Member of the European Commission
responsible for Agriculture and Rural Development
Towards a more competitive and sustainable agriculture
Rome, 29 November 2011
Thank you for your invitation to this Conference. After the presentation of our reform proposals on October 12, this is a good moment to discuss various elements of the proposals with you. And I am particularly happy to share the platform today with Paolo De Castro and Giovanni La Via of the European Parliament, because this reform will be the first time that the EP has full co-decision on CAP reform. IN other words, the final negotiation will not only be negotiated among the Ministers of Agriculture of the 27 member states, but also with MEPs.
I have read in the press many different interpretations of the reform, so my aim this morning is to make clear the objectives behind the reform and some of the various tools we will use to obtain those objectives. I want to underline the importance of an EU approach to the reform.
A major objective of the reform is to provide the tools to provide both growth in agriculture and sustainability. If not, if is difficult to justify the CAP as a public policy.
We have made proposals which maintain direct payments (but with a better, more targeted distribution); we will have an improved organisation of the markets (not just the existing private storage aid and public intervention tools; but also a more rapid response mechanism, and measures to boost producer organisations); and also a Rural Development policy which should address the challenge of innovation more than ever before, as well as continuing investment and structural change. These are key elements to assure the competitiveness of agriculture in the longer term and therefore of productivity.
Direct payments: Within the overall debate about future policy – and within the budget negotiations too – we are keen to underline that the CAP is not just for farmers, but for all EU citizens. We believe that Direct Payments are justified because production costs continue to grow more quickly than prices, but we need a more understandable system. As a result, we are looking to better structure our system to be easier to explain. This entails a certain redistribution of funds both between member states and within member states.
At the same stage, in order to provide more transparency, we are looking to define 30% of the direct payments as a payment for the provision of environmental public goods – the so-called Greening – and the remainder will be defined as a basic income payment for farmers.
The need to adapt the system of direct payments to reality:
Under the current rules, we have a system of direct payments in the EU-27 which sees an average payment per hectare of roughly 270 €. However, if you look at the average amounts of payments in each member state, we see a variation from more than 200% of the EU average in some, and less than 40% in others. We need to change this, and so we are proposing modest changes - with those that get less than 90% of the EU average getting an increase (by one third of the gap between where they are and 90% of the EU average). This will mean a modest reduction in the envelope for some countries, but we are proposing this with a transition period – such that there will be a reduction of 4.7% in the envelope for Italy over the whole period, and 6% in the final year. Of course those member states that will lose out are critical, and those that gain insist that it’s not enough, but I believe that we have put a proposal on the table which is both reasonable and politically realistic.
We looked at different criteria for distributing aid. We do not believe that it makes sense to base allocations after 2013 on historic references – ie production levels from 2000-2002 – so we are proposing to move towards an area basis. This is perhaps not perfect, but we want an EU approach and an area basis is a way of taking into account both the goods rewarded by the market, and those that are not rewarded by the market.
For the payments within a member state, we are not insisting on an equal payment throughout the country, but we are providing flexibility with a view that producers in each homogonous region have equal treatment.
Capping : By redefining most of the direct payments as direct income support, it is only logical that, with economies of sc ale, there comes a moment when we can no longer justify lower the level of support payable. We are therefore proposing to lower the level of support above €150 000 and cap the support at 300 000. However, we will make an additional allowance for labour costs. One further key point is that any funds generated will stay within the member state – and be available in the Rural Development envelope, for example for investment in innovation.
Active farmers: We have always tried to target our payments towards active farmers. However, there remain a few loopholes in the current system, which have led to a limited number of highly publicised cases of “sofa farmers”, or speculators, or airports or golf courses benefitting from CAP payments. Consequently, we are looking for a tighter definition in the reform which will exclude these non-active producers – above all without endangering the WTO-compatible nature of our payments. (Decoupled CAP direct aids are defined within the WTO “Green Box3 – ie not subject to future reduction – as they are not linked to production.) Our proposals look to exclude very large companies which only have a small agricultural interest, but we are also giving some flexibility to member states to exclude those that have land but do nothing.
On the so-called Greening – for 30% of the direct payment envelope – we considered a menu of options with regional flexibility, or an EU-wide approach. In the end, we have proposed an EU-wide approach because we want the same rules on the single market and we can also underline the effect en masse that we will have if all EU farmers do the same thing. But also because we have additional options through our Rural Development policy which allows member states to respond to the specificities of particular regions, which will be available in addition to Greening payments.
The 3 measures we are looking for – crop diversity, maintaining permanent pasture, and having 7% ecological focus area – are all elements which fit in with good agricultural sense. I do not think t will be a major problem for Mediterranean agriculture. For example, fruit trees or olive groves will not face the diversity requirements and will probably be able to fulfil the 7% requirement through the existing terracing and fields margin structures.
Let me now move to the position of the famer on the market. The proposals include a number of important elements. Firstly we are looking to extend the system of producer organisations to all sectors, not just fruit & vegetables. In future, if we want to strengthen market support, it is much easier to go via Producer Organisations. The concept is not only good for helping farmers to be better organised, but they can also get operational funds via the 2nd Pillar to help with common investment.
We are also introducing more flexibility to the Commission to respond rapidly to market crises – with a special fund – which can take account of elements which go further than just a fall in prices, the usual triggers for Private storage aid and pubic intervention.
We are also providing an extended toolbox which will allow producers to pay into a mutual fund – and receive a payment if there’s a threat to revenue. This should reinforce the existing insurance options available.
Let me just close by mentioning 2 other dossiers which are of great interest to Italy. Firstly, the quality dossier, proposed at the end of last year, is under negotiation – and we hope, with the help of the European Parliament, to be able to have a deal before the end of the year.
Secondly, on promotion – where the role of quality products both on EU and non-EU markets will be particularly important – we shall be coming forward with a Communication early next year, with a view to presenting legislative proposals before the end of the 2012.