SPEECH/06/556

Mariann Fischer Boel

Member of the European Commission responsible for Agriculture and Rural Development

Simplification of the CAP: meeting the challenge

Conference “A Simple CAP for Europe”
Brussels, 3 October 2006

Ladies and gentlemen,

Let me give you a very warm welcome to this conference on the Simplification of the Common Agricultural Policy, organised by the Commission's Directorate-General for Agriculture and Rural Development.

We have a very full programme ahead over the next two days, and I hope that you're looking forward to it as much as I am.

I'm especially glad to welcome my colleagues Juha Korkeaoja, the Finnish agriculture minister, and Günter Verheugen, the Commissioner for Enterprise and Industry. As Günter will confirm, in trying to simplify policy DG Agri is not making a lone charge. Simplification is an issue for the whole Commission and for every policy area, especially in view of our Lisbon agenda for growth and jobs.

As Leonardo da Vinci said, "Simplification is the ultimate sophistication."

Of course, this doesn't mean that life is always simple. Some people of my generation will always struggle with the technology of a DVD-player!

If we look at farming, this has become much more mechanised, more capital-intensive, more complex. These developments have been positive: it would be much more challenging to feed a city like Brussels if we abandoned combine harvesters and modern distribution methods in favour of ox-drawn ploughs and horse-drawn carts.

On the other hand, we're all familiar with the concept of unnecessary complexity. Must there really be so many buttons on the remote control unit for the DVD-player? And why do I have to fill in ten pages of forms by hand to claim a small tax exemption? Isn't there a simpler way of doing things, such as would have pleased the great Leonardo?

We often ask similar questions about the Common Agricultural Policy (or "CAP") – and with good reason. Yes, the CAP is complex. It addresses complex problems, in a complex geographical and political setting.

Simplifying it is a stern challenge. But there is much to gain from the attempt. We can help farmers to be more competitive. We can lighten the load on administrators. And we can get more "bang for the buck" – squeezing the maximum value out of every euro spent. So here we are today, taking a look at where we are now, and mapping out the way ahead.

I ought to make clear what our simplification work is not about. It's not about "scrapping the CAP". We need a common policy for agriculture, for many reasons. If anyone thinks that reverting to national policies would really make life simpler in the European Union's single market, I would gladly debate the issue with them – but not today. For the purposes of this conference, simplification is not abolition.

So what is simplification about? In the Commission's current work, we distinguish between two types: technical simplification and political simplification.

Technical simplification is about the detailed implementation of policy, and sometimes about form. Revising a legal document to make it clearer, or streamlining administrative procedures: these are examples of technical simplification.

Political simplification is about changing underlying policies in ways which make them simpler. For example, some say we should abolish production quota systems. This would give farmers in some sectors the freedom to produce whatever quantities the market would pay for, without worrying about artificial limits: this is political simplification in action.

It's important to realise that we are pursuing both sorts of simplification. Both are important. Political simplification usually creates more headlines, but technical improvements are valuable as well: the devil is often in the detail. Technical work often brings quick gains for relatively little pain, and sometimes clears a path for political changes.

So let me first outline some of our technical projects.

The Commission will soon finish its work on a single Common Market Organisation. For those of you who don't know, I should explain that a Common Market Organisation (or "CMO") is a set of rules which governs the European Union's market for a given agricultural product. For example, we talk about the "cereals CMO" or the "beef CMO".

These sets of rules have become very confusing over time. Imagine the sum of the market policies of the CAP as a broad, deep forest. Now imagine that there is no single map of this forest – just a large collection of selective maps, which cover different areas and have been updated many times by other incomplete maps.

You wouldn't be surprised if a lot of people got lost in this forest.

The CMOs of the CAP – the legal documents setting out market policies – are like these maps. They have multiplied over time to the point where only experts can use them with confidence.

The solution: make a new map of our market policies – a single, up-to-date map – a single CMO.

Creating a single CMO would not involve changing market policy instruments. No deletions, no additions.

Instead, a single CMO – which would replace 21 individual CMOs - would simply list and describe those policies more clearly in a consolidated legal document. For every market policy mechanism which we operate, it would set out the general principles which apply to all CMOs, then list the individual differences, sector by sector.

I firmly believe that the single CMO would in itself bring valuable order, clarity and transparency. Access to legislation would be improved enormously. But the single CMO would also help us to check the consistency of our market policy more carefully. When we have a better map of the forest, we can see more clearly which parts of the forest need to be thinned out or replanted.

Another element of our current work on technical simplification is our Action Plan. This contains 20 proposals for practical changes which can make life easier for farmers, businesses and national administrations without changing fundamental policy.

These are changes of detail. But we all know how some details in daily life can make a big difference.

One example comes from the olive oil sector. Currently, farmers may not use land planted to olive trees after 1998 to activate their entitlements to decoupled payments. Today, this restriction makes little sense, and the related controls are burdensome, so we propose to abolish it.

My second example concerns dried fodder. Under the CAP, processors can receive a support payment – but only after the farmer has proved that he or she met a number of conditions when growing the raw material. But as it is the processor that receives the aid, and as the farmer now receives a decoupled payment on the land, many of these conditions are an unnecessary burden. They should go.

