Murcia, 30/04/2002 (Agence Europe) - European Agriculture Ministers, who met on Tuesday at the Informal Council in Murcia (Spain) under the presidency of Miguel Arias Canete, were all of a mind to strengthen the second pillar of Common Agricultural Policy (CAP), and rural development, but they expressed differences over the practical ways to achieve this. Most Member States said they preferred modulation of direct aid in order to release funding to this end, unlike others, such as Italy and Denmark, that by far prefer application of aid according to the principle of degressivity.
Commissioner Franz Fischler recalled he would take the opportunity of the mid-term review of CAP to ensure this policy is strengthened, as it best meets the expectations of society, while declaring that the Member States insisted this change should not entail an "additional burden" on their budgets. Mr Canete felt that broad agreement had taken shape on the need to: - have additional elements of subsidiarity available (to make the use of programmes more flexible); - keep the double structure (first pillar of market spending and second of rural development spending); - and gradually strengthen rural development policy.
All Member States called on the Commission to take measures to simplify the rules of the CAP still further, mainly because it is becoming difficult to make a distinction between the provisions that come under EAGGF-Guarantee and those that come under EAGGF-Guidance. Italian Agriculture Minister Giovanni Alemanno said making the modulation compulsory would not resolve the current problems, all the more as this principle is very little used and over complicated. He would prefer to apply the principle of "redistributive degressivity of aid". Mr Alemanno specified that he hoped to introduce a key for breakdown for this, a key that would reflect the weight of the different national farm systems, depending on the surface area used (SAU), the number of farms (and number of employees) and the value of production. Italy is also in favour of a "gradual" transfer of funds towards rural development. The Netherlands, which tends to be in favour of the cofunding of measures (on condition that CAP is not "renationalised", it insisted) in order to give the various countries more responsibility, called for administrative simplification. It was open to the definition of reference criteria for modulation, but opposed to the principle of breaking the link between aid and production. Luxembourg was opposed to the principle of compulsory modulation and degressivity. Margaret Beckett (UK) considered such problems should be put into perspective with enlargement and WTO negotiations. She restated her support to the principle of degressivity and to the "uniform" modulation mechanism applied to all farmers. Austria (like France and Portugal) insisted on the primordial role of the Common Market Organisations (CMOs). Wilhelm Molterer called for there to be no reform of CAP before 2007. He insisted again on keeping the financial framework fixed in Berlin. He was in favour of modulation (even compulsory) of aid taking into account environmental considerations, the specific nature of mountain farming and the small farmers. Finnish Minister Raimo Tammilehto was not so much in favour of modulation and insists on taking the northern dimension into account in rural development programmes, and on the importance of aid to young farmers. Germany specified it would apply the principle of modulation for direct aid next year in order to remunerate services not related to production (protection of the environment and animal welfare). Renate Künast reaffirmed the usefulness of national co-funding although it would inevitably apply in a differentiated manner to the different Member States. She said "yes" to compulsory aid modulation bearing in mind the different size of farms, and asked for greater liberty to be allowed to Member States for managing funds. She expressed opposition to the principle of degressivity. Portugal declared it was necessary to bring more flexibility into (current) cofunding and not derogate from the principle of Community solidarity. It insisted on keeping the preponderance of the first pillar. It is open to the principle of modulation, but in a Community framework (uniform rate), and against aid degressivity. In the absence of the French Minister, the replacement representative pointed out that his country was not in favour of the principle of unlinking aid (lack of visibility regarding beneficiaries) and called for greater simplification of the current CAP rules and competences between Member States and Commission for the management of programmes. Margareta Winberg, the Swedish Minister, called for dismantling of the CMOs, which would no longer need to be there in a market economy, she said. She spoke in favour of a new concept of "collective utility" in favour of consumers, a concept that would make farmers more responsible. She also called for recent measures on the budgetary level to be adopted.
Here are some of the main concepts outlined in rural development:
- Modulation: since the Agenda 2000 provisions, Member States are able to reduce Direct State Aid by 20% from a farmer if three criteria are satisfied: total amount paid out, profitability of the farm (standard gross margin) or number of workers employed (employability). This procedure is designed to make funds available for rural development measures and is used by the United Kingdom and France and in 2003 by Germany. Portugal appeared to support the idea at one stage but now seems to have changed its view. Franz Fishchler speaking at an Informal Council fringe meeting, explained that Germany only foresees a reduction of 2% in direct aid for this end, whilst the United Kingdom is counting on a maximum reduction in 2006 of 10%. This clearly shows the differences that exist and what emphasis modulation should be given, even among Member States that support this mechanism.
- Degression: this idea is supported by France and the United Kingdom but applied differently and could be retained by the Commission to strengthen the rural development pillar by combining it, for example, with modulation. France would like a reduction in aid depending on crops (3% for large-scale crop cultivation and 1% for other sectors), while the United Kingdom would like to apply a uniform rate of 4% for all other crops). This mechanism has not yet been decided on, would have three advantages: budgetary economies; better compliance with WTO demands (given that this aid would come from the "Green Box" on aid not subject to reduction obligations); the possibility of transferring some of the economies made to rural development (20% for the United Kingdom and 25% for France)
- Ceilings: this deals with a suggestion by Austria (that has not yet been retained) and supported by Germany, that would consist in reducing aid that exceeds the threshold set by the Member State.
De-linking: the objective is to provide aid depending on the surface area and not on performance production, an approach retained by the Commission for the simplified system in candidate countries. The Netherlands and Germany have outlined a simple scheme to be applied within the framework of national budgets. This system currently only exists in the arable crop sector but is still dependent on revenue per hectare
Distribution of market and rural development expenses
Distribution of CAP expenses in 2001: Germany, 82.7% for market expenses, 17.3% for rural development; Austria, 56.5% and 43.5%; Belgium, 95.8% and 4.2%; Denmark, 95.22% and 4.8%; Spain, 82.9% and 17.1%; Finland, 58.4% and 41.6%; France, 92.1% and 7.9%; Greece, 87.9% and 12.1%; Ireland, 79.1% and 20.9%; Italy, 79.8% and 20.2%; Luxembourg, 61.9% and 38.1%; Netherlands, 93.1% and 6.9%; Portugal, 70.8% and 29.2%; United Kingdom, 94.3% and 5.7%; Sweden, 79.8% and 20.2%. In total, funds for rural development provided by Member States in 2001 rose to EUR 6.5 billion, 14.9% of all agricultural expenditure (EUR 43.6 billion).