If he did not reform the income payment system, new member states would explode the budget beyond sustainability. If the CAP remained an obstacle for European services and manufacturing in trade negotiations, these external actors would force deep and unpleasant changes to CAP programs such that European agriculture no longer tied their hands. In other words, failure to reform the CAP could spell the end of the CAP. Fischler’s central goals were to decouple CAP payments from production and to expand the environmental scope and standards of CAP policy . The first goal, decoupling, would help reduce the vast disparity in CAP income payments, whereby 80% of CAP income payments went to only 20% of eligible farmers. It would also put CAP spending into conformity with WTO rules. The second goal, improving environmental standards, would address growing public dissatisfaction with the effects of CAP policy on food safety and the environment. Decoupling would go a long way towards ensuring that the CAP remained financially viable in an enlarged Europe, while mandatory environmental standards and regulations would make certain that newly-added agricultural land was protected as well as guarantee that food produced in Eastern Europe would meet the higher quality and safety standards already in place in the West. While there had recently been high-profile incidents of food-borne illnesses, overall safety and quality standards and rules in the West were much higher than those in the East.

Without these changes, the CAP would be overwhelmed by the financial strain of supporting the new member states, would be challenged by Europe’s trading partners,vertical growing towers and would lose public support due to its social and environmental consequences. Fischler had learned several lessons from the Agenda 2000 negotiations. During Agenda 2000, the early publication of reform proposals allowed vested interest groups the opportunity to mobilize and undermine initiatives before they could even be launched . Farmers in particular, once tipped off about the contents, had moved to lobby their governments to oppose reforms before any discussion or formal presentation and explanation of the proposals could occur. Fischler, therefore, resolved to develop the MTR behind closed doors, like MacSharry had done with his 1992 reform. By working first in secret, Fischler would be able to propose a reform that called for dramatic and far-reaching change—more than was expected under the MTR. A more open development process would leave the agricultural directorate susceptible to interference from the member states. Given that a number of member states wanted the MTR to be nothing more than a review, Fischler opted to keep his proposals under wraps until the time was right. Secrecy also gave Fischler and the Commission a research advantage: they could collect and gather evidence so that when the reform proposal was presented, Fischler would be able to provide data to support his proposals . The member states would then be forced to play from behind in order to mount specific, evidence based criticisms of the Commission’s reform package. Because the content of proposals would be a surprise to the member states, they would be unable to make specific, detailed claims about the effects of reform, and any general reactions, like claiming the reforms would hurt farmer incomes, could quickly be refuted by the Commission, armed with data and evidence.

Another key and more personal lesson that Fischler had learned was to be wary of French President Jacques Chirac. When speaking about his adversaries in CAP negotiations, Fischler stated, “my biggest opponent was Mr. Chirac” . The two had tangled multiple times in the past. Fischler described Chirac as an “intelligent and crafty politician who knew a great deal about agriculture and could manipulate political rules to his advantage” . Fischler recounted that at the Berlin Summit, where Agenda 2000 would be formally adopted by the European Council , Chirac “used a trick” to reopen and revise the agreement . First, Chirac exploited his personal relationship with German Chancellor Gerhard Schröder who held the rotating presidency at the time. Because the CAP was part of the new Multi-annual Financial Framework , the summit chair could open any component of the MFF for debate and reform. Second, Chirac used a complicated rule in the operation and calculation of the CAP budget to compel other member states to abandon a dairy reform that Chirac did not like. Fischler “was furious because the reform was already agreed to, but Chirac went back and undid the work” . Fischler learned the hard lesson that even when the agreement was concluded in the Council of Ministers, he still needed to make sure the holder of the rotating presidency did not reopen the CAP portion of the MFF at the European Council summit meeting. Fischler’s rocky relationship with Chirac continued after the Berlin Summit. Following the Agenda 2000 reform, Chirac unsuccessfully appealed to Commission President Prodi to not renew Fischler’s post as agriculture commissioner for a second term. When asked specifically about the MTR, Fischler again identified Chirac as one of his biggest adversaries .

