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Dr. Franz FISCHLER
Member of the European Commission responsible for Agriculture, Rural Development and Fisheries
EU Enlargement: A future for European farmers
9th Carrefour on Animal Production
Gembloux, 21 January 2004
Ladies and Gentlemen:
Let me begin by thanking you for giving me another chance to speak at this conference. As you may remember, I was unable to honour this commitment last year due to the ongoing discussions surrounding CAP reform. This year however, I am pleased to be able to join you with the agreement for a new agricultural policy behind us, and the prospects of an historic enlargement ahead of us. As Goethe once said, "We must always change, renew, rejuvenate ourselves; otherwise we harden". The European Union is changing. It's got a renewed agricultural policy, and it is rejuvenating the European idea. Its borders, and its policies remain flexible, and, far from hardening, it is continually adapting to new circumstances, and enlarging to create new outlets for opportunity, diversity, and growth.
The impact of enlargement is a very apt subject to have chosen for your 2004 conference. The Irish too have chosen, 'Europeans Working Together' as the theme for their Council Presidency, and the coming months will see idea become reality, and one of the most important opportunities this century for Europe, and its people, come into being. I would like to use today to explain what an EU-25 means for Europe's farmers, and why I believe that chance outweighs challenge.
Firstly, there is the enlarged single market, under which the EU-25's eleven million farmers will benefit from a consuming public of almost half a billion. And, coupled with a increase in purchasing power which in the new Member States is currently growing at around twice as fast as it is in the EU-15 experts anticipate a sustained increase in demand in the new Member States in particular for value added, high quality, processed products such as meat or cheese.
Secondly, there are the benefits afforded by free trade within such an extensive common market. The so-called "double profit" and "double zero" agreements have, in particular, played a crucial role in liberalising trade between old and new member states in recent years. They have contributed to the increase in EU-15 exports of pigmeat to the accession countries for example, which has gone up by over 100 000 tonnes since 1999.
Another benefit of phasing-in the common market is that it cushions the impact of enlargement. Producers can adapt to the new market realities as they develop. Where new pressures arise, the CAP will support them to upgrade and become more competitive or diversify. And where new openings occur, the CAP will support them to maximise their profits in this respect.
Quality has a lot to do with maximising profits and being competitive, particularly where livestock is concerned. BSE, foot and mouth disease, and swine fever have all had a severe impact on the livestock industry in both the EU and the new Member States. Consumer confidence dropped, particularly in the beef sector, demand for meat decreased rapidly, and production methods and standards were brought into question. You chose 'quality' as your theme for last year's conference, but it ties in very closely with this year's theme, because many of the openings that farmers will see post-enlargement will be in the production of quality products.
There is no doubt: attitudes towards quality and origin of food have changed. Consumers want healthy food. They want high quality food and they want safe food. They are increasingly conscious of animal welfare, and they inevitably want assurance that what they eat has been produced in line with the highest ethical standards.
And in meeting the demand for quality, livestock farmers in the EU-15 have a distinct advantage. Whilst the accession countries have invested massive efforts into preparing themselves for EU accession, and have made major progress in every aspect, they are still lagging seriously behind in key areas.
Firstly, there are the continued administrative challenges, in terms of setting up the control mechanisms necessary for the day to day functioning of the CAP. Then there are crucial veterinary and hygiene standards that need to be reached and maintained: many abattoirs and processing facilities still require further upgrading. There is also the question of rural infrastructure which remains underdeveloped in many places. Marketing and promotion schemes are yet to be put in place, or are far from being used to their full capacity.
And whilst this significant restructuring continues, livestock producers in the new Member States will find their potential severely limited. Regardless of whether farmers have fewer overheads and lower production costs, failure to meet EU production standards, particularly in the livestock sector, will severely hinder their potential: we simply do not have a market for goods that do not make the grade.
