Future Fit Farming: Policy solutions for a diverse, resilient EU farming sector

Current subsidies make plant foods disproportionately expensive, compared to animal products. CAP’s coupled income support mechanism (CIS) should prioritise sustainable crop production by increasing support for protein crops, fruit, and vegetables. Furthermore, payments for ecosystem services – including soil health, animal welfare, biodiversity, and social conditions – provide fair incentives for farmers.

True-cost accounting for food production should shape subsidy reforms by aligning financial incentives with farming practices that reflect the external costs of production. This involves redirecting subsidies away from systems that contribute to environmental degradation and impact negatively on public health, and toward sustainable, organic, and regenerative farming methods.

The incumbent system of agriculture, especially intensive livestock production, is entrenched in several path dependencies, including cultural attitudes, existing infrastructure, institutions, policies, power dynamics, and research-and-innovation priorities. Given that strategic support for crop diversification is essential, stronger provisions are needed for incentivising farmers to grow more protein-rich crops for direct human consumption.

Expanding legume production, especially as part of organic and regenerative methods, can enhance soil health, increase crop biodiversity, and reduce reliance on synthetic fertilisers, while also creating new economic opportunities for farmers and across the value chain. Furthermore, given that strategic support for crop diversification is essential, the next iteration of CAP needs to include stronger provisions for incentivising farmers to grow more protein-rich crops for direct human consumption.

Dedicated funds for research and development need to increasingly focus on region-specific planning for farm diversification, tailored to domestic requirements, capabilities, and market competitiveness.

A just-transition funding mechanism is needed for the EU’s agri-food sector, similar to that which the European Commission has established for the energy sector. Such a mechanism could incorporate a one-off investment in order to support the development of new infrastructure that meets environmental requirements and targets, while also promoting the adoption of sustainable business models. The 2024 report by the Strategic Dialogue on the Future of EU Agriculture recommends the establishment of a temporary fund – the Agrifood Just Transition Fund (AJTF) – that is separate from CAP funding. Additionally, there is a need for greater mobilisation of both public and private capital in order to enable both small- and large-scale farmers, along with food-system stakeholders broadly, to transition towards sustainable production models.

Access to financial support, including low-interest loans and capacity-building services, is crucial in order for farmers to shift to viable business models that incorporate sustainable agri-environmental practices. To facilitate resilient and sustainable farming practices, the Strategic Dialogue on the Future of EU Agriculture likewise emphasises the need to adapt CAP in order to strengthen farmers’ access to finance and improve their position within agri-value chains.

The changes in agricultural practices that are required for diversification need to be accompanied by investments in training and knowledge networks. Farmers and other land managers will need access to a broad range of diversification strategies, supported by advisory services (also called ‘extension services’). Advisory services are currently geared predominantly toward intensive production. Rebalancing these services to support farmers pursuing or currently practicing organic, regenerative, or plant-based (or other broadly agroecological) farming will be essential for fostering a diverse, resilient, and sustainable farming sector. Offering farmers access to case studies and success stories will encourage diversification.

Model demonstration networks would improve rural advisory services (or ‘extension services’), build trust within farming communities, and assist in developing regional supply chains, with a strategic role for farmers and targeted agricultural products.

Governments and NGOs should allocate resources in order to establish peer-to-peer consultant networks that bring together farmers, local communities, governments, and industry partners. These forums would help to facilitate the sharing of knowledge about diversification and climate-resilience strategies, as well as helping to mobilise funding and advocate for policy changes.

Establishing minimum requirements for food produced through organic or regenerative practices can help local governments to reduce and mitigate the long-term impacts of unsustainable diets. These requirements could also create a stable market for local, small-scale producers, stimulating local economies and reconnecting consumers with their food sources. 

VAT on organic and plant-based foods is often higher than that on animal-based products. Retailers also tend to apply higher profit margins to organic and plant-based products. These factors collectively reduce the affordability of more sustainable options. Creating a level playing field for these more sustainable options is essential, while continued innovation in plant-based food production will reduce long-term costs.

Effective policies need to reflect farmers’ perspectives, avoid overly prescriptive measures, and restore their decision-making autonomy. In order to successfully diversify agricultural production systems, securing buy-in from farming communities is imperative. However, short-term concessions will only dilute the intentions of environmental-policy frameworks and build resistance to the uptake of new technologies. A systems-transformation on this scale needs to be founded on a long-term vision and decisive leadership. Governments need to enhance planning security and provide structural support for sustainable practices, thus helping to foster agency and capacity building.

The responsibility for monitoring, reporting, and verification systems, including aspects such as methane emissions and labour intensity, often falls on producers, which places an unfair burden, especially on smallholders. Streamlining these complex reporting methods could enhance the uptake of eco-schemes, making it easier for farmers to adopt sustainable practices and receive incentives for doing so.