Brussels, 09/02/2011 (Agence Europe) - Putting in place an instrument to stabilise farmers' income, particularly in difficult times, is an idea attractive to most EU member states. It is one of the proposals from the European Commission contained in its communication on the reform of the common agricultural policy (CAP). Agriculture ministers will continue their debate on CAP reform at their next meeting on Tuesday 22 February. Differences over the “greening” of the CAP persist.
On Monday 7 February, in preparation for the next ministerial meeting, the Special Committee on Agriculture (SCA) discussed a number of key points of the reform: risk management with the putting in place of an income stabilisation instrument, redistribution of CAP payments among member states and among farmers, reorganisation of the direct payments system and the dividing line between Pillar 1 of the CAP (direct aid and market spending) and Pillar 2 (rural development).
Risk management. The Commission is suggesting an income stabilisation instrument complementing the existing systems in the CAP. This meets a request from member states which are seeking a response to price volatility. Funding for such an instrument would be shared among the EU, member states and producers, but implementation costs could be hefty. Costs would be “asymmetrical” as some EU countries suffer more than others from the vagaries of the climate. The instrument would be come into play above a 30% loss of income and would provide compensation of up to 70% of income. Implementation of the instrument would form part of the second pillar (rural development).
Most member states, including France, Italy, Poland, Spain and even the United Kingdom support such a system and are agreed that implementation should be under the second pillar. The UK, Irish and Bulgarian delegations in particular, want the instrument to be voluntary. Some other member states, including Denmark, Germany and the Netherlands, are doubtful of the usefulness of such a system, arguing that existing instruments (safety net, market instruments) were enough and that such a facility could result in competition distortion, additional complexity and further costs. Several delegations, including Italy, the UK, Germany, Greece and Spain, wondered if the instrument would be consistent with the “green box”. For the Belgian and Irish representatives on the SCA, it is imperative that the system is simple and flexible. Some delegations wondered about the responsiveness of the system with reimbursement coming in year n+1 for crises happening in year n. And lastly, countries such as Bulgaria, Greece, Poland and Romania, were concerned about how much producers would be expected to contribute to the system.
“Greening” of some CAP aid. The greening of the first pillar is the major innovation proposed by the Commission, which believes that environmental issues should become an EU priority: it will be for farmers to choose from a range of ecological measures proposed (permanent pasture, set-aside, crop rotation, etc.). Some older member states (Denmark, France, the Netherlands, Spain and others) back the Commission proposal that these measures should come under the fist pillar of the CAP, while others (Germany, Italy and the UK) feel they are better suited to the second pillar. Among the newer member states, Bulgaria, Poland and the Baltic states go with the Commission, while others, including the Czech Republic, Romania and Slovakia, would prefer to use the second. Many countries fear a much too complex system.
Several member states have concerns over the Commission's proposals for less favoured areas (combining funding of first pillar and second pillar rural development measures). Austria and Germany, in particular, feel that the second pillar is better suited to this policy.
Allocation of aid. The allocation of payments among member states is one of the major weaknesses of the current CAP. The Commission says that, for there to be a fairer allocation of aid, there have to be objective criteria. Member states do not all share the same views on what should be taken into account in these criteria. Many of the newer states (Poland, Romania and the Baltic states among others) and some of the older states, such as Italy and Portugal, are calling for the area of farms to be taken into account. Ending historic references is an explicit call from a number of states, including Romania and the Baltic states, while others (Denmark, Sweden, and others) want to retain some of the historic references. Other countries, including Belgium, Finland and Luxembourg, are calling for the introduction of other “economic” or standard-of-living criteria. The re-allocation of aid among member states will come into effect over a transition period, which the older member states, like France, Italy and Spain, want to be as long as possible to allow the sector to adapt to the changes, while some newer member states would prefer the transition to be as speedy as possible. (L.C./transl.rt)