Director-General Jean-Luc Demarty will be saying more about the Action Plan a little later. I would simply add that the proposals currently in it are not the end of the story: I very much hope to receive more suggestions from your side. We want all of you to become involved so that we can add projects to the Plan as the months go on.

Now I return to a point which I made earlier: that the Commission is committed to simplifying not only technical issues but also underlying policies.

There will be three main avenues for further policy change in the coming years.

The first is the sectoral reforms which are, like sugar, already done, or, like wine, bananas and fruit and vegetables, currently under discussion. There is rich potential for simplification here. An example would be the end of vine planting restrictions - once we have brought the wine market back to durable stability.

The second avenue for policy change is what I call the "health check" of the CAP, to be carried out in 2008. This certainly won't mark a fundamental change of direction – but it will mean policy adjustments, to keep the CAP working as it should.

The third avenue is the general review of the EU budget. This is planned for sometime around 2009, and it will include reflections on the CAP's longer-term future beyond 2013. For me it is important that these discussions on the CAP are in the first place "policy-driven". Of course when formulating the new policy we have to bear in mind that we won't have the same amount of money available for its financing. In other words: we need to create or reshape our policy tools in a way that they are at the same time efficient in maintaining a competitive European agricultural production, simple in order to keep the administrative burden for farmers and national authorities to an absolute minimum and less costly in order to respond to budgetary constraints.

Many different ingredients of the CAP will come under the microscope within both the health check and the budget review. For example, in the health check we may need to adjust a number of market instruments; and in the budget review, their very existence in the long term could be open to question.

One of the central tools in the CAP will probably provide a theme that runs through all of these discussions: the Single Payment Scheme (and its simplified variant in some New Member States).

The Single Payment Scheme, established by the reform of 2003 and developed in later reforms, gives us a very solid foundation for simplification of the CAP. When fully implemented in the form currently agreed, it will draw in 90% of direct payments to farmers, which were previously very diverse and complex; and it doesn't vary according to agricultural production (the aid is "decoupled" from output).

However, it is more complicated than it might be, and I firmly believe that we should tidy it up: make it more streamlined, simpler, better.

Within the health check, we should take a hard look at the many exceptions to the principle of full decoupling which are currently practised within the Single Payment Scheme. Unless we can show that they do more than just add extra layers of complexity, we should end them.

Our ongoing work on assessing the administrative burdens on farmers from the CAP, and from the Single Payment Scheme in particular, should throw valuable light on this issue.

Another point of complexity which we could examine in the health check is that of the different kinds of entitlements to decoupled payments which are generated by the current system. There are "standard" entitlements, and those with special conditions attached – related to set-aside, for example.

I see a strong case for sweeping aside the variations and creating a single type of entitlement.

It could for instance mean the end of set-aside, which is a relic from the days when cereals subsidies were linked to production or (later) to planted area. The end of set-aside would lift a heavy burden from the shoulders of farmers and administrators alike.

Looking further ahead, what questions should we ask ourselves about the Single Payment Scheme in the budget review? One of them could be this: after 2013,what will be the role of the direct payments and could we move towards a single model of decoupling?

This is only a question at this stage, not a clear conviction. But one thing is obvious to me: to survive the waves of external change which are beating against it, the CAP must have the strength of simplicity. So simplification will stay high on the agenda as we do our long-term thinking.

Now comes a word of caution.

Simplification of the CAP is a worthy goal, which offers very substantial benefits. But it comes with a price tag attached.

The price tag is this: in a simple CAP, exceptions from the rule must be just that – exceptions. They cannot be the norm.

Everyone who knows the CAP also knows that a simple idea for improving it can become more complicated as Member States try to mould it to their individual requirements. This is exactly the fate that befell the Single Payment Scheme in 2003, as I have already outlined.

Of course, this is democracy. I understand this; I was there at the table in 2003 as a minister. But here's a hard truth: we can't have our cake and eat it. We can't both keep things simple and also hand out exceptions to anyone who asks.

This does not mean that we are condemned to having a "one-size-fits-all" CAP. In the area of rural development, for example, I think Member States and regions will almost certainly continue to have very generous room for manoeuvre.

What it does mean is that we must all be responsible in seeking a balance between flexibility and simplicity. This is a task not only for the Commission but also for Member States, the European Parliament, interest groups and citizens. It's a challenge for all.

A final point I would like to raise in this context is that simplification should not undermine other fundamental goals of our common policy. A good example here is Cross-Compliance. Of course we want to take away all unnecessary burdens here as well, but we must preserve the main objective underlying the Cross-Compliance system: the delivery of public goods and services. This is in the interest of all - and particularly of the farming sector, because Cross-Compliance will help us to win broader support for our policy in future.

Ladies and gentlemen, to finish, let me summarise again the task before us: to find the sophistication in simplicity that Leonardo da Vinci spoke about. I don't promise that the CAP will ever have the plain elegance of his Renaissance hang glider. But I am absolutely sure that we can make it into a better tool for the job that it does – sharper, cleaner, stronger, simpler to use.

I'm greatly looking forward to hearing your ideas on how to achieve that over the next two days and in the months ahead.

Thank you for listening, and enjoy the conference!