Ladies and Gentlemen:
Let me take the pigmeat sector as an example to put this into perspective. This is a sector in which many EU-15 countries - Germany, Denmark, Belgium included - are extremely strong. And it is a sector in which consumption is anticipated to go up by around 28%, against a 20 25% rise in production with enlargement. In the new Member States, demand could increase by another 12% by 2009 with the growth in disposable income. Producers in the accession countries however are restricted by a number of problems:
I am aware that pigmeat producers in the EU-15 are facing other specific problems at the moment. The Euro is currently very strong against the dollar; feed prices are very high due to last summer's drought; consumer demand for pork is low. These factors come on top of the usual cyclical fluctuations, and they all contribute to the extremely low prices that we are witnessing in this sector.
As a result, the Commission introduced a private storage scheme in December to alleviate the market pressures. 77 000 tonnes of pigmeat have already been bought into this scheme to date, and we have continued to observe the market very closely in recent weeks. And, although private storage has stopped the fall in prices by stabilising them, they are at a very low level, and there is still no sign of them picking up. Consequently, I will propose in the pigmeat management committee on Friday, that export refunds for pig carcasses and cuts be reintroduced for a limited period.
Ladies and Gentlemen:
The situation in the beef sector on the other hand, has been steadily improving over recent months, and I have no reason to believe that enlargement will pose any additional problems to farmers in the EU-15. Yes, the number of producers will increase by 10%, but so too will the number of consumers. Furthermore, production in the new Member States will only form a very small percentage of the total EU-25 production in 2001 for example, there were over 90 million bovine livestock in the EU-25 group, of which only 10.4 million were reared in the accession countries.
Poultry however, does face more of a challenge. Accession country producers are very competitive, and their exports to the EU-15 have risen from 78 000 tonnes(1) in 1994, to over 170 000 in 2003. However, in this sector, it is not enlargement that I see as the test. Indicators show that as spending power increases following accession, so too will the consumption of white meat. The challenge for European poultry producers as I see it, is to remain competitive on a world market which is witnessing the emergence of new and competitive producers in third countries. Quality, and added value, will play a key role in this respect.
Ladies and Gentlemen:
Reinforcing and promoting quality production has of course become a central element of the CAP with the latest reform. Increasing Europe's agricultural competitiveness in this respect was one of the key objectives underlying last year's discussions. And I am confident that the agreement reached has enabled us to map out a positive future for Europe's farmers.
It enabled us to address the more localised problems such as surpluses in the beef sector. But it also enabled us to address the more global questions of how we secure a sound future and a stable income for our farmers; how we improve efficiency; how we develop and expand the range of income opportunities for farmers without compromising the level of support they receive; and how we increase rural development expenditure without drawing on more resources. And, as various studies have shown, CAP reform does provide a sustainable answer, and it does substantially improve the medium term perspectives for agriculture in the EU-25.
And, having an EU of 25, rather than one of 15, does not mean that producers in the current Member States will see their CAP aids compromised. You all know that in October 2002 the Heads of Government meeting in Brussels mapped out a clear budgetary framework for agricultural spending up to 2013. The agreement was concluded with enlargement in mind and, as a result, covered the EU-25 and provides for the necessary funding for the 10 acceding countries.
This offers a stable framework for the future which accounts for the payment of CAP aids to all producers.
Ladies and Gentlemen:
I am confident that the EU's agricultural sector is now moving in the right direction. I am confident that enlargement is the right road for us to be going down, and I am confident that Europe's livestock producers will find the opportunities that both offer, rewarding. Recent studies have also almost invariably concluded that the overall effects of EU enlargement on the agricultural sector will be positive.
I believe that EU-15 producers farm a highly competitive livestock sector. And I know that where there are challenges, there are also new opportunities, supported by our agricultural policy, and boosted by CAP reform. As the American philosopher Eric Hoffer said, "In the shaping of life, chance, and the ability to respond to chance, are everything". Enlargement provides the chance. I know that Europe's farmers are able to respond to, and profit from, the opportunities on offer.
Thank you for your attention.
(1) Carcass weight