Brussels, 16/07/2002 (Agence Europe) - Although a powerful coalition of nine Member States (France, Spain, Belgium, Italy, Greece, Ireland, Portugal, Austria and Luxembourg) formed during the public debate at the Agriculture Council in Brussels on Monday afternoon to block the draft mid-term review of the Common Agricultural Policy (CAP) which they felt ran counter to the spirit and the terms of the 1999 Berlin mandate from heads of state, Commissioner Franz Fischler saw that he could count on the support of four countries (the Netherlands, Germany, the UK and Sweden) along with the Danish Presidency in order to take advantage of this opportunity to make the deep changes that are needed in agriculture. Finland adopted a more mixed position, expressing serious reservations about the potential impact of the proposed measures on its own very specific agricultural situation.
A summary of the interventions following the Spanish, Belgian, Swedish, French, Portuguese and Finnish addresses (see yesterday's Europe, p.7/8).
The Austrian agriculture minister Wilhelm Molterer made the following comments: the mid-term review has to fit with what was agreed in Berlin in terms of content and timetable; "There must be no link or conditionality between enlargement and the mid-term review, otherwise the danger is that enlargement enlargement could be delayed"; as Agenda 2000 is an overall package, it is legitimate' to query why the CAP has to be reformed without taking other sectors like the Structural Funds into account. While being overall in favour of the Commission's rural development strategy (which made it possible, he said, to focus on agricultural environment programmes), Molterer added that the issue of deprived regions should also be taken into account. He said he understood the plans for durum wheat but had problems with scrapping the intervention payments for rye and also with the 5% cut in the cereal intervention price. We do not feel that the "modulation" model proposed by the Commission is suitable, said Molterer, because it would first apply to small and medium-sized farms which the Commission sees as the heart of agriculture in the future. Austria pointed out that it favours compulsory modulation of aid for farms (which it has defended during the Agenda 2000 negotiations.
The British farm minister Margaret Beckett said they had to seize this opportunity to shape the future of the CAP, before congratulating the Commission on the proposed package of changes, "very much on the right track. In some areas we would argue it does not go far or fast enough", she said. She cites some of the positive measures - guaranteeing food safety and animal welfare; making EU farmers more competitive; simplifying Community structures to relieve the pressure of paperwork from farmers' shoulders while respecting international obligations and ensuring coherence between CAP reform and the poverty reduction objectives. Beckett went on to say that many elements in the Commission's package were seductive, like transfer from the first to the second pillar and the desire to completely refashion expenditure, even if one can go even further in terms of eligibility for rural development programmes and concerning the range of potential beneficiaries. She said that "decoupling" aid from output was a "bold and imaginative" step since it would get rid of incentives to produce ever more. The British minister said that the sector-wide proposals also seemed very fair, although she was disappointed that the Commission hadn't proposed to abolish milk quotas to respect the mandate outlined in Agenda 2000. The quotas are due to expire in 2008 and the EU has to establish mechanisms to allow the dairy sector to re-adjust and regain the share of the world market that it is in the process of losing, said Beckett, regretting that land set-aside was still compulsory. The UK has problems with the Commission's reform package in a number of areas - it does not achieve the necessary savings; the CAP budget has to be better managed and for this, the UK has long desired that modulation of direct aid be made compulsory; the UK's experience of implementing modulation has demonstrated that it only works if one opts for a single, simple and set price system. She said she was a little concerned about the proposals on modulation because the exempt amount mechanisms and the ceilings complicate the whole system at the risk of making it unmanageable, unfair and even perverse with respect to our most competitive farmers.
In short, the British Environment and Food and Rural Affairs Minister Margaret Beckett said that the UK would have referred more radical reform. Luxembourg's agriculture minister Fernand Boden said that his country believed it was not necessary when carrying out the mid-term review of the CAP to make immediate, fundamental changes to the CAP, since only adjustments and improvements there where they are needed was required. He said the package that had been presented went well beyond that because it is an anticipated reform of the CAP for the period post 2006 and therefore goes well beyond the mandate granted by heads of state. Luxembourg said it was prepared to actively participate in perfecting the CAP but at the right time and not in haste or cutting corners. Boden said that Luxembourg could support a strengthening of the second pillar, but not to the detriment of farmers' income. He said that rural development was very advanced in Luxembourg and the percentage of expenditure given over to rural development programmes from the total EAGGF-Guarantee fund was in the range of 35%. He recognised that this did not rule out considering additional instruments to be foreseen in the framework of strengthening the second pillar, giving examples such as extending the range of measures to food quality, respect of environmental standards or animal welfare. The Luxembourg agriculture minister called on the Commission to provide more details about the principle of ecoconditionality (which would apply to food safety, agricultural audits and health and safety at work). At first sight, as presented by the Commission, ecoconditionality would have a negative impact, he said, in terms of administrative management and controls, explaining that in Luxembourg 70% of farmers would have to be covered by a the agricultural audit system. He came out against the proposed model of dynamic modulation based on the principle of gradually reducing aid since this would have a negative impact on farmers' revenue. Stressing that the proposed modulation prejudged future Financial Perspectives (because of the effect of a 3% cut in aid per year from 2004 onwards), Luxembourg shared the Commission's concern to share out aid more fairly among farmers and could therefore agree to a ceiling and a gradual cut in aid depending on the size of the farm, since economies of scale would come into play. He also opposed the redistribution of the money thus saved "in terms of economic criteria", since he said that the CAP should not be mixed with social policy. He also expressed reservations about full "decoupling" of aid from production.
