A PERSPECTIVE ON AGRICULTURAL LABOR PRODUCTIVITY AND GREENHOUSE GAS EMISSIONS IN CONTEXT OF THE COMMON AGRICULTURAL POLICY EXIGENCIES

European agriculture is the result and experiences of a numerous and md determinant reforms during last period of time. Labor productivity and green gas emissions represents two major turning points in analyzing the Common Agricultural Policy evolution. The main aim of this research is to make a synoptic analysis of the agriculture evolution in context of the new Common Agricultural Policy paradigm transformation from the perspective of sectorial structural changes determined by the new environmental exigencies and labor productivity. © 2021 EA. All rights reserved.


Introduction
Agriculture represents more than a source of food production and it is a sector that brings many contributions, except consolidating the GDP -more in the case of Romania, than in the case of the European Union (EU). Agriculture involves much more: rural communities rely on agricultural activities; agriculture involves natural resources management, preserves the specific lifestyle in rural areas and much more. Not only that, but also agriculture acts as an important generator of jobs in rural areas, especially in developing countries, where the share of the population living in the rural area from total population is considerable.
As it is already argued in literature (Burlacu, 2018;Galluzzo, 2018;, the Common Agricultural Policy has had a significant impact on the Romanian agricultural sector in both financial frameworks: 2007-2013 and 2014-2020. Not only that, but CAP will also continue to have a major influence on the Romanian agricultural sector, as the next financial framework approaches: 2021-2027. This policy is one of the most important European policies affecting such an important part of the economy and population, which passes through a new reform at the beginning of the 2021-2027 financial framework. Through its pillars, the Common Agricultural Policy is not only affecting EU farmers, but it is actually affecting all the EU citizens, in many ways. As is already highlighted (Matthews, 2018;Lovec et al., 2020), Common Agricultural Policy is structured on two complementary pillars. Pillar I concerns direct payments and market-oriented measure, aiming to contribute to achieving a higher level of environmental and climate ambition. Pillar II is meant to aid development in rural areas through economic and social schemes. According to (Kiryluk-Dryjska and Baer-Nawrocka, 2019; Pawłowski and Piotr, 2020), there are two essential mechanisms at designed to finance measures the CAP, specific to each of the two pillars: EAFRD (The European Agricultural Fund for Rural Development) and the EAGF (European Agricultural Guarantee Fund).
The latter finances expenditure meant to support the direct payments to farmers, measures designed to inform and promote agricultural products on the Community's internal market, intervention measures aimed at regulating agricultural markets and other specific measures. On the other hand, the EAFRD corresponds to Pillar II of the CAP and it designed to finance rural development measures in the EU. In this context, CAP has multiple dimensions: the market-oriented and financial support dimension and the rural development dimension. Both dimensions are interconnected and sustainable, considering that they act complementary and the each EU Member State must co-finance the projects which contribute to the rural development in their country. CAP is not only helping farmers ensure food security in the EU, but it also has a significant contribution to developing rural areas and to building a more sustainable and environmentally-friendly economy in the rural areas.
Even on the verge of the 2014-2020 financial frameworks' end, Romania's agriculture is still trying to catch up to the competitiveness and green criteria of the European Union. Reducing the gaps in productivity and competitiveness represents Romania's main focus when approaching the agricultural sector. Romanian rural areas are the evidence of an intense out emigration to urban agglomerations and wealthy cities. Mitigating the negative socio-economic impact of this transition and the lack of competitiveness in the agriculture, the CAP represents the main instrument for improvement in the case of Romania.
The main aim of this research is to study the evolution of the Romanian agriculture in the context of the new Common Agricultural Policy paradigm transformation from the perspective of sectorial structural changes determined by the new economic exigencies. This research paper contributes to an explicit understanding of the CAP problems as a specific policy with great impact on Romanian agricultural system and rural community's development.

