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Member of the European Commission responsible for Agriculture and Rural
DG AGRI seminar on Health Check Review of the CAP
[Ladies and gentlemen],
First of all, let me echo the welcome that you've already heard from John. It's great to see so many people here.
Whatever anyone might say about the Health Check, we can't deny that it has generated some very colourful press coverage.
Over the next few minutes, I don't want to go through every aspect of the Health Check communication. I'm sure you have already seen the document, and of course you have Tassos here to explain the detail.
What I want to do is give you an idea of the political context, and comment on a few points of particular interest.
What is the Health Check, and what is it not?
You've almost certainly heard me say that the Health Check is not "a new reform". This is true. The objectives that we had in 2003 remain fundamentally the same, though there are a few additions.
But as I have also said very often, the world has not stood still since 2003. We have gained 12 new Member States, certain trends are beginning to emerge in international markets, and new challenges are becoming clearer.
In this situation, we need to check that the reformed CAP is doing its job as effectively, efficiently and simply as it can.
This means that the Health Check will go beyond "fine-tuning".
In this regard the Health Check is an important exercise in its own right, leading to changes for the period 2009 to 2013.
Furthermore the Health Check will be a stepping-stone towards the Mid-Term Review of the Financial Perspectives – which will examine the period after 2013.
I'm very pleased to report that discussions on the Health Check have got off on absolutely the right foot. The atmosphere in the Council and in the European Parliament Agriculture Committee has been very positive.
Certainly, Member States and MEPs have their "shopping lists". But it's clear to me that we're all in the same shop, and I think we have an excellent basis for discussion.
So now, as I promised, I'll talk about a few individual points in the Health Check communication.
As you know, there's a section on our market tools.
The background to this is an atmosphere of anxiety. Wheat prices in the European Union are currently around € 250 per tonne, compared with about € 150 a year ago. According to the Food and Agriculture Organisation, global dairy product prices have climbed by 65 per cent in the last 12 months. People are now feeling at least a little concerned about where their food will come from in future.
I think a renewed awareness of the importance of food is a good thing. We should never be complacent about supplying ourselves with life's basic necessities. But nor should we fall into knee-jerk policy reactions when prices rise.
So now is a good time to hold a debate about the agricultural market instruments within the CAP.
You may have heard me talk about the future of export refunds – even though these aren't mentioned at length in the Health Check communication.
Within the Doha Round, we have conditionally undertaken to phase out export refunds by 2013. But whatever happens in the Doha Round, they don't have a place in the CAP of the future. They don't encourage effective competition in agricultural markets, and the public takes a very dim view of them.
On the other hand, that doesn't mean that we have to pull the plug on them tomorrow. They will be part of our safety net that we are going to establish for the period 2009-2013.
This is also true for the intervention systems. The main aim is to make sure that they work as genuine safety nets and that we do not use them to set market prices.
In the case of cereals, it might be worthwhile to move towards a situation in which we keep intervention in place for just one cereal – bread wheat. This would make intervention a genuine safety net for the sector, but would also allow cereals to find their natural price level.
With regard to set-aside: it's widely known that I've proposed to abolish this.
This is not because I don't care about the beneficial environmental side-effects which it has brought. It's because I want to use the right tools for the right jobs. Compulsory set-aside was never meant to be an environmental tool. Abolishing it would help to simplify the Single Payment Scheme.
But we should look for ways of keeping the environmental benefits – for example, through targeted rural development measures.
The future of the dairy sector will be a central topic in the Health Check – especially in view of the definite ending of the milk quota system in 2015. But I don't intend to talk about this today, as there will be a specific conference devoted to the subject on the 11th January.
So instead, I'll move on to changes proposed for the Single Payment Scheme.
In my view, media coverage of these proposals has not always focused on the most significant aspects. There have been quite a few red herrings around. And yet there are important ideas in the text.
First, it's important that we could allow certain Member States to reduce differences between individual farmers' decoupled payments within their territory.
This may be relevant particularly to those Member States which have chosen the so-called "historical" model of the Single Payment Scheme.
