Dr. Franz FISCHLER
Member of the European Commission responsible for Agriculture, Rural Development and Fisheries
CAP Reform and EU Enlargement The Future of European Agriculture
Leuven, 4 November 2003
Ladies and Gentlemen,
I would like to say thank you very much to the Christian Academy for European Dialogue for inviting me to join you here in Leuven. I am pleased to be with you tonight to discuss European agricultural policy.
Organisations such as European Bridge are of enormous importance for the European dialogue. If we are to advance the common cause of Europe, we must build bridges, and if we are to create "an ever closer union among the peoples of Europe", as the Treaty establishing the European Community puts it, we must span the divides with European bridges.
This evening I would like to address four issues:
Firstly: What shape must a modern European agricultural policy take?
Secondly: How will the forthcoming EU enlargement affect our agriculture?
Thirdly: Where do we stand in the international farm negotiations after their failure in Cancun?
And fourthly: the organisers have asked me to briefly touch on the European constitution debate.
To my first point then, the common agricultural policy:
The EC Treaty of 1957 states that "the objectives of the common agricultural policy shall be (...) to increase agricultural productivity (...) and (...) assure the availability of supplies"(1). Today this call for greater production seems somewhat anachronistic. But at the time the European Community was created this goal was fully justified: at the time European agriculture was not even able to ensure self-sufficiency in cereals(2).
Thanks to the efficiency of our farmers, rapid technical progress and thanks also to the common agricultural policy, the situation changed rapidly and the EC had already become a net exporter by the 1970s.
However, once it had started moving, the European farm production machine was difficult to stop. It took 15 years and two major reforms before the surplus mountains and lakes were eliminated. But even today some opponents still use the milk lakes and meat mountains of the 1980s to argue against the CAP.
But the situation today is quite different. The time of the headlong dash to raise production is over and today's society has completely different expectations of agriculture:
These are the burning questions, as again recently confirmed in a European public opinion poll(3):
These demands are not always easily reconciled, because higher environmental standards, for example, increase production costs, reduce yields and thus lead to lower revenue.
But that is not all. It is not only difficult to reconcile the different demands of society, but - hand on heart - there is also a difference between what people preach and what they practise. How else can the person who advocates greater protection for animals go to the supermarket and buy eggs from battery hens just because they are cheaper?
In any case, the poll again showed that people expect far more from farming than just the production of cereals, milk and meat. Agriculture must be in touch with nature, protect the environment and conserve our farmlands which have been there for thousands of years.
How then can European agriculture and the CAP meet society's requirements?
The answer is sustainability, or more precisely: a return to sustainability, because for centuries it was understood that each generation of farmers would pass on their farms and fields to the next generation so that it could harvest more, not less. It was only advances in technology and chemical engineering that gave farmers the means to live at the expense of future generations and deplete natural resources.
But if we are to return to improved quality, better environmental protection, greater competitiveness and more support for our rural regions and farming families, we also need an agricultural policy that is environmentally, economically and socially sustainable!
Ladies and Gentlemen,
Sustainability, the greater demands made by the population, higher quality and stricter compliance with the rules these are all right and proper, but they must also be reflected in agricultural policy.
That was the reason behind our agricultural reform:
How can we achieve this?
First of all we will sever the link between subsidies and production: Farmers will no longer receive headage payments for each livestock unit that they keep, but a single farm payment. This eliminates the incentive to overproduce. In return farmers will be required to provide society with the public goods which it demands.
Secondly, there will not only be improvements for individual farmers - we will also do more for our rural areas:
The third key element of our reform was a major overhaul of the milk sector:
Fourthly, we have also kept some of the existing CAP instruments that serve as stabilisers for agriculture. For example: intervention stabilises internal market prices, export refunds help to stabilise the markets, and compulsory set-aside stabilises arable crop production.
The Union actively uses these instruments to regulate the markets. But to do so they must be also flexible.
Take set-aside, for instance: over large parts of Europe this summer we had a devastating drought, leading to smaller harvests and high prices for animal fodder. The Union already decided some time ago to bring forward a number of direct payments to avoid farmers having to face liquidity shortfalls. But we should also try to improve the cereals balance. I will therefore next week be suggesting lowering the set-aside requirement in 2004 from 10% to 5%. This will encourage the production of an additional 7 million tonnes of cereals next year.
The next step in the reform is ensuring that the Member States implement the new policy properly.
At the end of the day everyone benefits from the new agricultural policy:
Enlargement to include ten new Member States means 75 million new consumers and four million new farmers in the EU. That means new market opportunities for farmers in all 25 EU Member States, but also increased competition.
Purchasing power in the ten accession countries is currently rising about twice as fast as in the EU-15. Experts are therefore predicting a continued strong rise in demand in the new Member States for quality processed products, such as cheese and meat products.
However, it is mainly the farmers and the food industry in the EU-15 that produce branded products and will be able to make use of these new market opportunities. Conversely, the ten new Member States have the chance of growing low-cost feed grain, rape and renewable raw materials, which will soon be pushing onto our markets. And domestic demand in these countries is continuing to rise too.