Literature Review
Agriculture in the EU countries is differentiated in many regards, similar to the many ways each of the CAP measures have different results, based on the specificities of each state. Romania tries to converge to the sustainable development of agriculture in the European Union by using CAP instruments in order to adopt measures that fit best the national circumstances; measure meant to mitigate the effects of the declining rural population, poor development of non-agricultural activities in rural areas which generates dependence on subsistence agriculture; low level of labor productivity are other issues (Comanescu, Foris and Foris, 2019). Additionally, through adopting CAP measures, agricultural entrepreneurial income is meant to increase among all EU Member States (Marcuta and Marcuta, 2019). This can also be achieved by empowering the diversification of entrepreneurial initiatives in the rural economy -financeable through the second pillar of the CAP (Răzvanţă, 2020).
Divergence still exists between the EU Member States when approaching the agricultural sector. Denmark is a country with a low population and high-income potential. On the other hand, Poland and Romania are countries with high population potential, with an important share of people working in agriculture, but with lowincome potential (Tluczak, 2020).
However, converge must be achieved in the agricultural sector in the EU. The measures supported by the CAP must be constantly updated according to the needs of farmers and according to the market situation at different moments and eventually trying to anticipate future outcomes (Dumitru et al., 2017a). For developing countries such as Romania and Bulgaria, both CAP pillars are critical for agriculture, but with an emphasis on the first pillar. Adopted measures need to be taken in order to eliminate the existing gaps with the other countries, especially in the Northwestern EU (Dumitru et al., 2017b). Galluzzo (2016) demonstrated the existence of a direct correlation between the Single Area Payments Schemes and crop specialization. Mack, Fintineru and Kohler (2020) demonstrated that the results of implementing the CAP in Romania have positive outcomes: higher the treatment intensity imply the generation of more new enterprises and that funds higher than €50 per capita significantly contribute to the generation of newly established in rural areas. Through the first pillar of the CAP, the financial subsidies allocated for Romania have had an effect on the development of agritourism, yet this is in contrast with the subsidies disbursed under the second pillar have had no unique effects in any Romanian development region (Galluzzo, 2020).
As it is remarked by Lupu,( 2020), during the 2014-2020 financial framework, Romania encountered several difficulties related to the CAP structure: Romania has a deeply fragmented agricultural land and there are many small and very small farms, therefore there is a lack of cooperatives; the population working in agriculture is aged and the labor force involved in agriculture is inefficient .

Research findings
When analyzing the evolution of the labour productivity in agriculture (EUR per capita), one can notice the divergence between the Northwestern European countries and those from the Eastern Europe and the Baltics. Source: Own representation, based on the CTX_SOC_12_1 raw data Eurostat, 2020  Source: Own calculations and representation, based on the CTX_SOC_12_1 raw data Eurostat, 2020 Regarding the dynamics of the labour productivity in agriculture (percentage change) one can notice the tendency for convergence in the case of the Baltics and Eastern European states to the EU-27 average. Even though these states are facing issues in terms of the labor productivity in agriculture, they are catching up to the labour of the Northwestern European countries through harnessing the instruments of CAP. The Northwestern European states have a slower rate of growth in terms of the labor productivity in agriculture, since they are already ahead of the Baltics and Eastern European states. For these findings, there is evidence: huge increases (expressed procentually) of the labor productivity in agriculture in country such as: Bulgaria (38.6%), Poland (30%), Slovakia (26.73%), Latvia (26.41%) and Hungary (21.07%), along with decreases or small increases in the case of the Northwestern EU-27 countries, such as: Denmark (-7.51%), Belgium (-1.65%), Germany (-1.66%), Netherlands (7.19%) and France (8.35%). Unfortunately, Romania is still behind of the Baltics and other Eastern European States in terms of converging to the EU-27 mean, mainly due to the small increase rate (1.62%) in terms of labor productivity in agriculture, while simultaneously having the least labor-productive agriculture in the EU-27 in 2018. Source: Author's own representation, raw data source: Eurostat, 2020 Correlating the labor productivity in agriculture with the total utilized agricultural area in the EU-27, more discrepancies are observed. With the exception of France, Germany and Spain, the Northwestern European countries and more specifically: Netherlands, Denmark and Belgium are among the most labor-productive countries in the EU-27 in terms of agriculture, yet the total utilized area in those countries is below the average of the EU-27. With extremely limited areas dedicated for agriculture, the Netherlands  Source: Author's own representation, raw data source: Eurostat, 2020 The same type of relationship can be observed when considering the CAP direct payments (expenditure, expressed in million EUR) in relation with the labor productivity in agriculture. Results confirm that Romania's and Poland's labor productivity represents only 6.76% of the Denmark's, Belgium's and Netherland's labor productivity in agriculture, while the latter's direct payments sum up only to 38.02% of the expenditure made in Romania and Poland.
