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SPEECH/07/558












Mariann Fischer Boel

Member of the European Commission responsible for agriculture and rural development




Policy challenges of rural land management



















Conference organised by "Land Use Policy Group and the Bundesamt für Naturschutz" on "Future policies for rural Europe 2013 beyond - delivering sustainable land management in a changing Europe".
Brussels, 19 September 2007

Ladies and gentlemen,

Thank you very much for your welcome. And thank you in advance for making a particular effort to pay attention at this stage of the afternoon. I know the attractions of the Bierkeller are waiting for you in a few minutes in this rather attractive building...

It's significant that my job title as a Commissioner contains two elements: "agriculture" and "rural development".

Some people see these two elements as competing interests. I believe they form a coherent whole. And with this in mind, it's certainly interesting to change our vocabulary a little and talk explicitly in terms of "land use".

Two facts about land seem essential to me. One is that it's a fundamental resource for the countryside, for farming and for other uses. The other fact is this: no one has yet found a way of creating more of this resource! So we have to consider very carefully how we use it. (At least we can't "use it up"....)

I'm certainly aware of the valuable contributions which the Land Use Policy Group and the Bundesamt für Naturschutz have made to this work of analysis and reflection. I think we have a lot of aims in common, so please keep up the good work!

The LUPG would like to see our Common Agricultural Policy replaced with a "common rural policy".

It argues for this in a very reasonable way. I wish that all contributions to this debate were as well thought out! For some people, a "common rural policy" seems to be a sort of Biblical "promised land" which they want to get to as soon as possible after 2013.

But let's leave terms like "agricultural" and "rural" on one side for a moment. Whether or not the CAP is heading for a promised land, in environmental terms it has really moved a long way already.

For one thing, it has moved a long way in terms of the "first pillar".

For those of us who have been in agriculture for some time, it really wasn't so long ago that the CAP was based mainly on price support. Price support is environmentally blind. It has played its part in the CAP, but it contains no incentive to look after hedges or hedgehogs. And of course, if not balanced by other policy tools, it could be environmentally harmful.

Look at the situation now. By 2013, we forecast that 91 per cent of pillar-one payments in the European Union will come from direct payments, and just 9 per cent from market measures. (This is under current policies.) And under the reform of 2003, 100 per cent of these direct payments are subject to cross-compliance.

This means that environmental standards are written in stone in our system of direct payments.

Also, this terminology of "pillars" in the CAP is certainly not just word-play. With regard to rural development policy, gone are the days of "accompanying measures". The "second pillar" of the CAP is real and is worthy of the name. We can see this in several ways:

  • We have a significant budget for rural development: more than €88 billion for the period 2007-13 .That should account for about 21 per cent of total CAP funding by 2013, if modulation of 5 per cent is included.
  • We have a single fund to manage that budget – separate from the "agricultural" fund.
  • We have a broad and deep range of rural development measures.
  • And we have a solid system in place to ensure a strategic approach to rural programmes (through strategy plans) and a balanced approach (through minimum spending on the different axes of policy). By the way, from 2007 to 2013, about 46 per cent of all money available for rural development will be spent on axis 2.

Overall, rural development policy has clearly established itself. It's now unthinkable that we could return to a world in which the CAP was a purely "agricultural" policy.

But don't think that I'm being complacent. With regard to the environment, as to many other things, there's plenty of work to be done.

At the level of detail, we must do more to ensure that individual rural development measures and schemes deliver maximum "bang for the buck".

In connection with this, I'm pleased to see that the Land Use Policy Group has been looking at ways of getting the best value out of agri-environmental schemes, for example.

But while I'm on the subject of money, I must also say this: We can't hide from the fact that winning enough money for rural development is a huge political challenge for the future.

As you know, the agreement on the European Union's Financial Perspectives for 2007 to 2013 left rural development policy somewhat stranded. We had promised the New Member States a big slice of the cake to help modernise their farm sectors. At the same time, the Member States of the EU-15 wanted to keep existing schemes running and perhaps add some new ones. It became very difficult to balance these needs when the European Council came up with a rural development budget of €20 billion less than the Commission had proposed.

This was all the more frustrating as everyone had said warm words about rural development policy ("everyone" includes heads of state and government, by the way). When I look back, it makes me think of an advert that a bank is currently using. As the advert says: "Abra-ca-da-bra! Mum has a new car!" A number of politicians seemed to think that we could raise expectations without raising funding. Sadly, the world doesn't always work that way.

If we want to start squaring the circle before 2013, we must raise the rate of compulsory modulation. I see no realistic alternative to this. You know my views on voluntary modulation. It distorts competition and creates administrative headaches. So compulsory modulation will be an important topic in my forthcoming "Health Check" of the CAP for the period 2009 to 2013.

In the longer term, we must also persuade national finance ministers that there really is no magic wand: if you talk up an area of policy, you can't then run that policy "on the cheap".

There are other aspects of policy to be examined that have an impact on the environment.

