Porto, 18/09/2007 (Agence Europe) - EU agriculture ministers were at odds on Tuesday 18 September at their meeting in Porto (Portugal) over the scale of monies to be transferred from the direct aid and market measures heading of the EU budget (part of the first pillar) to rural development (covered by the second pillar), one of the key issues at stake in the fundamental review of the Common Agricultural Policy (CAP). The current hike in agricultural prices seems to support the views of supporters of a strong first pillar which is capable of responding to market crises.
The Portuguese agriculture minister and acting President of the Agriculture Council, Jaime Silva, said at a press conference that member states had stressed the importance of rural development policies and the countryside in the CAP. He added that they had also stressed the need to keep up the reform process launched in 2003 and take a more in-depth view of the market situation.
During the debate, some countries (the United Kingdom, the Netherlands, Denmark and Sweden) made it clear that they back EU Agriculture Commissioner Mariann Fischer Boel's plans to increase modulation of direct aid (reducing direct aid and transferring the money saved to boost the rural development programme). Other countries, namely France, Germany, Spain, Italy and Ireland, are more reluctant, basically arguing that aid for rural regions should not be granted at the expense of productive agriculture. Belgian minister Sabine Laruelle warned that the CAP was not competing with rural development and the two should not be described as if they were. Paolo de Castro, Italy's agriculture minister, stressed that the CAP should also serve consumer interests, particularly the protection of landscapes and high quality products. Italy called for 'compulsory and limited' national co-funding of direct farm aid and agricultural market expenditure, an idea which seems to find favour with the United Kingdom, the Netherlands and Sweden.
In answer to quizzing from journalists, the acting President of the Council, Jaime Silva, said that views on the co-funding of farm aid differed according to countries' public finance situations. He refused to comment further but said he was against the renationalisation of the CAP and wanted to keep fair competition among farmers.
In its proposals on the reform of the CAP due to be unveiled on 20 November 2007, the Commission is expected to suggest increasing the compulsory modulation of direct aid from the current 5% to 13% in 2013. The transfer of monies from the first to the second pillar of the CAP would have the advantage of legitimising and therefore protecting some farm spending from the political dog-fight over the budget forecast for 2009 and later (in 2011 when the new financial perspectives are being prepared for 2014). The Commission wants to go further, reducing the aid granted to big farms and using it for rural development measures. According to provisional figures, 10% would be held back from farms receiving more than €100,000 of direct aid from the EU each year, rising to a 25% for farms receiving more than €200,000 in aid a year and 45% for farms receiving more than €300,000 a year. Some sources suggest that Germany, the Czech Republic and Slovakia are highly critical of this aid reduction mechanism. In the reform of the CAP in 2003, the previous EU Agriculture Commissioner, Franz Fischler, suggested that a maximum annual limit of €300,000 of EU aid should be introduced but the idea had not taken root and Fischer Boel said that she was currently looking for some way of re-introducing it.
The Commissioner recognised that it would be a good idea to discuss the impact of high farm prices in Europe as part of the review of the CAP, particularly the prices of some staples (+50% for wheat in a year, +60% for maize, and price rises of between 30% and 40% for milk). She flatly rejected the suggestion in the Financial Times that she wanted to have emergency stocks of cereals and/or milk. 'Let's be crystal clear, I'm not advocating buffer stocks,' said the Commissioner. After the publication of the communication on the review of the CAP on 20 November 'we'll have the possibility to discuss all the issues that have been raised, to open our eyes and see what is going on,' she added. She said there would be a debate about food security (supplies of staples and commodities on the market) and she would be keeping a close eye on market developments. The hike in cereal and milk prices will feed through to the cost of rearing animals. A Commission report suggests that the price of pork could rise 30% by the end of the year, and beef by 7%. (lc)