Brussels, 27/05/2003 (Agence Europe) - During the consecutive talks, Monday and Tuesday, with the Greek Presidency and the European Commission, Agriculture Ministers showed determination in make certain concessions over the various aspects of Common Agricultural Policy (CAP) reform, notably over the uncoupling and modulation of subsidies. Thus the conditions seem present for the Council to reach an agreement in June. On Tuesday before the press, Commissioner Franz Fischler stated that the talks confirmed that all the Member States, or nearly all, want this reform and want it now. It also clearly emerged that it is crucial for us to provide ourselves with more adequate support measures. The principal is accepted, what remains to be done, is to agree on solutions taking into account the specificities of certain Member States. Mr Fischler added: Certain sensitivities have been expressed and the Commission is open to dialogue, it will not be dogmatic. He explained that the various models suggested for partial uncoupling will assessed in the light of three criteria: - possibility for farmers to react to market signs; - the new system should be simpler; - the new system should enable the EU to dote itself with a greater margin for manoeuvre in WTO negotiations. If the various suggestions that will be made induce more bureaucracy, if they lead to even more complex support systems, if they are counterproductive at the level of international negotiations and if these models do not increase the margin for manoeuvre for the farmer who must have the free choice over what he grows, these models will be unacceptable, warned Mr Fischler.
Below is a detail of the results of some trilateral meetings (Presidency, Member States and Commission) on the main themes for reform:
Support for reform, uncoupling and single payments: The French Minister Hervé Gaymard, reiterated his opposition towards the principal of uncoupling direct subsidies (which, according to him, goes beyond the Berlin Agreement of 1999 over the Agenda 2000) and felt that the introduction of a single subsidy based on land size (hectares) would be complicated and that it would create inequalities between sectors and regions of production. Without providing further information, he spoke of his preference for a partial uncoupling with different procedures according to the sector or regions. The Spanish Minister, Miguel Arias Canete, who felt that it was difficult to be bold without predicting the results of the negotiations (as, according to him, the positions of the delegations are confused), spoke against complete uncoupling of subsidies as proposed by the Commission which, according to him, would prejudicial against 1.5 million hectares in disadvantaged areas. He favoured a partial uncoupling applying only to the ovine and caprine sectors and which would take into account the disadvantaged areas as a whole. He added that the consequences of the uncoupling would be very negative in the breeding, wine and seed sectors. Joe Walsh, for Ireland, stated his willingness to accept a partial uncoupling. In view of an uncoupling, Ireland defended payments for milking cows (according to Mr Walsh a decoupling of male bovine payments would have detrimental effects on the payments for milking cows). Ireland is calling for a national allocation for additional payments towards milking cows and as a result maintain quality production. Luxembourg noted its willingness to consider a partial uncoupling in the plants and animal sector that would progressively increase (according to his delegation it would be possible to consider that part of the aid be uncoupled and linked to surface area aid). As Ireland, Luxembourg favours excluding payments for milking cows from uncoupling. The Italian Minister Giovanni Alemanno, called for five sectors not to be uncoupled: hard wheat, ovines, caprines, dried feed and seed. Germany favoured a progressive partial uncoupling over five years. Renate Künast's aim would be to progressively move from aid on a hectare basis to a surface aid not linked to yield (grass payment). Germany suggested first setting a minimum uncoupling rate to progressively reach 100%. After having announced is support for the Greek Presidency and the Commission in reaching an agreement before the end of June, Denmark (represented by its Secretary of States Poul Ottosen) welcomed the approach put forward for the uncoupling of aid. He added that he favoured complete uncoupling for cereals and that he was open to a progressive uncoupling in the breeding sector (first over 33%, then 50%). Like others, Denmark requested the maintaining of milking cow payments. For the British Minister, Margaret Beckett, it is necessary to reach an agreement in June over CAP reform (to give farmers certainty and opportunity and in view of the WTO negotiations). The United Kingdom stated its support for the Commission approach over the uncoupling (it allows for a reduction in bureaucracy and a simplification of CAP) and is intensely hostile towards a partial uncoupling (notably because it would send a mixed signal to the EU partners in the WTO).
