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MEMO/03/56

Brussels, 19 March 2003

Outcome of Agriculture/Fisheries Council of March 2003

Part 1 : Agriculture

CAP reform

The Council discussed the Commission's proposal to reform the cereals, milk and rice sector and the new rural development policy.

Cereals

Fischler stressed that the reform process must be completed fully in order to offer to the EU grain growers long term solid and sustainable perspectives. "Our goals remain unchanged. In particular we need to put ourselves in a position where under normal circumstances we would not need to rely on export restitutions for wheat in order to balance our campaign and our market. The formation of our prices needs to be flexible enough for EU cereals to price themselves into both internal and external markets. This necessary reaction to market conditions cannot be ensured under circumstances where it is institutional prices which systematically provide the basis upon which our prices are constructed. The only way to avoid this distortion is to increase the difference between the intervention price and market prices in normal years, by reducing the level of the intervention price by 5%. But we must recognise that a major contributory factor to this distortion also comes from the effect of monthly increments. By providing a systematic incentive to retain stocks and delay marketing they disturb the fluidity of the market and so magnified any problems we may have. In brief, we must allow intervention to play its proper role as a safety net but we should not allow it to substitute the normal role of the market in setting price levels.", Fischler said.

Milk

Fischler explained that the viability of the EU milk sector was threatened by the fact that the price paid to producers, although not high, was still on average about 30% higher than an equivalent world market price. "This difference makes it increasingly difficult to export. Indeed, our share of the world market is continuously coming down, where others take over. We lack therefore competitiveness. The Council already reacted partly to this lack of competitiveness by deciding, under Agenda 2000, to decrease institutional prices. I say "partly", since I consider the decisions not going far enough to better ensure the long-term competitiveness of the sector. Therefore our proposal is to add two additional steps of price reduction and to advance implementation by one year.

The prolongation of the quota regime until 2015 allows that such a restructuring can take place under relatively favourable conditions. The quota prolongation would also ensure milk production to remain in less favourable areas. International and budgetary margins determine to a great extent our room for manoeuvre. This proposal does a serious effort to make the sector more competitive by reducing prices against a reasonable compensation and by prolonging the quota to allow an orderly restructuring.", he stressed.

Rice

Bearing in mind the social, economical and environmental roles of the rice sector, the Commission proposed a radical reform of the rice sector. "This is unavoidable, otherwise we should cope with plethoric stocks and their resulting costs for the EU budget. Besides the need for more market orientation, the main objectives of the rice reform are to ensure the continuity of rice production in traditional producing areas of Southern Europe, to guarantee a fair income to the rice producers, to preserve a typical high nature value landscape in the concerned areas. To achieve these goals with a long term -perspective for a sustainable agriculture, this sector must be rapidly reformed by a drastic reduction in support price, with a appropriate compensation and all Member States are in agreement to recognise this need.", Fischler stressed.

Rural development

Having listened carefully to Member States comments, Mr Fischler indicated a number of areas where the Commission was prepared to examine amending the proposals. On promotion of agricultural products on the internal market at end 2005, the Commission indicated that it is now examining the possibility for the co-existence of this regulation and the new promotion measure now proposed within the 2nd Pillar at least until end 2006. The Commissioner also made clear that he was ready to amend the proposals in order to phase-in the new Farm Advisory System. Member States would be required to have their systems in place by 2006, but the compulsory use of such services by farmers for cross-compliance would apply from 2007. This would coincide with the arrival of additional EU funding for the 2nd Pillar. Fischler said that he had had no difficulty to withdraw the possibility to offer support to farmers to implement existing standards, if this proposal was not of interest to member states.

WTO farm talks - state of play

Commissioner Fischler informed the ministers about the ongoing WTO negotiations on agriculture. "Not surprisingly, the agriculture talks are to be difficult. The key political message we have to send across is that the negotiations should be pursued after March, with a view to establishing modalities and make the next WTO ministerial Conference in Cancun a success. I remain optimistic. We have shown realism from the beginning, we have moved our domestic policies in the right direction, and we should continue to do so in the future. As Chairman Harbinson himself has proposed, further work is needed on a number of areas he mentioned export credits, food aid, the concept of strategic products, special safeguard for developing countries, quota administration, non-trade concerns. I added when I met him the issues of tariff preferences which is crucial to many developing countries, and the issue of the rationale and economic underpinning of the domestic support classification (the "boxes").", the Commissioner said.

Fischler recalled the EU's position vis-à-vis the first Harbinson draft:

"We found it was unbalanced against the weakest of the developing countries and in favour of the largest exporters. We found it was unbalanced against those developed countries like the EC that have pursued an internal reform path and in favour of those who had increased trade-distorting support. We found in particular that the measures proposed for export competition left too many loopholes open for export credits and bogus food aid.

And last but not least we found that the draft was not comprehensive as it did not include non-trade concerns nor a peace clause.", Fischler underlined.

"From the discussions in Geneva it came out clearly that only part of the Cairns group is actually behind this paper. The US do not consider it acceptable. The majority of the developing countries like some of the ideas proposed, in particular on the exceptions foreseen for access into their markets, but they are wary of the over-ambitious drive embodied in the paper. Many are also very concerned about the reduction of their margins of preference in our markets. The combination of these elements led them to sign with the EU and other like-minded countries a proposal to adopt instead of the Harbinson formula for tariff cuts a Uruguay Round type formula. I should say that the majority of the WTO membership, 75 countries in total, share that position.", he concluded.

