically agricultural in nature. An “eco tax” 41, proposed in France in 2013, that was to affect truck transport of goods, including agricultural products, was abandoned due to pressure in large part from farmers. Pension-related cuts, however, went ahead despite mass protests. The second part of the mini case looks at domestic reform in Europe more broadly, and confirms that the French case is not an outlier. Indeed, I find that at the domestic level, European governments largely did not cut national discretionary spending on agriculture, while they did impose significant cuts on pensions. In the wake of the Great Recession and sovereign debt crisis, austerity programs were adopted across the European Union. Spending was cut, programs of support for those suffering financial hardship were canceled or suspended,hydroponic growing and new taxes were created to help generate revenue for cash-strapped governments. One social group that would have appeared to be particularly vulnerable to austerity-imposed policies is the agricultural community. Farmers are a tiny population that is continuing to decline. Any spending cuts or new tax burdens would therefore apply to only a small portion of the population, in theory allowing politicians and policymakers to minimize the negative backlash faced by aggrieved constituents. Moreover, farmers already receive a disproportionate share of financial support, given their share of the population, making their programs and policies low-hanging fruit for retrenchment-minded officials. Yet, since the 2008 financial crisis, farmers have felt little if any of the budgetary pressure that austerity has brought to bear on communities across Europe. As is observed in EU policy making, farmers at the domestic level successfully resist the imposition of new costs that are not paired with compensation. The parallels between the ways that farmers defend their policies and thwart unwanted policy changes at the domestic and EU levels can be made clear by looking at a case in which a national government attempted to impose new costs on their agricultural community without offering compensation. In 2013, Socialist French President François Hollande attempted to implement the so called “eco tax” first put forward by his conservative predecessor, Nicolas Sarkozy. The eco tax was intended to promote greener commercial transportation by imposing a tax on heavy vehicles. Under the plan, any vehicle over 3.5 tons would be taxed a flat rate of .13€ per kilometer traveled on 15,000 kilometers of roads included in the scheme. The government expected the tax to generate over €1 billion in revenue annually. The eco tax was slated to come into effect beginning 1 January 2014. The government’s proposal was immediately met with criticism from the main French farmers’ organization, the FNSEA. The organization described the tax as an “usine à gaz”, a situation where pipes are going everywhere and the system is overly complex. Through thus turn-of-phrase, the FNSEA meant to convey that the eco tax was a complicated procedure with little actual value or payoff. The FNSEA argued that the tax would place a significant burden on the agricultural community, particularly farmers in Brittany, who had suffered significantly from the financial crisis, and demanded that it be suspended immediately.
Other critics raised concerns that Breton farmers might be driven out of business as a result of higher transportation costs. In addition to the concerns about its effects on Breton farmers, the FNSEA warned that French goods would pass through the tax gates more often than trucks carrying foreign goods, putting French farmers at a disadvantage compared to farmers’ goods arriving from abroad. Xavier Beulin, the leader of the FNSEA, promised immediate action against the proposal, directing members to target the “portiques” that were intended to scan the trucks as they passed underneath. Beulin called on farmers from other parts of France, even from those areas without the tax scanners, to join the protests. The call for action was successful, as a wave of angry protests erupted in Brittany and across France. In Brittany, the heart of the demonstrations, protesters gathered in main town squares, many wearing red caps, or bonnets rouges in a reference to a 17th-century protest against a stamp tax proposed by Louis XIV. Some protestors threw stones, iron bars, and potted chrysanthemums at riot police, while others destroyed the electronic scanners intended to collect the fee from passing trucks. The protesters included not just farmers, but also the broader public, who were rallying to oppose taxes, with some also supporting the farmers specifically. In addition to the violent actions in Brittany, farmers elsewhere blocked roads with their tractors, including around Paris. Despite the disruptions these protests caused to the daily life of the average French citizen, the farmers did not face any negative public backlash, a further indication of the deep support and connections between farmers and urban France. Indeed, public polling concerning the image of farmers revealed that the public has a strong, positive image of farmers. According to a 2014 survey, shortly after the mass protests by farmers, just 26% of respondents were willing to describe farmers as selfish and only 16% of respondents agreed that farmers were violent. A resounding 80% agreed with the statement that farmers were trustworthy42 . After Prime Minister Jean-Marc Ayrault met with local officials from Brittany, the government proposed to “suspend” the tax until January. This concession, though it was expected to cost the government €800 million in revenue, was seen as insufficient, and tens of thousands of protesters continued to gather in the epicenter of resistance to the proposal, the town square of Quimper in Brittany.France’s eco tax then, like to efforts to change CAP income support systems or greening policies, demonstrates that it is nearly impossible to impose new costs on farmers, without some degree of compensation or widespread exemptions. For example, new CAP greening standards that are costly for farmers to adhere to are typically coupled with subsidies for compliance.