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SPEECH/01/478

Dr. Franz FISCHLER

Member of the European Commission responsible for Agriculture, Rural Development and Fisheries

Feeling the pulse of the CAP

Forum of the Coldiretti

Cernobbio, 19 October 2001

Ladies and Gentlemen,

It is a great pleasure for me to be here with you today at the Forum of COLDIRETTI and to be able to share some thoughts on the Common Agricultural Policy. I know that COLDIRETTI has recently broadened its role as an association representing farmers and agricultural entrepreneurs with a view to an overall regeneration of Italian agriculture. I fully agree that an agricultural policy in the 21st Century has to take account of the entire foodchain, from those who are upstream of farming down to the individual consumer and his or her demands and requirements. Only by considering the global picture can we appreciate the role which agriculture must play in modern society, a role that includes respecting environmental, ethical and social concerns as well as the more traditional economic role of producing food and providing income for farmers.

In my speech today, I will try to look at this global picture from an EU policy perspective. Moreover, I will address the international picture, in particular our position in the WTO and the upcoming talks in Doha. Finally I will speak about the challenge of enlarging the EU-15 by a further up to 12 countries.

Ladies and Gentlemen,

Scientific and technological progress is pushing the frontiers of agriculture forward at a great speed. GMO's are an example of how rapid and how controversial that change can be. The issues raised by GMO's are also a very good example of the importance that we must give to public opinion and citizens' concerns. There is an apparent cleavage between the desire of the agri-food business to become more profitable and efficient and the perception by some consumers that a number of modern agricultural practices are unnecessary and could put food safety or environmental sustainability in question. The experiences we have had with BSE, through the use of meat and bone meal in cattle feed have done little to reassure the general public that the profit motive does not outweigh safety. This was particularly the case for the beef market in Italy where consumption fell sharply this year. It is to be hoped that the lessons of BSE have been learned. However, our latest Eurobarometer survey shows that consumers in the EU are still anxious and confused. This lack of confidence in so-called "industrial" methods has led to widespread demands for specific types of production such as organic farming, also here in Italy, which has the highest number of organic farms in the EU already.

Of course, I believe that it is essential that farmers respond to consumer demand but I recognise that certain kinds of quality production will only be able to fulfil niche markets. Not matter what the production method may be, we as policy makers have to make sure that all products are safe. Traceability has an important role to play in this context.

The balance, which has to be struck between technological progress and consumer conceptions and demands, has to be seen in the context of the CAP as defined in Agenda 2000.

Allow me to recall the objectives defined in Berlin:

  • To create a competitive agricultural sector which can progressively face up to world markets without being oversubsidised

  • To promote production methods which are environmentally friendly and lead to production of quality products, by which we also mean safe products

  • To ensure fair standards of living and income stability for the agricultural community

  • To ensure diversity in forms of agriculture, maintaining the landscape and supporting rural communities

  • To justify the support given to the agricultural sector through the provision of services that the public expects farmers to provide

When we speak of an agriculture that that can progressively face up to world markets without being oversubsidised, a certain emphasis has to be placed on the conception of 'oversubsidised". In the past we had a policy, which guaranteed the home-produced food supply by paying farmers for the quantities of food they produced. There was little consideration paid to how the farmers produced this food and how modern farming methods impacted negatively the environment.

Over the last ten years our policy has moved away from production support to a more decoupled form of aid which recognises the importance of the role of farmers in the rural community, but which can also impose production conditions upon the payment. Today 70% of the farm budget goes directly to farmers. Under the old CAP, 90% was spent on Food Mountains and wine lakes. What we have done, too, is to build a genuine rural development policy, also called the "second pillar" of the CAP. With this policy, we are supporting rural communities and environmental measures. The importance of this policy has grown significantly and will certainly continue to grow.

As for Italy, the European Commission has approved the Rural Development programs that the Italian regions have put together. It is up to the regions to emphasise elements which are particularly important to them. The European Union does not interfere in this question. What it does indeed is to contribute a major part of the budget for these programmes. From 2000 to 2007 it will contribute 14500,- billion Italian Lire (=€ 7.5 billion) to the rural development in Italy.