Consequently, through the CAP, the EU supports countries like Romania and Poland, with huge labor productivity gaps, yet countries with impressive agricultural areas when reported to the mean recorded in the EU-27. An emerging question is whether the CAP should be reevaluated in order to include the necessary instruments to finance investments and the transition to a more digitized agriculture with modern technologies and equipment. Is the current distribution of the CAP budget structured well enough in order to ensure the success of countries such as Poland and Romania in their mission to converge to at least the average labor productivity in agriculture in the EU-27?
Countries such as France and Germany are competitive in terms of the labor productivity in agriculture and still the direct payment expenditure in these countries sum up to 30.75% on the total direct payments in the EU-27. Taking all these findings into account, one can notice that labor productivity in agriculture is definitely not tied to the direct payments expenditure, nor is it with the utilized agricultural area. Mitigating efforts in the sense of labor productivity convergence in the EU-27 is dependent on factors such as: fostering precision agriculture, ensuring investments in highly performant technologies and equipment, knowledge transfer and others. However, the volume of the direct payment expenditure needs to be considered differently in less productive countries, mainly because an important share of the total population relies on subsistence farming. In this context, CAP budget allocation becomes a double-edged sword.
One of the components of the first pillar of the CAP is meant to provide an additional support to offset the cost of delivering public environmental goods not remunerated by the market. This component can be referred to as the 'greening' component. Through this component of the first pillar, the CAP brings its contribution to the 13 th goal of sustainable development, by integrating climate change measures and fostering green initiatives in the EU's agriculture. Source: Author's own representation, raw data source: Eurostat, 2020 Considering this, it is important to analyze the evolution of the greenhouse gas emissions generated by the agriculture of the EU-27 members. The trend should be descending judging from the perspective that the CAP finances green agricultural practices. At the level of the EU-27, the CAP successfully managed to decrease the volumes of the greenhouse gas emissions in 2018 by 0.32% (reported to 2017).  Source: Author's own representation, raw data source: Eurostat, 2020 Correlating the greenhouse gas emissions from agriculture with the agriculture greening expenditure through the first pilar of the CAP, very few discrepancies can be noticed: − The Netherlands and Ireland generate high volumes of greenhouse gas emissions (11.08%), yet receive only 5.1% of the sum of greening expenditure (EU-27), which signals the lack of green initiatives and practices in their agriculture; − Spain, Italy, Poland, Romania, Czechia, Hungary and Bulgaria are fond of eco-friendly practices in agriculture (14.70% of the total greening expenditure is allocated to those states) and produce only 16.60% of the greenhouse gas emissions in the EU-27 Even though the Netherlands is the most labor-productive country in agriculture in the EU-27, the same country encounters issues in the transition toward applying ecofriendly practices in agriculture. Germany, the biggest greenhouse gas emissions generation from agriculture, follows the same pattern: even though 13.09% of the total greening expenditure is redirected to Germany, this percentage is not sufficient when considering that 20.56% of the total greenhouse gas emissions is generated by the German agriculture.
