September 19, 2023

Greening the Agricultural Sector in the EU


Maximilien Boyne, Analyst


The European Union has always been proud of its agricultural heritage. One of its first major programmes was the Common Agricultural Policy (CAP). The EU's agricultural industry created an estimated gross value added of EUR 222.3 billion in 2022[1] and is a competitive and significant exporter of value-added products (processed foods, meat, dairy products…).[2]

However, certain types of agricultural practices contribute to severe environmental and sustainable impacts, such as widespread degradation of land and ecosystems, high GHG emissions and biodiversity loss.[3] Recent studies have highlighted and confirmed the impacts of agriculture on the increase of global GHG emissions and the decline in biodiversity.[4]  If intensive agriculture is not reformed, there is evidence of a potential global collapse of insect life, which would have a catastrophic effect on food production worldwide.[5]

Because of the environmental and sustainable implications of agriculture, the EU has made an effort to green its agri-food system. Since its creation, the main objective of the CAP was to encourage farmers to become more market orientated and competitive on the EU and global markets. In 2003, the CAP underwent a major reform, it maintained its objective to become more market orientated, but it also introduced for the first time the ambition to “reap the rewards of farming in an environmentally sustainable way”.[6] In a further effort to establish its determination to contribute to the fight against climate change, the EU decided to “green” the CAP in its 2013 reform by introducing payments for environmentally sound farming practices.[7] Despite these measures, the CAP did not turn green, but remained a murky brown. [8] The fact is, conciliating the goal of sustainable agriculture with the CAP’s main objective of making agriculture more competitive is proving to be complicated.

The Commission, in its summary of the 2014-2020 CAP’s performance, announced that the policy’s tools for enhancing environmental protection and climate action had mixed results.[9] This was further confirmed by the European Court of Auditors (ECA), who found that CAP contributions failed to halt biodiversity decline and that data on farmland biodiversity in the EU, unambiguously shows a decline in recent decades.[10] Furthermore, in more worrying findings, the ECA suggests that the 2014-2020 CAP has promoted greater water use, instead of more efficient usage[11] and has not helped to significantly reduce GHG emissions, despite the fact that more than a quarter of all EU agriculture spending (around 100€ billion) was earmarked for tackling climate change.[12]

With 38% of all EU land used for agricultural purposes[13], it is essential for the European Union to green its agricultural policy. For now, all hopes for a more sustainable agricultural sector rely upon the 2023-2027 CAP and Member State national actions.

To accelerate the greening of the system, the EU Platform on Sustainable Finance in its technical working group, was adamant that a taxonomy compliant route for mixed farming was not a niche preoccupation but would rather encourage tried and tested sustainable farming techniques. The technical working group listed several recommendations and technical screening criteria.[14] The Commission recognised the role that needed to be played by agriculture but decided to exclude the sector from the EU Taxonomy for now[15], despite Member States urging the Commission to work on a rapid adoption of further activities in Taxonomy Delegated Acts, particularly agriculture.[16] Furthermore, considering the key role and international scale of the agricultural sector, its exclusion from the Taxonomy may impact the international influence of the Taxonomy in the long term. Since the importance of the sector is internationally recognised, the exclusion of the sector may harm the interoperability with taxonomies outside of EU in the years to come.

Hence, until agriculture is added to the Taxonomy, the greening of the agriculture sector will depend solely on the effectiveness of the 2023-2027 CAP. In its new iteration, its ambition is to make a stronger contribution to the goals of the European Green Deal. The new CAP requires Member States to have a national strategic plan displaying a higher ambition on environmental and climate actions and to update the plan when climate and environmental legislation is modified. The CAP also requires (and helps) Member States and their strategies to contribute to the European Green Deal targets.[17] The ambition is to have 40% of the budget being climate-related and for it to strongly support the European Union’s general commitment to have 10% of its budget dedicated to biodiversity objectives by the end of its multiannual financial framework.[18]

