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

Latvia's Accession to the EU Challenges for Agriculture and Rural Areas

Meeting with representatives of the agricultural and agribusiness sector

Jelgava (Latvia), 16 September 2002

Honourable Minister Slakteris,

Ladies and Gentlemen,

I am very pleased to have the possibility to be present at the conference "Contemporary Latvia and the Farmer: Possibilities and Challenges". The imminent accession of your country to the European Union will offer you many opportunities. But in order to seize these opportunities, information and exchange of ideas are crucial. Therefore, I would like to congratulate the organisers of this conference and wish you all interesting discussions.

Since my last visit to Latvia, your country has made remarkable progress. Only three years ago, Latvia was admitted to the second group of accession countries. But in the meantime, your country has caught up in many respects with the frontrunners, and today it counts among the candidates that are most likely to join the European Union first. This is mainly due to the efforts of you - the Latvian people-, who have opened up politically and economically to the European Union.

Ladies and Gentlemen, we are together part of the important process of uniting Europe. This unification will offer opportunities for investment, economic growth and wealth. A Europe of common values is a good basis for stable peace. But the European Union is even more than that, it is also a community in which we can address challenges and find solutions together. This was true when the EU was founded, and it will equally be true for a Europe of twenty-five or thirty members.

One of the basic principles of the EU is solidarity between the Member States. It is our goal to reduce the gap between living standards in Europe by investing heavily in less advantaged areas.

I should like to talk today about the changes which are necessary in the agricultural and agri-business sectors, and how the European Union is prepared to help with those changes.

EU membership offers unrestricted access to the biggest consumer market in the world. The addition of 100 million people, in rapidly growing economies, to the EU's single market of 375 million will boost economic growth and create jobs in both old and new Member States. In terms of agriculture, membership means entering a very large and competitive market, where consumers will be willing to pay reasonable prices for quality food. The first positive results are already visible thanks to our bilateral trade liberalisation. As a consequence of our so-called double profit agreement, Latvia's agricultural exports to the EU have doubled between 2000 and 2001 to € 33 million.

However, in order to use the opportunity of the single market even more, you need to continue and reinforce your efforts for your restructuring programme. The restructuring of your agriculture and the upgrading of your processing facilities is not something which is forced upon you by the European Union. Latvia is facing these tasks in any case, no matter whether Latvia joins the European Union or not. Increasing demands of the consumers in your country regarding food quality and food safety, membership of the WTO and the further liberalisation of trade require these changes. By meeting the admittedly high standards applied in the European Union, you will not only increase your potential sales on this market, but also elsewhere in the world.

And in order to meet those challenges, further modernisation of your farms, and of the rural infrastructure in general, is also necessary. This too is not easy, but is clearly in your interest.

Your advantage as a future Member of the European Union is that you do not need to carry out all the necessary changes alone. And the EU is not just waiting for the day of accession with its support. For the first time in the history of the EU, we have established major programmes to help the candidate countries before their accession to the EU. There is one programme that is specifically designed for agriculture. This so-called Sapard programme (Special Accession Programme for Agriculture and Rural Development) supports both the farmers and the countryside as a whole in the restructuring process. It is essentially the counterpart and preparation for the rural development programs that exist in the current European Union. Sapard supports investments in agricultural holdings, investments in processing and marketing, the rural infrastructure and the diversification of economic activities in the rural sector. This means that Sapard supports exactly those measures that are necessary to make Latvian agriculture more competitive and rural areas more dynamic. Through this programme, we allocate € 23 million in Latvia per year.

I am aware that the procedures linked to Sapard may seem difficult or bureaucratic to some. However, I would like to remind you that the procedures are largely the same as those in the current Member States. For the first time, we are handing over EU funds to be administrated by non-EU members. Sapard is dealing with EU taxpayers' money and we all have to take care that it is properly used. If money is used incorrectly, it has to be claimed back later, and this is clearly in nobody's interest.

What is most important now, however, is to help the farmers and the agri-business sector to use the potential of Sapard. This is where farmer and agri-business organisations play a crucial role: The information that they spread in the rural community is the basis for success! The funds are there, but many people in the countryside don't know how to use them. I want to encourage you to establish the link between those dealing with the Sapard funds and those who need them. Co-ordination between all actors is key for the success of Sapard.

But pre-accession aid is not enough. We have to create new opportunities for the people living in the countryside, so that they are not forced to move away: we have to improve infrastructure, provide education and training, and attract job-creating investment. This question is basically the same as inside the current EU. But in the candidate countries, it is even more pressing. Therefore, we cannot just take the existing agricultural policy of the EU and transfer it to Central and Eastern Europe. What the candidate countries need above all is support for the rural areas. We need an adequate approach that will help to integrate the new Member States harmoniously into the European Union.

The Commission has therefore proposed a well-balanced package for agriculture in the new Member States following accession that covers the questions of direct payments, quotas and supply management instruments but that puts a major emphasis on, and delivers major funding to rural development. This package has been carefully drafted to meet the real needs of the sector in the candidate countries. All its elements should be seen together. The package is realistic, balanced and fair.

In following the negotiations, it is essential that you are realistic about what can be achieved. The room of manoeuvre for compromises in the negotiation package is limited. With regard to the proposal to phase in direct payments, you should be aware that certain Member States are reluctant to pay any direct payments at all to the new Member States. With regard to the quotas and other supply management instruments, I do see some limited flexibility, but only on the basis of solid arguments.

In the short-term, we have to respond to the real needs of the rural sector, by doing more to assist the necessary restructuring and intensifying our rural development measures in the new Member States. In the long-term, of course, the CAP will be the same for all Member States.

I understand the concerns and fears of Latvian farmers, but it is essential that they are fully informed about what joining the EU really means for them. The direct payments will be phased in. The agricultural sector will have access to a far higher rural development support than EU farmers benefit from, and from certain measures which do not exist in the current EU. Moreover, from day one farmers will benefit from the other market mechanisms, such as intervention, storage systems, trade mechanisms aimed at stabilising prices and providing a secure income to farmers.

In short, membership of the Union will bring greater predictability of policy and prices, direct payments, which will steadily increase, access to a market of nearly 500 million consumers and major new funding for farm investment and rural development. I believe that Latvian farmers should certainly hope that accession is not delayed!

Ladies and Gentlemen,

We must not forget that the enlargement of the European Union concerns not only the economy or the representatives of our countries. It is foremost a project for our citizens. Therefore, communication with the people is crucial, particularly in the countryside, where many people have fears. It is now up to all of us to inform the farmers of the benefits of joining the EU so that they vote yes in the referendum.

You and all Latvia's citizens are facing the difficult aspects of adjustment. It is important that the benefits, which will follow this adjustment, are explained to the people. The procedure of enlargement must be clear, transparent and understandable for everybody. Otherwise, the European project, our project, cannot succeed.

Thank you for your attention.

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