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Health Check of the CAP reform

In order to direct the common agricultural policy (CAP) towards balanced and environmentally friendly development, its various components are examined. This analysis deals with the three main questions forming the basis of a wide-ranging review of the CAP, and constitutes preparation for the 2008/2009 budgetary review.

ACT

Communication from the Commission to the European Parliament and the Council of 20 November 2007 on preparing for the “Health Check” of the CAP reform - [COM(2007) 722 final - Not published in the Official Journal].

SUMMARY

This Communication envisages the directions that the common agricultural policy (CAP) should take in order to continue the reform process which started in 2003 with the introduction of the Single Payment Scheme (SPS). Significant progress has marked the CAP’s development over the last few years, in particular the introduction of a new aid system, which contributed to improving the competitiveness of the agricultural sector.

This Communication aims to review progress made, and to feed into the debate on future developments of the CAP. It focuses on three main issues:

  • simplifying the Single Payment Scheme;
  • market measures;
  • new environmental challenges.

Simplifying the Single Payment Scheme

According to the CAP Health Check, the Single Payment Scheme should be developed in the following ways:

  • standardising the application of the system in order to limit cases where aid is still granted under a coupled support system;
  • continued adaptation of the principle of cross-compliance, which promotes sustainable agriculture whilst taking account of society's new requirements;
  • reviewing the allocation of aid: limiting the higher level of payments and increasing the minimum area threshold required for small amounts.

Market developments

In order to encourage effective competition on agricultural markets, the Commission intends to review some CAP management instruments which no longer meet market requirements, in particular measures concerning cereals and dairy products.

With regard to the cereals market, Community intervention should take into account the rising demand for cereals as well as the increasingly significant role of bio-energy.

Measures are also suggested to prepare the milk and dairy products market for when the milk quota system ends on 31 March 2015. At present, demand for high value products is increasing both on the internal market and the international market (particularly for cheese and fresh dairy products), prices are high, and, hence, there is a reduction in the role of intervention as an outlet for butter and skimmed milk powder. A gradual increase in milk quotas could therefore offset the destabilising effects that this transformation might entail. To this end, other measures may be applied, focusing on certain regions, in particular mountainous regions.

New environmental challenges

This Communication illustrates the new challenges that the CAP could contribute towards meeting: climate change, bio-energy and water management, as well as other challenges such as biodiversity.

Climate change is a pivotal issue for European agriculture. The sector has already contributed significantly to reducing greenhouse gas emissions, but it is still exposed to some of the issues introduced by climate change, including bio-energy, water management and biodiversity. The European Union (EU) will address these issues through existing rural development measures, careful management of cross compliance, and increasing research and innovation.

Risk management is also addressed by the Communication. The second pillar of the CAP is considered to be the most appropriate instrument for managing crises in agriculture. Nevertheless, other instruments may be considered. Rural development should be increased, since it is a key instrument in dealing with these complex issues. To this end, the activities and resources devoted to it through mandatory modulation * should be increased.

Key terms of the Act
  • Modulation: an instrument introduced by the 2003 reform, which allows resources aimed at direct aid for farmers to be transferred to rural development measures during the period preceding 2013.
Last updated: 09.02.2008

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