At the same time farmers in the accession countries are still being held back by huge shackles: lack of capital, poor animal husbandry, shortcomings in veterinary care and hygiene, not to mention problems with processing and marketing their products, to name just a few.
But there is no getting away from it: we have to ensure that the new Member States comply with our EU standards, and use EU assistance properly.
The EU strives, through targeted programmes, to help farmers to help themselves: over the past four years €1.33 billion(5) has flowed into the farming sectors in the accession countries to enable them to prepare for integration into the CAP.
These resources have been used, for instance, to promote investments in modernising holdings, improvements in processing and marketing products, the setting up of production cooperatives, and improvements in vocational training.
Despite these extremely successful measures, huge efforts will still be required to ensure the common agricultural policy really does work properly in the new Member States: thousands of public employees in the accession countries have to learn how to implement Community law in practice. Programmes will have to be created, agencies developed, tenders organised, controls developed and discussions held.
The course has been set therefore; we are on track but not yet moving at full speed.
Increased international competition, new markets and new terms of trade are also on the table in the WTO.
Thanks to our new system of support, with more rural development measures and reductions in price support, we have for the first time moved off the defensive in the WTO and became one of the top international players.
And so it was even more disappointing that negotiations collapsed in Cancun, even before getting on to agriculture. And so it is wrong to claim that farm policy was responsible for the failure of Cancun.
Nor, in retrospect can the blame for the failure be pushed onto those developments which, before Cancun, had been named as conditions for the success of the talks.
Countries all over the world called on us to reform our common agricultural policy to ensure that the negotiations would succeed: this we did in our June reform, for which we received a huge amount of international support. Yet in Cancun those same parties turned round and said: we are not interested in that, we want to know what else Europe is prepared to do.
It was then said that the talks would fail if we did not settle our differences with the Americans. So we resolved our differences, and were then slated by critics saying it was not acceptable for two major world trading blocks to come to an agreement with each other.
I find it a little strange, to say the least, that what was said beforehand to be a condition for success is afterwards declared to be the reason for failure!
Cancun has us put us seriously behind schedule in the current negotiations. But the Doha Round must and will continue. Because opening world markets even more is a major prerequisite for economic growth which we urgently need all over the world.
Our negotiating proposal therefore remains on the table:
I will in any case continue to work actively towards a successful end to negotiations. But at the end of the day, success will depend on all members of the WTO converging on a central position. This will require more political will and commitment on the part of all - the industrialised nations and developing countries alike.
A lot more could doubtless still be said here, but perhaps we can come back to this topic again in the discussion to follow.
Now to my final topic:
The European Constitution
Two years ago the heads of state and government set up a Convention of 105 representatives from the European Parliament, the national parliaments and governments of the EU-25, and gave to it the task of drawing up a Constitution for Europe. The Convention successfully completed this work a few months ago, and now the Intergovernmental Conference is set to decide on the draft.
The greatest thing about the Convention's draft is the fact that it was actually produced at all. After the Laeken summit hardly anyone still believed that the Convention would be able to adopt a draft constitution, let alone such a broad text.
But there are also a number of points which give me serious misgivings - particularly the proposal that there be only fifteen voting commissioners. In my view this is the worst possible solution, because it would make the new Commission a two-class society, with top-tier commissioners with voting rights and a portfolio, and the others unable to do anything other than lobby for the interests of their Member States.
From everyday practice I know that we categorically need one voting commissioner per Member State! This is important if only because each Member State needs someone who can speak out in their national language as a visible mediator with Europe. Quite apart from that it is important that all commissioners answer to the European Parliament.
Nor do I view it as an impossible task having a Commission of up to 30 members. This would doubtless create a management problem, but one that could easily be solved.
I would like to address one more weak point in the draft constitution to do with the common agricultural policy: the draft submitted by the Convention has in effect ignored the major paradigm change in European agriculture away from maximising production and towards sustainability, and the goals of the common agricultural policy in the draft still reflect the deprived post-war economy.
On the whole, however, I would like to emphasise once more that the Convention has achieved great things, given its difficult starting position. It put its proposal on the table on time and produced an excellent draft for the Intergovernmental Conference.
We must therefore, under all circumstances, avoid a situation whereby this draft is challenged in its entirety in the Intergovernmental Conference.
I draw now towards my conclusion:
Antoine de Saint-Exupéry once said: "As for the future, your task is not to foresee it, but to enable it."
I hope that the draft Constitution for Europe enables a good future for the Europe of 25 and more, and that our agricultural reform too opens up attractive prospects both for our farmers and for the food sector as a whole, and for our consumers throughout Europe.
Thank you for your attention.
(1)Article 39(1)(a) and (d) of the EC Treaty.
(2)Cereals self-sufficiency rate in 1967: 83.9% (source: Eurostat).
(3)Eurobarometer 59.2, October 2003.
(4)€378.4 million under the Guarantee Section and €41.6 million under the Guidance Section.
(5)€2.2 billion including BG and RO.