Midterm Review

Ladies and Gentlemen,

When we look at the concerns of the European citizens and when I compare them to the objectives of the Agenda 2000, I see absolute accord. We do not have to change these objectives. However, we need to examine whether our tools are appropriate to achieve these objectives. This is the purpose of next year's midterm review. If we find out that some of our tools are not working well enough, we will suggest adjustments so that the policy can work more efficiently.

When we analyse the current tools, we have to ask especially the following questions.

  • Are we doing enough for the rural development?

  • Are we doing enough to improve product quality, or is CAP concentrating too much on quantity?

  • Are our budget resources being properly distributed between the various sectors?

  • And should we not shift a bigger part of our budget to support measures that are non-trade distorting, so that they are acceptable in an international context?

The review will not be WTO or enlargement driven. Yet if our proposed changes will facilitate WTO negotiations, or help to resolve the problems in the enlargement process, so much the better!

At first sight, some of our priorities for the future of agriculture might seem to be incompatible with each other. Greater openness to markets could seem, on the face of it, to be in conflict with our objective of maintaining farm incomes. Imposing environmental or animal welfare conditions on farmers may also seem to contrast with the need to reduce production costs in order to become more competitive. However, I believe that, if agriculture is to break away from the mind-set of the 1970's and 1980's, markets should be allowed to function more freely. The rewards for responding to consumer demand for quality products are already being experienced by farmers the length and breadth of Europe. Our wines and cheeses and other quality products such as olive oil are exported around the world. An economically viable sector, which is not always looking towards the next subsidy, will also be better placed to meet the environmental and ethical demands made by our citizens.

However, producing quality products is just part of the job. We also have to guarantee that the quality of the product can be recognised by the consumer. This is why we need clear labelling rules. But we also need to protect names that stand for special production methods that are linked to a geographic area. Italian food products have earned a well-established reputation in the whole world under names such as Chianti, Parmigiano, and Prosciutto di San Daniele. The EU will take care that Parmigiano cheese means cheese that indeed is parmigiano, and not from any random place of the world.

Rural Development Policy

We also need to see agriculture as part of a wider rural economic system. We need to promote sustainable agriculture. This means, as you know, agriculture that is sustainable not only ecologically, but also economically and socially. We must use our rural development policy to make sure that farmers farm in a way which is environmentally friendly and which contributes to the preservation of our landscape, which, may I say, is essentially a man-made landscape, created by generations of farmers over hundreds of years. This landscape is as much part of our cultural heritage as our historical cities and towns. Just think of the cultivated hill country of Tuscany, the terraces of Sicily and the well-tended mountain pastures of Trento or the Alto Adige (Südtirol).

If we want our agricultural policy to be accepted by the majority of our citizens, it has to be a serious response to the problems and challenges facing the countryside. Fears about food safety and production methods need to be allayed by encouraging the farming industry to choose a path, which responds to the demand for environmentally correct farming methods. I believe we are already making significant strides in this direction and that we can be an example to other nations around the world.

A move to sustainable agriculture should not, however, be confused with a return to out-dated inefficient methods. It is true that we need to get away from environmentally harmful use of fertilisers or pesticides that have characterised some modern agriculture. However, if we are to further develop our farming methods, we need to profit from the latest research and technology. For example, we should encourage and facilitate the use of sophisticated but natural techniques to wage war on insect parasites without resorting to chemical pesticides. Crop rotation and intelligent use of manure can substitute anorganic fertilisers. Transport of animals, which respects animal welfare, minimises stress-inducing factors on cattle and improves meat quality.

Universities and Agricultural Institutes have a vital role to play as do farming organisations such as COLDIRETTI in helping farmers to regenerate agriculture by moving out of the past into a future, which is sustainable and which responds to the moral requirements of the citizens who do not always see things from the farmer's point of view.

Let me turn now to some international aspects of the CAP.

WTO

As chief negotiator for the agricultural chapter, I consider that Doha is a great opportunity for Europe in general and agriculture in particular. That the meeting should take place in a part of the world, which is at the centre of an extremely serious political and military situation, is not without its significance; it demonstrates our determination that business should go on as usual.

