Pac-12 Model EU; The Grand Duchy of Luxembourg; CAP Reform Position Paper

Image<– The Grand Duchy (of Luxembourg)

Bring it, Model EU.

Position Paper

Importance of the CAP

The Grand Duchy of Luxembourg acknowledges the Common Agricultural Policy (CAP) as the main instrument for stabilizing effective, sustainable and competitive European Union (EU) agriculture. Confronting new challenges such as climate change, supply and security of food, energy, environment and biodiversity, the EU must use the CAP to achieve subjective and pragmatic protection of EU agriculture. Thus, negotiations for the future CAP are crucial and should bring a result, which provides advantages for our farmers, consumers and the economy.

Luxembourg recognizes the need to be proactive in CAP reform, for both agricultural and economic demands on the EU have become increasingly larger. Changes in both 1992 and 2003 represented the progressive pragmatism of CAP reform. Such pragmatism should continue, as the CAP represents 40% of the European Union’s funding allocation. Reformation of the CAP must be targeted at a deepening of the funding model, in order to establish a more perfect unification of EU agricultural markets, in order to achieve subjective goals laid out by Agenda 2020.

Agriculture of Luxembourg in relation to Europe

As a formative member of the European Union, the Grand Duchy of Luxembourg maintains a favourable relationship with its neighbouring countries in regards to agricultural support Devoting over 50% of the land to agricultural endeavours, with average farm size around 2 hetacres, Luxembourg emulates the type of farming that suffers from the current CAP subsidy model, and yet has the potentiality to represent an ecologically and economically sound agricultural market as a result of CAP reformation; inasmuch as the smaller farming method encourages decentralized farming and agricultural cooperation between farmers (Co-op farming).

Co-op farming represents over 83% of Luxembourgish farms, prompted by farming crises of 1988. These crises were the emergence of an ongoing trend, wherein local farmers were unable to operate independently due to poor yields and market decline. Co-op farming has since gained in popularity, as farmers seek assistance beyond the small CAP subsidies they are provided, due to small farm size. CAP payments do not adequately assist smaller farms, necessitating greater trade expenditure for local markets, resulting in higher priced goods, and decline of agricultural employment. Agriculture represents over 27% of Luxembourg’s employment, making agricultural well being central to economic and social stability. With involvement of over 80% of national revenue in banking, Luxembourg was hit hard by the Euro Zone crisis and seeks to sustain employment and other internal affairs.

Small and local farming in Luxembourg has attracted the attention of several ecologically-minded cooperatives, namely Bio-G, who are interested in promoting “greener” farming among associated farmers. Luxembourgish farming co-ops portray alternative farming and marketing methods that are environmentally and economically sustainable. CAP reform should bolster farming co-op initiatives, in the interest of increasing financial stability for small farmers, and realize local farming advantages, to increase ecological farming methods and European consumer-focused marketing strategies.


Underlining the environmental and economic initiatives of Denmark’s proposed CAP reform, the Grand Duchy of Luxembourg respects the consideration for social well being in respect to financing public goods. The alleviation of public goods-related costs to farmers and the Grand Duchy of Luxembourg, through subsidies, gives Luxembourg the opportunity to further focus resources to the agricultural market itself.

Luxembourg also agrees with a 30% expenditure of the CAP towards ecologically motivated Pillar 1 subsidy payments. Luxembourg emphasizes a 5% CAP Pillar 1 expenditure towards development, in the interest of making use of the rising number of ecologically-minded research in Europe. Research and development is a long-term investment, with guaranteed returns. As the number of educated Europeans grows, allocation of CAP funds towards research supports agriculture, the environment, the economy and most importantly, the opportunity for European innovation and success.

Promotion of another 5% of Pillar 1 CAP funding towards local farming initiatives is encouraged, to create reliably ecological methods in local communities, whereby creating a low-priced and healthier standard for European agriculture. Local farming decreases transportation-related problems, such as gas and energy cost, which increases cost of food for the consumer, and emissions from transportation vehicles. Locally grown food also provides health benefits due to shorter transportation and environmental factors.

Luxembourg strongly disagrees with the €300,000 cap on direct income support subsidies. Such a cap limits the ability for larger farms to operate at full capacity, and negates the possible incentives to farm under the new ecological CAP initiatives. Luxembourg supports a targeted “menu” approach to subsidy payments, with a sliding scale dependent on specific ecological methods used, farm size and production amount. Luxemboug supports the supranational initiative of direct income support payments being distributed directly from the EU, in order to minimize the burden of allocation for individual states. Through direct payments from the EU, the EU can better analyze the state of the agricultural market as a whole.

Denmark’s presidency of the EU shows a dedication to Agenda 2020, represented by a comprehensive Agenda concerning the security of the CAP. In high opinion of the current Agenda initiatives, Luxembourg proposes to open the Agenda for the inclusion of discussion about a farming Co-op subsidy model. Luxembourg maintains this position, due to the large number of suffering small farmers across Europe, and the potential they have for success through cooperative farming. Luxembourg encourages each European country to consider the advantages of local farming, and consider the opportunities for agricultural stability through cooperation, similar to the strength of the European Union.


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