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

Building our Common Future: Policy challenges and budget resources in the enlarged Union 2007-13

Committee on Budgets of the European Parliament

Brussels, 17 March 2004

My colleague Michaele Schreyer has already described the new Financial Perspective to you. I would now like to comment on the figures for agriculture and fisheries and their background.

Agriculture and rural development are to be funded together with environment policy and fisheries under Heading 2 "Sustainable management and conservation of natural resources". The financial framework for future expenditure on market support and direct payments was adopted unanimously at the summit in October 2002.

On that occasion the Member States agreed to take the spending planned for 2006 and to keep that figure in nominal terms until 2013, with only partial deflation at 1% a year. It is important to remember that the phasing-in of spending in the ten new Member States will only reach 35% in 2006 and that the phasing-in of the other 65% and financing the reform of the milk quota scheme plus any other funding requirements arising out of past reforms will have to be found within this strict budget limit.

However, the Commission is proposing all the same that the accession of Bulgaria and Romania should be funded with additional resources.

Since the figures for the Financial Perspective are set in constant prices, we started by determining all the figures for agriculture at current prices, then applied an annual deflator of 2% to arrive at constant 2004 prices.

The proposed financial framework goes hand in hand with the reforms which we adopted last year in Luxembourg, and which is to be rounded out by the second reform package. As I have already hinted, this framework is pretty constraining, because it means that expenditure on agriculture will go down in real terms.

This is not as bad as it sounds, however, since the budget resources for agriculture will be used in future in a more targeted and more efficient way.

Developing rural areas

As regards rural development, in the Council and here in the European Parliament it was often said that "simplification is needed".

For this reason we are proposing a single rural development fund combining EAGGF Guarantee Section funding for rural development with funding under the EAGGF Guidance Section.

The shift to one programming and funding instrument for the next programming period should lead to a reduced number of programmes to manage and more coherent programming.

I believe this is a major step forward.

The following principles were followed in establishing the rural development budget.

The amounts coming from the EAGGF Guarantee Section remain frozen in real terms (in constant euro prices) at the 2006 level for EU-25 over the whole period. An amount for Bulgaria and Romania has been added which is calculated to give these two countries the same share as they had under Sapard.

Alongside this, resources from the EAGGF Guidance Section will be transferred to the new single rural development fund. These are calculated on the basis of their historical share in the overall Objective 1 budget for each Member State in EU-25, supplemented by a pro rata amount for Bulgaria and Romania.

Furthermore, the new rural development fund will include half the amount allocated to Leader+ in 2006.

The overall budget for rural development between 2006 and 2013 at 2004 prices increases substantially by 25%. However, this is entirely due to enlargement.

The funding for rural development which I have given does not yet take modulation into account.


Expenditure on the common fisheries policy will rise from €919 million in 2006 to €1 128 million in 2013.

In order to increase transparency and simplify management, it is proposed to group all CFP expenditure, currently spread over four budget headings, into one single fisheries fund.

The same approach as for rural development has been followed for establishing its overall budget.

An amount has been estimated for Bulgaria and Romania again based on the average share for EUR-10.

For the non-structural part of fisheries assistance, an increase in appropriations over the 2006 figures is proposed to take account of our commitments following the reform of the CFP.

Overall, agricultural expenditure in EU-27 (direct payments, market support and rural development) will rise from €54.3 billion in 2006 to €55.5 billion in 2013. This is an increase of 2% at 2004 prices, resulting solely from enlargement.

The share of agricultural expenditure in 2006 accounts for 45% of total commitments under the EU budget. In 2013 this percentage, with Bulgaria and Romania added in, will have decreased to 35%. This reflects the shift in budget resources towards new policy areas outside agriculture.

The total allocation for direct payments and market support under the new Heading 2 for EU-27 will decline between 2006 and 2013 by 3% (at constant 2004 prices), despite enlargement from 15 to 27 Member States.

The proposed Financial Perspective for 2007-13 is designed to provide the resources we need to achieve our political goals, keep the budget stable, simplify the financial instruments being used and guarantee full transparency.

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