At the informal meeting of EU agriculture ministers in Tallinn, from 3-5 September, the Estonian Presidency of the Council wants to push for crisis and risk management tools to be strengthened in the future.
In the Estonian capital on 5 September, the ministers will discuss the new common agricultural policy (CAP) from the angle of the available tools to manage crises and risks in the sector.
“We need risk management instruments that provide holistic solutions to managing risks, including prevention, response and planning”, states the Estonian Presidency of the Council in a working document that is to inform the debate. “One of the lessons learnt is that we cannot only rely on reactive measures”, the Presidency goes on to say.
Risk management and direct payments. In the view of the Presidency, direct payments are of great importance in supporting income in times of crisis. It goes further in suggesting that consideration has to be given to integrating stronger risk management elements into direct payments “to be able to respond to market developments more effectively”. “As we are operating on a single market and are open to price volatility on global level, it is hard to see any justification for division of direct payments based on the historical references”, the document says. The Estonian Presidency does not believe that the current CAP is able to manage crises and is not capable of responding properly to them.
Avenues for the future. The Estonian Presidency wonders whether the amount of the crisis reserve should be increased. It also believes that further harmonisation of support levels would allow direct payments to work as a real risk cover. Among the questions asked of ministers is whether a percentage of direct payments should be put into the risk management fund and whether it should be voluntary or mandatory for farmers.
The EU agricultural sector is facing increasing market (prices) and production (environment) risks, the Presidency states. This, it says, creates uncertainty about farmers’ income and competitiveness, makes long-term planning difficult and hampers incentives to make investments.
A fair balance. The Estonian Presidency points out that, in the reflection paper on the future of EU finances, the Commission says that a fair balance will have to be found between policy measures and financial envelopes, grants and financial instruments, risk-management tools and other market arrangements to cope with risk and unexpected adverse events in the agricultural sector.
Under the rural development policy, risk management schemes are optional. Twelve member states plan to implement risk management measures during the 2014–2020 programming period. “Both mutual funds and income stabilisation tools are under-used for rural development”, the Presidency says.
Support not felt to be enough. Italy and France devote €1.591 billion and €600 million respectively to risk management, far ahead of the others: Romania (€200 million), Hungary, Portugal, Croatia and the Netherlands (all with expenditure of between €95 and 54 million). France took the opportunity to transfer credits associated to risk management from Pillar 1 to Pillar 2.
Total public spending committed for risk management tools is €2.7 billion, with over €1.7 billion coming from the EU (second pillar) budget. This sum of €1.7 billion represents less than 2% of the second pillar funds and only 0.4% of the total 2014–2020 CAP budget, “which means that CAP support to agricultural risk management continues to be very low”, states the Estonian Presidency. (Original version in French by Lionel Changeur)