Luxembourg, 18/06/2003 (Agence Europe) - Several Agriculture ministers expressed reservation on Wednesday on the subject of the new draft compromise by the Greek Presidency on reform of Common Agricultural Policy (CAP), drafted in agreement with the European Commission. The Presidency and the Commission, however, tried, as far as possible, to take into account the specific requests ("shopping list") made by Member States the day before, mainly proposing to introduce a certain degree of flexibility in the decoupling of direct aid (with the possibility in some cases of keeping the link between aid and production).
French Minister Hervé Gaymard was the most vehement telling the press that the new draft compromise is "still not acceptable for France". He noted moves forward, such as the recognition of the relevance of partial decoupling and disadvantaged areas, "even if we are opposed to the solution proposed". According to France, the rate of decoupling for cereals (75%) is "too high" and the solution retained for exemptions in this sector (zones in difficulty) is "not appropriate". The partial decoupling system adopted in the beef sector would be "too complicated" and the maximum rate of 30% of premiums maintaining a link with production is judged "insufficient". France was also opposed to aid degression and to the fall in prices in the cereals sector. Spanish Minister Miguel Arias Canete seems to have been less intransigent than his French counterpart, welcoming the Commission's opening on decoupling, mainly in order to limit the risk that land will be abandoned in disadvantaged areas. He did, however, call for exemptions to be made to decoupling in the cereals sector, not just for the areas in difficulty but also for the whole of Community territory. Italy took a stance against the compromise, while noting "steps forward for durum wheat" but not for milk, or for beef and veal. German Minister Renate Künast stressed that, with the three elements (decoupling, aid conditionality and modulation), this was "real reform" and that it would be impossible to have reform without France. She criticised, however, as did Denmark and the United Kingdom, the arrangements for modulation of aid (the 1% of amounts saved returned to the Member State being considered too low). Denmark called for the link between aid and production for the slaughter premium to be maintained as well as the setting in place of a grass premium.
After the compromise had been presented and Member States had given their reaction, the Council suspended its work around 15h00 so that national experts could assess how compatible the additional requests made by delegations were with the Community budget and the international demands at the WTO. The Council was to resume work around 19h00 for what looked like a first night negotiating session on CAP reform. According to the spokesperson for Commissioner Franz Fischler, the Commission has already gone too far in its concessions. Evoking the list of specific demands by Member States presented at bilateral meetings, the Commissioner's spokesperson said that the limits of the financial framework no longer provide a "margin for manoeuvre for additional concessions". The Commission admitted that the solution of decoupling adopted was far from ideal as the possibility of keeping the link between premiums and production could complicate the management of the system. "The Commission refuses to be pointed at as if it were in the wrong" as it is the Member States that created this situation, Mr Fischler's spokesperson added.
Main elements of the new Presidency compromise
The main elements of the new Presidency compromise, that the Commission considered balanced and true to the main objectives of reform, are:
Decoupling of aid as of 2005: for cereal crops, 100% decoupling of aid with the possibility, however, that, for Member States that so wish, a link may be kept between aid to production up to 25% in regions where there is a risk that production and the land will be abandoned.
For the beef meat sector, it will be possible for Member States to keep a link between aid for production up to 30% of payment. The amount in question may take two forms: either a suckler cow premium up to a 75% maximum of the current level of this premium, or a uniform premium for every head of cattle. Furthermore, as in the first Presidency compromise, decoupling would not apply to the supplementary premium to sheep and goats in the disadvantaged and mountainous regions and to payments in very outlying areas.
Modulation of aid: modulation (reduction of aid to strengthen rural development policy) will begin in 2005 (as opposed to 2007 according to the initial proposal, which will necessitate some modification of the financial perspectives for 2000-2006) to a 3% rate, then 4% in 2006 and 5% in 2007. A threshold of EUR 5,000 will be applied to aid received by farms. 1% of saving funds, due to modulation, will return to the Member State where it was saved, whereas remaining funds will be allocated to the most deprived areas, as defined by the Commission.
Digression: Starting in 2007, payments could be reduced on the proposal of the Commission (and decision of the Council), if forecasts show that the budgetary ceilings are in danger of being superseded. The objective will consist in keeping a margin for security under the ceiling of at least EUR 300 million. Reimbursement of sums that have been retained will be total amounts up to a threshold of EUR 5,000 and 50% for the aid granted between EUR 5,000 and EUR 50,000.
Conditionality of aid: Member States can keep up to 25% of aid back from farmers who have not respected certain environmental criteria, quality of products or animal welfare.
Regionalisation of aid: Member States will have the opportunity to pay direct aid at a regional level.
System for agricultural advice: the normal system for Member States until 2006, which will then become compulsory, to be proposed to farmers from 2007.
Leaving land fallow: Member States could keep land fallow on a rotational basis and non-food production on this land could be developed. Exemptions for organic farms would be maintained.
Grain: a 5% fall is forecast for the intervention price for barley and corn (therefore not for wheat), leading to compensation of EUR 1.5/tonne. For durum wheat, decoupling of aid will be introduced in traditional production zones up to EUR 313/hectare in 2004, EUR 290.9/ha in 2005 and EUR 277.25/ha in 2006.
Rice: the Commission has agreed to withdraw its proposals not only on the application of a "super penalty" in cases of superseding the guaranteed maximum area but on the implementation of a private storage system too. Intervention will be maintained at EUR 150/tonne up to a limit of 50,000 tonnes a year. The Commission is committed to beginning WTO discussions on modifying border protection.
Potato starch: maintaining minimum prices (whereas the Commission wanted to get rid of them) and decoupling 40% of direct aid for potato starch producers. Maintaining of discount for starch products.
Dried fodder: no gradual dismantling of aid for processing and maintaining aid.
Milk: decoupling direct aid and decision and possible increase in quotas only when reform of Agenda 2000 in this sector has been integrally implemented (in 2007). Lowering of intervention price for butter and fat free milk power of 8% and 4% respectively in 2004 to 2007. Suppression of indicative price for milk.
Mediterranean production: before making the legislative proposals, the Commission will present in the autumn, a communication on reform of the common organisations in the olive oil, tobacco and cotton markets.
Market crisis management: the Commission will produce a report on this subject in 2004.