We all have a genuine interest that international trade should follow clear and fair rules. As the world's biggest exporter of agricultural goods and its second biggest importer, the EU shares fully this interest.

Of course, it is not enough to open up trade and ignore important issues such as environment, consumer protection and better rules for competition and investment. Essentially, free trade cannot last without a rule based trading system, which is shared and respected.

We must also take the interests of developing countries into account far more than we did in the past. I am in favour of launching a broad new round that addresses all these issues.

Looking at some current developments, I have to say that I am concerned that we may be repeating some of the mistakes of the past. Whilst the EU has put forward a fair and well balanced agricultural negotiation position, many of our partners seem to be camped on inflexible positions.

I ask myself:

  • How can the round achieve its ambitious objectives if the US Congress issues yet another farm aid package which means that the direct subsidies paid to US farmers are four times as high as those paid in the EU? Insulating US farmers from market signals is leading us backwards, and it cannot bode well for WTW negotiations.

  • Why does the Cairns group insist on treating agriculture like any other industry when it is self evident that agriculture never was and never will be "just another industry"?

In any event, every democratic society must be able to chose its own model of agricultural policy.

In our negotiating position within the WTO, we say:

  • "yes" to further liberalisation, on condition that all countries move forward together and profit from enhanced trade.

  • We also say "yes" to further reductions in export subsidies. Here again we impose a condition. All other forms of trade distorting export support, which are used by our trading partners have to be placed under an equivalent WTO discipline. This includes export credits, state trading enterprises and the abuse of food aid.

  • We can even envisage further cuts in trade distorting domestic support for agriculture. But only on condition that we can continue to support the services provided by agriculture, which are not directly linked to food production such as environmental protection, landscape maintenance and the positive role played by farmers in the rural environment.

World trade leads to a win-win situation when all sides profit from enhanced trade. A negotiation which produces winners and losers, generally fails to lead to an agreement, or to be ratified. However, I believe that we shall be able to soon meet the preconditions for productive talks.

Enlargement.

While the WTO negotiations include partners around the globe, we are leading negotiations with our immediate neighbours at the same time: negotiations for the historic enlargement of the EU to the east and south. If all goes well, we will be living in a community that has welcomed up to 12 new member states most of whom have strong agricultural interests. This will present both challenges and opportunities for EU's farmers and agri-food business east and west.

The candidate countries will first have to implement the existing CAP legislation or "acquis" This also means bringing its food industry into line with EU norms and sanitary rules. This requires considerable political will and administrative capacity. The date of accession depends upon the adoption of the "acquis", the establishment of the necessary institutional framework needed to apply it, and actual implementation.

Another step in the process is the removal of barriers to trade in agri-food between the EU and the candidate countries. We have concluded so called "double zero agreements", which lead to a smooth and step-by-step liberalisation between the old and the future member states. This opening of the borders means that both sides can profit from enhanced trade. Don't forget that the new member states represent important new markets for European agri-food products, and an increasing number of well-known Italian products will find new consumers in the candidate countries. But the double-zero agreements are not only good for our mutual trade contacts. In addition to this, they will facilitate enlargement itself by preparing both sides for a complete opening of the markets as soon as enlargement takes place.

Chairman, ladies and gentlemen,

I decided to call my presentation "Feeling the Pulse of the CAP" and I think that it is an appropriate title, since our role can be compared to a good doctor. Like a good doctor examines his patient, we must examine the CAP's body and mind and its interaction with society.

My "medical verdict" is that the CAP is getting better. Its regeneration has begun in the early nineties and continued under Agenda 2000 in clear response from farmers and politicians around Europe to the concerns voiced by our citizens. However, although the patient has a strong pulse, we need to prepare him, as we would prepare an athlete, for the challenges ahead. The measures we will need to take will serve to strengthen the instruments available to better pursue the objectives decided in Berlin. We must make further moves from traditional market to rural development measures, so as to strengthen the second pillar of the CAP. We must notably give greater consideration to environmental concerns and for food quality and safety.

If we failed to act as good physicians, we would end up being the morticians of the European agriculture. The choice is ours. In any case, the next appuntamento is the Midterm Review: It will not be a reform, but an aggiornamento. In that context, let us not forget: l'unione fa la forza!

Grazie.


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