The CAP 2023-2027 has much stronger environmental objectives than its predecessors. Beneficiaries of the CAP will continue to have their payment linked to mandatory rules, which include good agricultural and environmental conditions. These conditions already existed in the previous CAP but have been reinforced in this new iteration. For example, farms of at least 10 hectares will be required to rotate crops to protect soil quality. Organic farms are exempt from this condition, because it is deemed that they fulfil it.[19] Additionally, the CAP will require for farms larger than 10 hectares, that 4% of land be devoted to non-productive elements.[20]

However, these new requirements will need to be accompanied by strong financial support for farmers, for whom these objectives are significant burdens. To incentivise and help farmers transition towards more sustainable practices, 25% of CAP direct payments will be allocated to eco-schemes. Eco-schemes will focus on a common list of action areas defined at the EU level and can be used to support practices such as organic farming and agro-ecological practices. This scheme will be purely voluntary for farmers.[21]

The complexity with the agricultural sector is that it combines economic, trade, health, social, climate and biodiversity interests, as well as food security interests. Conciliating all these aspects and related requirements, even though necessary, can be very complex for farmers. If farmers, especially small farms, are not financially supported, the EU is at risk of losing what was once its pride and joy.[22] Thus, it is key to accompany the transition of the agriculture sector by leveraging both public and private sources of funding.

[1] Eurostat May 2023, Performance of the agricultural sector

[2] OECD-FAO agricultural outlook 2020-2029, Organisation for Economic Co-operation and Development, Paris, and Food and Agriculture Organization of the United Nations, Rome

[3] IPES-Food, 2016, From uniformity to diversity: a paradigm shift from industrial agriculture to diversified agroecological systems, International Panel of Experts on Sustainable Food Systems

[4] Outhwaite C. L., et al., 2022, ‘Agriculture and climate change are reshaping insect biodiversity worldwide’, Nature 605, pp. 97-102

[5] Hallmann, C. A., et al., 2017, ‘More than 75 percent decline over 27 years in total flying insect biomass in protected areas’,PLoS ONE12(10), e0185809

[6] EC, 2003, ‘CAP reform summary’, DG AGRI Newsletter, special edition, July 2003

[7] Reform of the Common Agricultural Policy post 2013 – Consilium (

[8] Matthews, K. B., et al., 2018, Report on the quality check of the robustness of the narrative behind the common agricultural policy (CAP), Project Deliverable 5.5, MAGIC (H2020-GA 689669): “The CAP remains the largest financial instrument though which the management of natural resources can be influenced yet it is possible to question how effective it is being in driving progress towards the EU sustainability goals” (p53)

[9] EC, 2022b, ‘CAP performance: 2014-20. A summary of CAP performance and impact across the EU’

[10] ECA, 2020, Biodiversity on farmland: CAP contribution has not halted the decline, Special Report 13/2020, European Court of Auditors

[11] ECA, 2021, Sustainable water use in agriculture: CAP funds more likely to promote greater rather than more efficient water use, Special Report 20/2021, European Court of Auditors

[12] ECA, 2021, Common agricultural policy and climate: half of EU climate spending but farm emissions are not decreasing, Special Report 16/2021, European Court of Auditors

[13] Eurostat November 2022, Farms and farmland in the European Union – statistics

[14] Platform on sustainable finance: technical working group

[15] Commission Staff Working Document (2023) 239 final/2 §4.4.3 ; Commission Delegated Regulation 2021/2139 §14

[16] Commission Staff Working Document (2023) 239 final/2 §7.2.3

[17] CAP Strategic Plans (2023-2027)

[18] CAP 2023-27 (

[19] GAEC 7, Approved 28 CAP Strategic Plans (2023-2027)

[20] GAEC 8, Approved 28 CAP Strategic Plans (2023-2027)

[21]  Key reforms in the new CAP (

[22] Between 2005 and 2016, the number of farms in Europe decreased by about one quarter. In other words, nearly 4.2 million farms were lost — the vast majority of which were small farms (Eurostat, 2018, ‘Farms and farmland in the European Union — statistics — The evolution of farms and farmland from 2005 to 2016’


Maximilien Boyne, Analyst


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