It's no secret that the CAP Health Check will bring a review of compulsory set-aside.

I know this is not a straightforward issue. On the one hand, as a supply management tool, set-aside is obsolete in the era of decoupled payments, and it adds an extra complication to the Single Payment Scheme. On the other hand, as many have pointed out, it has provided beneficial environmental side-effects.

All I will say before my Health Check paper is published is that we have been weighing up all aspects of the debate very carefully. Where environmental gains have been made, we would like to keep them. But we must also consider whether we should use a supply management tool as an environmental tool. Do we really need to use the handle of a screwdriver as a hammer, or can we find a better approach?

Also in the Health Check, we must develop our thinking on climate change and water management.

Certain trends in European agriculture are already positive from the point of view of mitigating climate change. Between 1990 and 2004, greenhouse gas emissions from farming dropped by 10 per cent in the EU-15 and by 14 per cent in the EU-25. By 2010, we expect emissions in the EU-27 to have fallen by 16 per cent from the 1990 level.

However, much of this shift is due to a restructuring of agriculture. I think we can do much more through agricultural and rural policy to mitigate climate change. We have questions to ask ourselves about this.

In any case, it seems that problems associated with the climate are on their way, so just as important as mitigation is adaptation.

The CAP is already better placed to assist adaptation than it used to be. Where direct payments are decoupled, there are fewer artificial incentives to keep producing water-intensive crops in areas where water is scarce. Also, rural development money has already been used to alleviate water scarcity – through support for action to save water, or for investment in more efficient irrigation equipment.

It's obvious that we need to do more. In general, I will say that we should probably think in terms of the carrot more than the stick. Farmers are already subject to strict environmental rules. Starting from there, I'm not convinced that we can simply legislate our way to victory in the fight against climate change.

Connected with the issue of climate change is, of course, the issue of biofuels.

This has caused ripples in the world media over the last few months, partly because of its links with the very high cereals prices which we currently see in the EU and on the world market.

I would point out that increased usage of maize to make ethanol is only one factor among many which are pushing prices up. Bad weather in Australia and other parts of the world has had a huge influence, for example. We are watching the situation in Australia and in Argentina very carefully.

Also, I think we need to avoid asking the wrong questions about biofuels.

A report recently published by the OECD carries the title "Biofuels: is the cure worse than the disease?"

Of course, the authors wanted to catch readers' interest. This is fair enough. But I suspect that the title does reflect quite a widespread way of thinking. For many, biofuels have in the past appeared as a sort of goldmine that will end the problem of low cereal prices. Now that it has become clear that life is not quite so simple, there seems to be a certain disappointment.

But the position of the Commission is certainly not that biofuels are a cure for all diseases. They represent another possible use for land. And they can be part of the solution - not the whole solution - to problems such as climate change and energy insecurity. In a regulated market system, such as the European Union has, the market continues to allocate land between different uses, but it also takes signals from policy.

As you know, the European Union has decided that biofuels should make up 10 per cent of its transport fuel by 2020. This is the key policy signal to investors.

We estimate that, by 2020, to meet this target would mean using 15 per cent of our arable land for biofuel crops. But it's important to understand a number of things about this estimate.

First, the effects of this transfer of land to energy from food and feed use would be largely offset by increases in cereal yields.

Secondly, the estimate assumes that we would import 20 per cent of our biofuel needs. Personally, I think the proportion may be much higher in the end, because some South American countries are of course very competitive producers.

A third important point to bear in mind is the role of second-generation biofuels. I think research on second-generation biofuels is going to accelerate. This is for a number of reasons. For example, rising cereal prices are likely to make the production of bioethanol less profitable.

In any case, we are still working on a system to help ensure that all biofuel used in the European Union comes from sustainable production systems. We hope to finalise this work by the end of this year.

*****

Ladies and gentlemen,

In conclusion, I don't claim that the CAP is in the "promised land" that I mentioned, from the point of view of land use and the environment. But I say this because we will never have full agreement on what the perfect policy would be. There will always be a range of views on how we should use the land, and on how policy should direct that use.

But I will say this. I don't think we are wandering in the wilderness. We have been making good policy changes over the years. And we have a sense of direction for the years to come.

As I said earlier, the forthcoming Health Check will cover the period from 2009 to 2013. It won't be a new reform. It will adapt the CAP to a changed situation. After all, the CAP was designed for a European Union of six Member States. Then we went to 15; now we have 27. So we do need some adaptation now.

I think we'll have some constructive discussions. And I can guarantee that there will be something on the environment and on climate change. You'll understand that I can't go into detail yet, but we will have constructive discussions, and I hope that legal proposals will be agreed by the end of next year.

With regard to the situation after 2013: the Commission has now launched what some are calling the "mid-term review" of the European Union budget. These discussions are getting underway in good time so that we'll have a clear idea of the situation before five minutes to midnight. Predictability is extremely important for the future.

Ladies and gentlemen, once again, thank you very much indeed, and of course I'm happy to answer questions.


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