Allowing Member States to move towards a model with a "flatter" rate is partly about fairness. But it's also about public acceptance of the payments. Because in the long term, no-one will understand why large differences between decoupled payments are due exclusively to production decisions taken in the reference period of 2000 to 2002.
Secondly, it's important that we're looking at introducing more decoupling.
Where we have applied decoupling so far, it seems to have worked well. So we should look at the remaining coupled payments case by case.
Some of them may still be relevant for the time being – in situations where decoupling the payments in particular regions could carry a high risk for their survival.
On the other hand, in my view, keeping certain payments partially coupled gives us more headaches than benefits. I'm thinking here of the cereals sector, for example.
Thirdly, it's important that we'll continue our work to make cross-compliance function better in practice.
Let me be very clear on one point here. If anyone thinks the Health Check is a chance to unpick the principles of cross-compliance, think again! The principles must remain intact. Otherwise, there's a very serious risk of losing public support for direct payments.
Interestingly, a recent study has found that the administrative burdens which cross-compliance places on farmers are relatively light.
On the other hand, the study identifies a number of ways in which we can make the administrative burden related to the CAP lighter still, and I'm keen to do this within the Health Check.
As I say, among all these important issues, a number of red herrings have been leaping about. The most irritating of these has been a very stubborn story about the CAP and golf courses.
I'm sure you know what I'm referring to: claims in the media that the CAP is helping to make sure that Tiger Woods has nice grass to play on at the ninth hole when he comes to Europe.
Let's be crystal-clear. The CAP is not in the business of funding golf as an activity – it never has been, and I'm pretty certain that it never will be.
On the other hand, if a company which owns a golf course also owns agricultural land which it is keeping in good agricultural condition – or perhaps, from which it is actually producing something – then, in some cases, that land may be eligible for a decoupled payment.
There is a logic to this: the rules define the word "farmer" in terms of activity – not in terms of whether someone wears a cloth cap and likes to chew blades of grass!
So please, no more golf course stories! Of course, if payments really are being made in error, we will track them down.
There has also been a flood of media articles about my proposal to put an upper limit on the direct payments which a given farmer can receive from the CAP.
The proposal is partly a response to public pressure. People ask again and again whether very large payments are a good use of public money. We have to look at this again.
As we do so, we're looking at all relevant factors.
For example, we could perhaps take into account various aspects of farm structure when we set payment thresholds and reduction percentages. Also, if it became clear that limiting payments would simply push large farms into splitting up, that too would be significant.
Finally, a few words on the "other challenges" that face us. As you know, the Health Check communication identifies these as:
There's a great deal to be said about all of these, but because we have limited time, I will comment on just two of them.
With regard to risk management: market related risks will be covered by our safety net. For risks related to natural disasters or sanitarian crisis, we need to do more. We're not talking about setting up a new scheme at European level. We're talking mainly about allowing risk management measures within rural development programmes – and asking ourselves whether we will need to go further in the future.
With regard to bio-energy: of course, this is a very hot topic these days, and I don't want to go deep into the debate now. But I will make two points.
First, we must ask whether the current energy crop scheme is still justified, given that the biofuel market is now getting a signal from the 10 per cent target that has been fixed.
Secondly, we must push harder on second-generation biofuels. This is essential if we want to move on from the debate about competing uses of land: food and feed "versus" energy.
Meeting all the challenges listed will have a price tag attached. And the best channel through which to act is almost certainly rural development policy. This is why I'm suggesting that we make annual increases of 2 per cent to compulsory modulation, to take effect in budget years 2010 to 2013 (for an overall increase of 8 per cent). Real action needs real money to back it.
I should add that any increase in compulsory modulation will be matched by a reduction in voluntary modulation in those Member States which apply the voluntary version.
Let me conclude with a few comments about timing.
I'm told that the European Parliament Agriculture Committee will probably vote on a draft opinion about the Health Check communication in February next year. This would allow the Parliament to adopt the opinion in March.
If we also have Council conclusions in March, that would pave the way for legal proposals in May. Then we could wrap up the Health Check under the French presidency in the second half of the year.
I've been really eager to launch this work. I know it can make a very positive difference – and I promise you, it won't target royalty, or any other particular social group.
Please help me to make the Health Check count!