French initiative for sub-Saharan Africa

The French initiative calls for moratorium on all forms of agricultural export subsidies for exports to sub-Saharan Africa for the duration of the WTO negotiations, for granting the same preferential market access to all developed countries for each African country, aligned on the most favourable existing scheme for such country and measures to address commodities price volatility and downward price trend. In response, Fischler said "The EU is and always has been at the forefront of the efforts to ensure better integration of developing countries in international trade. In fact, in concrete trade terms, we are the world's largest food importer from developing countries and the largest importer from the poorest countries. We are pursuing the goal of securing a better deal for developing countries very vigorously in the context of the Doha Round. We have made very concrete proposals as regards among others export subsidisation and market access, with the aim of securing tangible benefits for developing countries, especially the least developed ones, and ensuring that all developed countries do their share. The ideas put forward today by France concerning sub-Saharan Africa represent an interesting initiative. Naturally, they will have to be analysed very thoroughly, especially in relation to the Doha process."

Italian state aid for co-operatives

Italy presented a request to authorise state aid for Italian co-operatives. The Council decided to postpone a decision on the matter.

Part 2 : Food Safety

BSE

Commissioner David Byrne updated the Council on BSE developments. He informed the Council on his proposal to prolong certain transitional measures in place to protect public health of any BSE risk. The two-year extension will enable the Commission to continue its efforts to reach an agreement at international level on the determination of BSE status of a country. The feed ban is one of the transitional measures. To clarify the legal situation the Commission is considering introducing the current provisions into the TSE Regulation, thus ending the transitional character of the feed ban.

BSE Numbers: More than 10 million tests were carried out on cattle last year an increase of 20% compared to 2001. Despite the increased testing, the total number of cases remained stable and the ratio of positive cases found in tested animals dropped by 22%.

Scrapie Numbers: More than 360,000 tests were carried out on sheep and goats last year. In total, almost 1,200 positive cases were detected, and almost 50% of these were found by active monitoring. This proves the value of active monitoring in assessing the incidence of scrapie. The intention is to review the monitoring programme in the light of the results later this year.

Aldicarb

The Council agreed with qualified majority of the Member States to accept the proposal of the Presidency. This means the active substance aldicarb can be used for some very limited uses until July 2007 as pesticide in certain Member States.

The Presidency compromise proposal in essence confirms the Commission position that this substance should be removed from the market due to environmental concerns. The derogations being granted are quite restrictive, being limited in time and only for certain crops in some countries. Mr Byrne noted that this will represent a significant reduction in the use of aldicarb, and more importantly, in the environmental risks associated with aldicarb use. He also stressed that no risk to public health was associated with the substance in question.

Avian Influenza

Commissioner Byrne and the Dutch and Belgium Minister informed the Council of the situation regarding the recent outbreaks of Highly Pathogenic Avian Influenza in the Community. It is confirmed in the Netherlands - but laboratory tests have not confirmed the disease in Belgium.

The Member States concerned have reacted immediately to these events, in the most responsible manner, in close co-operation with the Commission. Mr Byrne paid tribute to their actions and their willingness to co-operate.

The Commission has also taken prompt action on its own initiative. Four Decisions have been adopted by the Commission in the past fifteen days aimed at preventing the disease from spreading to other Member States and third countries, and to endorse and legally reinforce the measures taken by the Netherlands and Belgium.

At this stage, Mr Byrne concluded, it is difficult to predict the evolution of the outbreak, as this disease is very contagious, but the rapidity of the measures taken gives hope for an effective containment.

Nitrofurans in Poultry in Portugal

The Portuguese Minister briefed the Council on developments in Portugal concerning the findings of illegally used nitrofurans in poultry production and explained the action plan implemented by Portugal. Mr Byrne emphasised that is clearly an issue of serious concern. The matter has already been discussed last week in a meeting of the Standing Committee on the Food Chain and Animal Health and technical experts will again consider it tomorrow at a further meeting of the Standing Committee.

Mr Byrne said, that it is vital from the point of view of protecting public health and reinforcing consumer confidence that rapid and effective action is taken to deal with the current situation in Portugal. The Commission will of course keep the whole situation and the effectiveness of the existing measures under careful review.

Mr Byrne said further: "Clearly, the current situation in Portugal demonstrates that our rigorous residue monitoring system is working and that improved detection and testing methods are contributing to our objectives of safe food. I would like to ensure that all Member States are actively operating in monitoring for anti-microbial residues. In this regard, and with the reassurance of European consumers in mind, I invited the Council specifically to include monitoring for nitrofurans in their residue monitoring plans for this year. I would underline that my request to the Council today is in line with our approach towards imports from third countries. Food safety should be indiscriminate. Food should be safe whether produced in the EU or imported."

Part 3 : Fisheries

Cod recovery measures state of play

Commissioner Fischler updated the Ministers on the state of play of the long-term cod recovery plan. "We have lived up to our committment to fully involve the stakeholders, to consult them extensively before tabling proposals. Following the December Council, the Commission held several meetings with the Member States and we held to consultations with the industry. The Commission is now working on the definitive proposal which will be presented to the Council and the European Parliament in May.", he said.

Possible state aids to compensate hike in fuel prices

France raised the question of the possibility to compensate fishermen for recent increases in fuel prices. In response, Commissioner Fischler stressed that it remained to be seen how the oil price developed, especially in the light of a looming war in Iraq. "At this stage, the actual price situation can hardly be interpreted as extraordinary circumstance which is required to justify such kind of state aid.", he said.


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