During the MTR negotiations, Fischler, however, benefitted from the lessons he had learned from the Agenda 2000 reform process and was better positioned to manage and respond to Chirac.Fischler’s initial plan was sent to the Commission on 10 July 2002 after months of study and work conducted largely in secret by Fischler and a small group of associates, including his Deputy Director, Corrado Pirzio-Biroli. The small group included only the top officials at DGVI. These officials relied on studies and analyses by experts within the DGVI administration, who conducted preparatory analysis and calculated potential effects of the reforms but were not fully informed of overarching agenda. Otherwise, Fischler and his associates preferred to keep the civil servants in the dark. Because CAP reform would force DGVI civil servants to change how they worked and adopt new, often complex and cumbersome systems, Fischler thought it unwise to reveal the extent of the plan to them. Fischler was also concerned that the civil servants might leak aspects of the program to their permanent representations, allowing the member states to begin to mount a defense before he could announce his reform package . Keeping potential reform proposals out of the public debate and masking the costs of new policies and reforms are strategies commonly used by welfare state reformers to avoid resistance from those who stand to lose. As with Fischler’s strategy in articulating agricultural policy reform, keeping the proposals secret allows the reformers to conduct research and compile data and evidence to justify the proposed changes. These data, on issues such as expected savings, distribution of benefits across groups, or overall change in total support, allowed reformers to support their proposals with evidence,container vertical farming while those who oppose the initiatives are caught flatfooted. Finally, secrecy prevents welfare state beneficiaries from marshalling opposition to reform before the proposals can be fully presented and explained.The plan developed by Fischler and his associates contained three core elements: decoupling of income payments, modulation, and cross-compliance. The first element called for the full decoupling of direct supports to farmers. Payments are coupled when the amount of money a farmer receives depends on how much he or she produces. Coupled payments were the original backbone of the CAP. When the CAP was created, Europe was struggling through its post-war recovery and food shortages were still a concern. Incentivizing production was essential for overcoming these challenges. Over time, production-based payments got out of hand, resulting in the milk lakes and butter mountains that plagued the CAP in the late 1980s and early 1990s. As previous chapters explain, Ray MacSharry was able to take major steps toward managing the surplus problem by implementing, among other reforms, a partial decoupling of payments from production. In the 2003 reform, Fischler sought to complete the work that MacSharry had started, and completely decouple payments from production.

Full decoupling was also a crucial and necessary step towards strengthening the EU’s bargaining position in the next round of WTO discussions. Coupled payments are market distorting and thus an object of particular ire within the WTO. In addition, coupled payments were exacerbating problems that Fischler feared would diminish public support for the CAP. Production-based payments incentivized farmers to produce at all costs, with no concern for resulting damage to the land. Production-based payments also skewed the distribution of support. The largest farmers were able to produce the most, ensuring that they got the most money. Finally, production-based subsidies, particularly in times of surplus, were wasteful and increasingly costly. Prices remained high for the consumer, yet expensive, massive stockpiles existed that the EU had to spend a considerable amount of money to buy, store, and dump. By fully decoupling the payment scheme, Fischler would be able to address two of the biggest challenges facing the CAP: compliance with WTO rules and the persistence of unequal and environmentally harmful CAP policies. Decoupling would allow CAP payments to be classified as in the WTO’s green box. The EU would thus be able to offer a key concession of sorts in the Doha Round negotiations by moving its agricultural subsidies into the box that is least trade distorting. As a result, the EU would be in position to press its interests across all sectors, as opposed to being targeted by other counties for having an agricultural policy that did not comply with WTO rules and regulations. Decoupling would also reduce the gap in support across the farming community, and diminish incentives for environmentally damaging farming practices. Payments tied to production had resulted in a dramatic disparity in how income support funds were distributed, with less than one fifth of farmers receiving fourth fifths of the support. The largest farmers continued to produce more and more, widening the gap between themselves and smaller or less productive farmers. Moreover, production-based payments incentivize farmers to produce as much as possible, no matter the costs or consequences for the environment. When these payments are decoupled, the income gap between the most productive and the rest can be contained, and the environment is spared the harmful effects of farmers who attempt to grow as much as possible. Most farmers would not stand to lose much in this change from coupled to decoupled payments. The Single Farm Payment , calculated with reference to size of holding and historical yields, would replace the coupled payment system. Specifically, the amount of aid received between 2000-2002 would be divided by the number of hectares actively farmed during that reference period. The resulting figure would be the farmers’ new income payment under the SFP. Under this system, farmers would also gain “complete farming flexibility”, allowing them to grow any crop they desired . Receipt of the full SFP would be subject to meeting stringent environmental, food safety, and animal welfare standards . In the end, decoupling was a way of paying farmers the same money, but from a new pot. This outcome is consistent with one of my core claims, that it is difficult if not impossible to cut support for farmers. The second component of the proposal was dynamic modulation. Modulation is a mechanism employed by the European Union whereby income payments are gradually reduced and the funds collected are distributed to support other initiatives. In other words, this program “modulates” or modifies and controls the flow of funds to farmers and uses the savings to increase spending on other programs or member states. The program was called dynamic because the redeployment of funds was not fixed but instead could respond to those areas most in need of additional financial support. The policy entailed not only a gradual reduction of income payments, but also the redeployment and distribution of the funds collected under the program. Most of the revenue collected would be retained by member states, but earmarked for rural development programs. The rest was to be redistributed to other member states in an effort to reduce existing disparities in the allocation of CAP support. Fischler’s dynamic modulation proposal entailed a progressive reduction in direct income payments, beginning with 3% in 2005 and increasing in 3% increments annually, until it reached 20%. Exemptions were to be made for farms that received less than €5,000 annually.