Regarding Romania's greening expenditure -greenhouse gas emission ratio, the latter is in the favor of the greening expenditure: 1.11. A much more favorable situation than in the case of Germany (0.63), let alone Ireland (0.55) the Netherlands (0.35), but greening the agriculture requires changes at the top of the list of the greenhouse gas emissions generators. Spain is the best example to be followed in this regard, the third generator of greenhouse gas emissions, yet with a greening expenditure -gas emissions ratio of 1.61. In the EU-27, the average of this ratio is 1.26, with a maximum value in the case of Slovakia (3.82) and minimum in the case of the Netherlands (0.35). Source: Author's own representation, raw data source: Eurostat, 2020

Discussions
In 2018, in the EU-27, the greenhouse gas emissions from agriculture are highly positively correlated with the agriculture greening expenditure: 88.59%, which is statistically significant (p-value is 0.00). The existence of the high positive correlation and the scatter plot in Figure 7 confirm that a linear regression model can be constructed. This research method is quantitative, based on cross-section statistical data. The cross-sectional linear regression method was applied and the econometric model was designed in Table 1, considering the greenhouse gas emissions from agriculture as the independent variable and the agriculture greening expenditure was considered the dependent variable. Agriculture, Year 68, No. 1, 2021, (pp. 53-67), Belgrade  Source: Author's own representation in EViews, raw data source: Eurostat, 2020 Based on Table 2 Germany, Italy and Spain are the most important outliers which cause divergence between the EU-27. These three countries encounter issues in fitting into the linear regression model, as it can be noticed in the residual plot from Table  2. One the one hand, Germany generates more greenhouse gas emissions than it can attract funds for greening its agriculture. On the other hand, Italy and Spain act as role models for sustainable production patterns in agriculture, since they successfully attract more funds for practicing a cleaner agriculture. Another question emerges in this context: should the CAP adjust and limit the amount of funds distributed to countries which generate less greenhouse gas emissions (reported to the EU-27 mean) in order to influence other EU-27 members (such as Germany) to foster sustainable production patterns in agriculture through higher volumes of agriculture greening expenditures?

Conclusions
In today's knowledge society, agriculture still has a crucial role in meeting the goals of sustainable development. Agriculture significantly contributes to capitalizing the national economic potential through harnessing the natural capital's potential.
In the European Union, the Common Agricultural Policy aims to increase agricultural productivity through various methods; to stabilize markets; to ensure fair standard of living for farmers and reasonable prices for consumers -therefore CAP aims at providing food security for the EU citizens, but in a complex manner that ensures sustainable development, the transition toward the green and circular economy, diverse and prosperous in the rural areas. The latter should not be dependent on agricultural activities.
This study aimed at analyzing the evolution of the Romanian agriculture through the lens of the new CAP paradigm, which is much more focused on the need for agriculture to become green and circular. This study's contribution resides in highlighting the major issues related to the effects of the evolution of the Common Agricultural Policy on the Romanian agriculture in terms of accelerating or decelerating the convergence, divergence or imposing a major need for adjustments.
The evolution of the labor productivity in agriculture (EUR per capita) points to the divergence between the Northwestern European countries and those from the Eastern Europe and the Baltics. The most negatively affected countries by the labour productivity gap are Romania (4,955 EUR/capita), Latvia and Poland. Correlating the labor productivity in agriculture with the total utilized agricultural area in the EU-27, more discrepancies are observed. Northwestern European countries such as: Netherlands, Denmark and Belgium are among the most labor-productive countries in the EU-27 in terms of agriculture, yet the total utilized area for agriculture in those countries is below the average of the EU-27 -which is a favorable situation for those countries. The same type of relationship can be observed when considering the CAP direct payments in relation with the labor productivity.
Regarding the sustainable development in agriculture, the link between the greenhouse gas emissions from agriculture and the agriculture greening expenditure through the first pilar of the CAP were analyzed and very few discrepancies were noticed in the EU-27. Because the greenhouse gas emissions from agriculture are highly positively correlated with the agriculture greening expenditure (88.59%), a simple linear estimation model was designed. Based on the coefficient of determination, 78.49% of the variation of the agriculture greening expenditure is explained by the the greenhouse gas emissions from agriculture. Germany, Italy and Spain are the main EU-27 Member States that act as outliers (divergence causes) in the constructed econometric model.
The next financial framework should act as a main vector for delivering convergence in the agricultural sector in the EU-27. Romanian agriculture is facing multiple challenges: catching up to the competitiveness gap and meeting the sustainable development goals.