Dutch Farm Minister Laurens-Jans Brinkhorst said the plans were "courageous and visionary", adding that one cannot say that the Commission had short-circuited the Berlin mandate. If the Commission were no more than a technical secretariat, it could be criticised for not having taken enough account of the political environment in formulating these necessary proposals. The Dutch minister felt that the Community had for too long adopted a defensive position and it was time to go on the offensive and adopt a very strong position with regard to the United States. He said that the proposal fell within a political context cut to measure for enlargement. Without wanting to go as far as making a direct link between agriculture and enlargement, Brinkhorst said there were two perimeters that had to be taken into account - non-discrimination between old and new Member States and the fact that the financial resources were limited. If we don't react to these budget constraints, we will either come bang up against this principle of non-discrimination or we will bang our heads on the ceiling, he explained, adding that one could not wait until 2006 to make the necessary changes and it was now time to launch oneself into a profound debate on reform. He said he could only support the fundamental analysis of Commissioner Franz Fischler. The Netherlands came out in favour decoupling aid from production (saying that European agriculture has been supply-oriented for too long) and the principle of dynamic modulation (which corresponds to the Dutch desire to bring agriculture closer to the markets and not closer to public intervention, commented the minister). He added that simplifying the rules and relieving the bureaucratic pressure will make it possible to restrict the number of fraud cases. The Dutch minister said that the Commission price proposals (for cereals, rye, etc) could have been more ambitious, even though they are a step in the right direction. The criticisms made by the Netherlands focus on the financial consequences of the proposed reduction in aid, saying that for new Member States, the proposals would lead to great problems since during the period of gradual introduction of direct aid until 2013, the new Member States will not be on the same footing as the current Member States. Laurens-Jan Brinkhorst said that the cuts proposed would not be sufficient, saying that either the percentage of cut should be increased or one should avoid transferring all the money saved in this way to rural development. Greater means are needed to fund enlargement, he said, adding that for the Netherlands, the idea of co-funding was always on the cards, not to make savings but because it will give greater flexibility in a continent of Europe with 500 million inhabitants characterised by huge diversity.
For Ireland, the budget situation and the market perspectives are not an argument for radical changes. While pointing out that it is necessary to assess the impact of the US Farm Bill, Joe Walsh recognised that come elements of the proposals were interesting, such as improving the quality and safety of food, enhancing competitiveness, greater environmental protection and cutting bureaucracy. He said that decoupling would lead to a fall in production, which would result in job losses, including in the processing sector and therefore called on the Commission to provide Member States with the studies carried out to date into the effect of decoupling on company productivity. I cannot see how one can ask farmers to accept a cut in aid according to the "degression" principle, he added, also mentioning the imbalance that modulation would lead to. The proposed exempt amount (EUR 5,000) was felt to be far too low, but the approach selected for rural development measures was judged to be good (certification schemes and support for farmers protecting the environment). Walsh said the proposals were far-reaching and were not just a revision, but a fundamental reform.
Italian minister Giovanni Alemanno said that the Commission's document was not a coherent answer to all the questions raised by the CAP. He said he did not see a clear link between the aims announced and the measures proposed. The Commission presents the "decoupling" of aid as a revolutionary element that will have the impact of radically modifying our vision of agriculture, said the Italian minister, noting that the US had recently returned to an approach of linking aid with production, which means that there was the opportunity within the WTO to consider various forms of agriculture aid. Decoupling aid certainly helps us eliminate any risk of distortion on the international markets, but what is equally true is that the CAP could simply become a policy of state handouts which would be even less acceptable to public opinion and even less justifiable from a moral standpoint. Alemanno said that the multi-functional role of agriculture had to be valued while the main aim should remain production of goods under the first pillar. The second pillar should be sued to accompany production. A totally decoupled support system could become the forerunner of fully abolishing the CAP, he said, recommending a partial decoupling of aid depending on the type of production. He was very vague about modulation, but felt that the Commission's idea of applying modulation to olive oil and tobacco was unacceptable. Alemanno said that Italy opposed the measures to cut aid for durum wheat farmers, which it sees as unfair (because too harsh).
Greece said it feared the gradual disappearance of the fundamental elements of the CAP, saying that transferring funds from the first to the second pillar would not solve the problem of searching for sustainable development. The Greek agriculture minister Georgios Drys said the first pillar had to be enriched to adapt production to sustainable development, using modulation as long as the system was properly applied. He opposed the idea of decoupling aid from production and the proposals for durum wheat and rice. Drys called for a "gentle" reform that would preserve the social and cultural acquis of the current CAP. Denmark saw the Commission's proposals as new ideas for respecting even closer the Agenda 2000 decisions, said the Danish minister for food, agriculture and fisheries, Poul Ottosen, saying that the principles of decoupling and modulation created a more coherent policy respecting the aims of the first and pillars of the CAP. He stressed that this was a step in the direction of a policy very close to the market, adding that "decoupling" was a courageous, necessary step that would allow farmers free choice in farming.