Brussels, 24/07/2013 (Agence Europe) - Copa-Cogeca is concerned about the balance of the EU-Canada free-trade agreement (it has recently sent a letter to the European Commission) and about the strong expectations for the trade negotiations with the US. Furthermore, it is calling for additional measures - on a voluntary basis - to support the milk sector once quotas expire in 2015, and it believes that the greening measures of 30% of agricultural aid will mean an increase in production costs for farmers. Pekka Pesonen, Secretary General of Copa-Cogeca, was kind enough to answer our questions. He is concerned about the effects of the reduction in agricultural spending between 2014 and 2020 - spending will drop from €43.1 billion in 2013 to €37.6 billion in 2020. “Of course, this is a problem for us. We see big challenges to replace these cuts. We have to ensure that farmers are able to generate income due to the market. This is not yet done.” In September, Copa-Cogeca will elect its new president. (Interview conducted by Lionel Changeur).
Agence Europe (AE): Are you satisfied with the deal on the CAP reform?
Pekka Pesonnen (PP): Generally speaking, we are happy that the institutions came up with a package on 26 June. We see clearly that there was a big improvement to the Commission's original proposal. But there will be some challenges. One of them would be the very restrictive financial framework and transfer of funds between pillars, and the additional requirements farmers would have to deliver in return for receiving the greening payments. But overall, we see that there were some major improvements, and we can live with the package. We hope that the EU institutions can now wrap up as soon as possible the fine tuning items or items related to the MFF [multiannual financial framework].
AE: Do you accept the results on greening and what will be the impact?
PP: We will most probably see increased production costs as an outcome of the introduction of the greening requirements. We can't avoid that. We don't have a figure at the moment, and it is variable. For example, there will be a difference in sectors - like between livestock or livestock dominant regions and areas where arable land is dominant.
AE: What is your opinion on the outstanding issues which will be discussed with the European Parliament (degressivity, capping, transfer between pillars)?
PP: Concerning degressivity, we can live with the solution proposed by the Irish Presidency (5% of degressivity), even though it goes against the principle of not penalising bigger farmers just because they are bigger.
AE: Does that mean that you are against capping?
PP: We are against the capping, yes. We don't like imposing an upper ceiling on support.
AE: What measures do you think would be useful when the EU milk quota regime disappears in 2015?
PP: The principal line is that we have to make sure that volatility in the market place is controlled, if not eliminated. And we need to make sure that farmers can perform economically. At the moment, the market situation is quite good. For once, at least we don't have worrying developments in the dairy sector. We have to take into consideration the distribution of dairy production across the EU. Politically, it is hugely important. It is one of the few sectors that actually exist in all member states.
AE: The quota system aimed to limit overall supply of milk production. What could the next tools be?
PP: I think we all agree that the quotas per se as they are now do not provide sufficient assistance to stabilise the market and especially farmers' income. In 2008, 2009 and 2010, when we had the crisis, we actually had a strong quota regime in place. But it didn't stop the drop in price. All dairy farmers suffered to a certain extent. The quota regime at the moment is no longer sufficient to guarantee farmers' economic returns from the market, and it does not provide enough assistance to stabilise the market. That's why we have agreed that it's ok that quotas in their current form will disappear. However, we would like to maintain the rest of the market management measures. They could also be used to curb market volatility. And we need to have new measures - preferably voluntary measures - in the market place and for farmers to be used individually or as a group: a sort of private voluntary mechanism to curb fluctuations in times of crisis, or some sort of stabilisation of personal income. Also some member state measures in taxation have helped farmers to stabilise their income from year to year. But we prefer EU-level tools to be available to all dairy farmers.
AE: What about the concerns you raised regarding the FTA [free trade agreement] negotiations with Canada and US?
PP: Concerning Canada, which is in the final stage of the negotiations, we have to make sure that it is a balanced deal. And we don't feel that it is balanced at the moment. We have seen some possible progress in some areas - for instance on geographical indications (GIs). But we don't get much return on the dairy sector. When it comes to commodities, we simply cannot accept that in return for giving increased market access for substantial volumes of beef meat and pigmeat, which has been negotiated by the European Commission and the Canadian government, we would receive very little increased market access for EU cheese exports to Canada. This is something we would like to be looked at again. Beef is a sensitive product for us, and EU beef production is under threat. Imports would increase substantially as a result of the deal. Also within the beef sector, we would like to see better division of our chilled, fresh and frozen beef. We feel that the EU has given too much increased access for fresh, chilled products and not put enough emphasis on frozen goods. Also for pigmeat, we have much higher animal welfare requirements, which cannot be imposed on Canadian or US producers, and higher feed costs due to the asynchronous approval process for GM crops, which puts us at a competitive disadvantage.
For the US-EU FTA, we feel very much that there is good potential for both parties to have a reasonably balanced deal. We agree on the objectives in many respects, especially in areas like food safety, but we have different means on how to reach those objectives. That is a big challenge. The Americans can't say that European food is not safe - and, frankly, we can't say that American food is not safe. The complication is to make things work together. First, we should talk about non-tariff measures, other than tarification. We use, for instance, certain production methods, like in meat inspection we have the discussion on lactic acid which was settled. In return, we would like to see the US BSE-induced embargo on beef meat lifted and import requirements for BSE aligned with OIE standards. We have an understanding that this may happen by the end of this year. There are also differences between the US and EU concerning the authorisation procedure for GMOs. The EU has an asynchronous approval process for GM market authorisations, which causes uncertainty and higher commodity prices for European livestock producers. And this is a bit of a challenge. The Americans would like to push their thinking on us, and the Europeans are a bit reluctant for political reasons. The European Commission stated that, for instance, in meat inspection, hormones and GMO authorisation are very much European affairs. It is almost impossible to give in on those. We have specific items like the use of ractopamine used by the United States in the pig meat industry, as well as the American protective measures in place, for example, in fruit and vegetable products or the citrus fruit sector (the EU cannot export citrus fruit to the US), and in olive oil (differences in terms of definitions). We should talk about these trade barriers as it would be important for Spanish citrus fruit and other Mediterranean products for these to be lifted. We have a huge number of issues on the table. They are both offensive and defensive. Perhaps the timetable that has been expressed of two years is a bit optimistic.