Brussels, 10/07/2002 (Agence Europe) - On Wednesday, the European Commission adopted a communication presenting the main lines of the proposals for mid-term review of Common Agricultural Policy (CAP), as well as two other documents, one on the functioning of the rice market and the other on the future of the milk quota regime. The legislative proposals are expected for the month of November.
We would point out that, although a large number of Commissioners supported the measures proposed by Commissioner Franz Fischler, some of his colleagues hoped his proposals would go further: Michaele Schreyer apparently hoped there would be a sufficient margin in this sector to finance future sectoral reforms. Some Commissioners of Dutch or German nationality insisted that the price fall for cereals should be more ambitious, unlike others (like Messrs Barnier and Busquin), who were uncertain about the need for such a measure. Other Commissioners expressed doubt about the compatibility of decoupling direct aid from the provisions of Agenda 2000.
A summary of the proposals envisaged by the Commission is as follows (see details especially in EUROPE of 8 and 9 July, p.8, and 29 June, p.8):
Decoupling of direct payments: The Commission proposes to introduce a single aid to income and per farm, decoupled from production. In a first phase, the aid would apply to arable crops, to the beef and sheep sector, and also to pulse vegetables and potatoes for starch manufacture. Revised payments for rice, durum wheat and dried fodder will be integrated in the support system. The Commission specifies that farmers benefiting from the new decoupled agricultural payment system may grow all kinds of crops on their land, including those that are still the subject of traditional support (linked to production) as long as they have not been explicitly ruled out. The granting of full decoupled aid to farm income, and of other direct payments, will be subject to compliance by farmers with a certain number of regulatory norms concerning the environment, animal welfare and food security, as well as safety on the worksite (principle of eco-conditionality). In order to comply with the expectations of society and to help farmers meet the standards that are a feature of modern, high quality farming, the Commission considers it necessary to set in place, and to promote at Community level, a farm audit mechanism for professional farms that the Member States should define in relation to the economic size of these farms. The agricultural audits will concern the flow of material as well as the farm processes and equipment, given the norms relating to the environment, to food safety, to animal welfare and to safety in the workplace.
Environmental freeze: In order to preserve the benefits of controlling supply as allowed by set-aside, while increasing the positive impact on the environment in the context of the new system of decoupled support, the Commission proposes to introduce a compulsory long-term (10 years) set aside regime for arable land. Farmers would have to set aside part of the arable land on their farms, equivalent to the surface area currently subject to compulsory set aside. This measure would be one of the rules that farmers would have to comply with in order to claim direct payments.
Support to energy crops: The Commission proposes to replace the current provisions relating to non-food crops by a "carbon credit" in the form of aid worth 45 euros per hectare in favour of energy crops that are to be a substitute for carbon dioxide. The aid (paid for a maximum guaranteed surface area of 1.5 million hectares) will be granted to producers that have signed a contract with a processing company.
Strengthened rural development policy: The Commission proposes to introduce a system of compulsory dynamic modulation for all Member States. Once the system is in place, all direct payments will be gradually reduced by 3% annually to reach a rate of 20% (maximum rate as foreseen in Agenda 2000). The modulation will apply not only to the coupled but also to the decoupled payments. There will be variable franchise depending on the number of farm workers employed on each farm: - up to two annual work units (full time), the franchise will be EUR 5,000; - for each new annual work unit (AWU), an additional EUR 3,000 may be allocated at the discretion of Member States. Thus, 75% of European farms will therefore not be concerned by modulation, and the franchise will concern less than one fifth of direct payments to farmers. After application of the franchise and of modulation, the maximum amount received by a farm will be ceilinged at EUR 300,000. The amounts released each year through modulation (EUR 500 and 600 million in 2005) will be shared between Member States on the basis of agricultural surface area, the rate of farm employment and the economic prosperity of the farm, in order to meet specific rural needs.
The Commission is also proposing to create two new chapters in the rural development regulation; on food quality to encourage farmers to get involved in quality assurance and certification measures (including those concerning geographical indications, designations of origin and organic farming) and the other on respecting values, aiming to financially help farmers to adapt to binding standards (for the environment, food safety, animal welfare and the implementation of agricultural audits). The Commission is proposing to increase the co-funding rate set for these measures by 10% (to 85% in the zones covered by Objective 1 and 60% in other areas).
Cereals. A 5% cut in the intervention price has been planned (from EUR 101.03/tonne to EUR 95.35/tonne from 2004/2005). Arable farmers will be compensated as foreseen in the framework of Agenda 2000. The Commission is also planning to scrap monthly increases.
Rye. Given the limited scope for disposal with export subsidies, the Commission proposes to abolish intervention for rye, since in parallel to the 5% drop in the intervention price for cereals, would enable balance to be maintained in coarse grain markets.
Durum wheat. The Commission proposes to reduce the current specific supplement for durum wheat to EUR 250/ha in traditional areas. These changes will be phased in over a three year period. In order to promote quality, it proposes to introduce a specific premium of EUR 15 per tonne of durum wheat sold to the processing industry within the framework of a contract specifying quality criteria.
Rice. In order to stabilise rice markets in view of long-term prospects and the implementation of the Everything but Arms initiative, the Commission proposes a one step reduction of the intervention price by 50% to a basic price of EUR 150/t for 2004/5. A private storage scheme will be introduced which will be triggered when the market price falls below the basic price. Safety net intervention will be established at EUR 120/t. The global price reduction will be compensated at a rate of 88% by EUR 177/t in aid. Of this, EUR102 /t multiplied by the 1995 reform yield would become an income payment paid per farm. The remaining EUR 75/t multiplied by the 1995 reform yield would be paid as a crop specific aid reflecting the role of rice production in traditional wetlands.
Dried fodder. The Commission proposes to replace the current arrangements with an income support envelope for farmers of EUR160 million, distributed among. Member States in proportion to national guaranteed quantities for dehydrated and sun-dried fodder. Producer entitlements will be based on the quantities delivered to the industry in a historical reference period. In order to ensure transition for the industry, a simplified single support scheme for dehydrated and sun-dried fodder with a reduced payment of EUR 33/t will be maintained.
Beef. The Commission is only proposing the decoupling of headage payments and their replacement with a single income payment per farm based on historical entitlements. "Together with reinforced cross-compliance conditions, this should reduce pressures towards intensive production and help achieve a more balanced market situation", notes the Commission. It is also intending to reinforce the conditions and controls under which exports subsidies for live animals can be granted.
Nuts. The Commission suggests maintaining and simplifying the support arrangements for this sector. It is therefore proposing to replace existing arrangements by a flat rate payment of EUR 100/ha, which can be topped up by up to a maximum of EUR 109/ha by the Member States. The maximum guaranteed area will be 800 000 ha.
"While guaranteeing farmers a stable income, the new system will free them from the straitjacket of having to gear their production toward subsidies. They will be able to produce the crop or the type of meat where they see the best market opportunities and not the highest subsidies. And we will to cut back on red tape and form-filling for farmers and national administrations. Our proposal means better value for money for farmers, consumers and taxpayers alike. It facilitates the enlargement process and help to better defend the CAP in the WTO. The new system does not distort international trade on the contrary, it should improve opportunities for developing countries", said Franz Fischler, Commissioner for Agriculture, Rural Development and Fisheries at a press conference.