Modulation and reduction of subsidies: For France, scaled reduction is not necessary (inferring, according to some delegations and the reduction of aid must not act to finance the sector based reforms to come) and if there has to be a modulation (in other words, a transfer of funds towards rural development), the level of levy should be reasonable and constant. Mr Gaymard favoured a fixed rate of modulation with a maximum 4% per year without area distribution and with an allowance that is zero, or low. France agrees to start the modulation before 2006, but on condition that the credits remain within section 1a of the budget (market spending, while the rural development funds are in section 1b: Ed.) Spain and Ireland also opposed progressive reductions for the same reasons as those put forward by France. Ireland stated its complete opposition towards modulation, but noted its readiness to accept it on condition that the rate of modulation is very low, in the region of 1 or 2%, at most. The Luxembourg Minister, Fernand Boden, suggested an original solution consisting of taking into account, as is the case with one-off payments, a reference period to determine the volume of transfers for rural development subsidies. Italy is favourable towards a modulation of aids to direct CAP towards foodstuff quality and safety and called for the inclusion among the criteria for the redistribution of funds of, instead of GDP per inhabitant, the total unemployment rate (as the latter provides a clearer indication of the country's problems than the rate of national wealth, which is very high in the north of Italy, but which does not correspond to the agricultural regions in the south). In the context of rural development measures, the Italian Minister suggested an increase of up to EUR 6,000 per year in aid for the introduction of quality products, while the Commission is proposing EUR 1,500. Mr Alemanno also called for an increase from 50% to 60% (in the regions other than Objective 1) in the rate of Community co-financing for investment subsidies to young farmers. The proposal on the modulation does not go far enough in the eyes of Germany. Accordingly, it would require a transfer rate of 3% to start with and take into account the unemployment rate in the redistribution of funds (38% unemployment in some regions of East Germany). Denmark called for a modulation of 2% in the first year. Germany, Denmark and the United Kingdom noted their support towards the progressive reduction of aids, but according to a flat rate. The United Kingdom suggested modifying the proposal on the modulation of subsidies. This system is impossible to defend as the United Kingdom would only receive 2/3 of what it gives, adds Mrs Beckett. Thus the United Kingdom favours a more significant transfer of funds from the first to the second CAP pillar and announced that it would favour increasing this modulation rate to 10% in 2005. This country is opposed to the setting of a levy for modulation.
Transfer of rights: Most of the delegations underlined that the transfer of these rights must benefit the active farmer rather than the landowner.
Regional or national approach to payments: France stated that it was not opposed to a regional approach for payments, but on condition that they are not compulsory. The Irish Minister is opposed toward this approach that has not worked in his country in the past (this would create a separation between the 'winners and losers' in relation to the benefits of regionalisation). Italy proved open towards the possibility of dividing the national budget into regional budgets. Germany approved the greater flexibility provided by the management of national budgets.
Use of the national reserves (1% of payments that must be paid into a reserve to finance the specific cases of new farmers that have not had a references period 2000-2002 or farmers that have been affected by foot and mouth disease or natural disasters): France called for a widening of the list of beneficiaries from this national reserve. Luxembourg felt that the 1% was insufficient to resolve special cases. Italy proposed an increasing the national reserves by 2.5% and at least 1.25% of these 2.5% should be set aside for young farmers.
Sectoral reforms: France felt that a hasty decision should not be taken in the sector for cereals and thus opposed a reduction in the price and an end to monthly increases suggested by the Commission. In the milk sector, France called for the maintaining of the quota system and felt that it is unnecessary to undertake, in the short-term, either an increase in quotas, or a reduction in prices for the sector. Mr Gaymard called for an increase in the intervention ceiling for butter. Spain called for the maintaining the intervention ceiling for rice. Ireland felt that there is no reason to reduce the price of milk in 2007/2008 and spoke in favour of maintaining quotas until 2015. Italy confirmed its opposition towards a reduction in Community support for hard wheat and its support for the Commission approach towards payments based on quality. The Italian Minister stated that he did not want more milk quotas after 2008 as the quotas allocated to his country only correspond to the 56% of production and spoke in favour of the deconsolidation in the WTO of import duties for rice (as was already done for cereals to put an end to massive exports of Russian and Ukrainian wheat to the EU). Germany is in favour of a reduction in the price of cereals and the suspension of monthly increases in the sector. In the milk sector, reforms are fundamental in view of the progressive ending of quotas, stated Denmark while adding its support to the Commission proposal. This country also called for the quota system to be adapted in 2010 as there is no reason to extend quotas until 2015.