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European Commission - Speech - [Check Against Delivery]

Simplification as a top priority in 2015

Brussels, 03 December 2014

Phil Hogan - Commissioner for Agriculture and Rural Development

Brussels, 3 December 2014, European Parliament, Committee on Agriculture and Rural Development meeting


Mr Chairman, distinguished members of the European Parliament,

Ladies and Gentlemen,

As I expressed to you two months ago, the European Commission is very committed to working closely with the European Parliament. I really want to develop a spirit of strong cooperation with this Committee, meeting regularly and using all the possibilities to exchange views and discuss the evolution of policy.

(Growth and Jobs)

Agriculture and Rural Development are part of the Jobs, Growth and Investment priority at the heart of the Juncker Commission. Indeed, I have already begun working with Vice-President Katainen in the Project Team linked to this priority.

As a strategic sector, agriculture is well placed to make a central contribution to the new economic agenda.

A few key numbers:

There are 25 million farmers: rural areas are 50% of EU territory;

agri-food sector = 7% of employment and 3.5% of EU value added;

rural regions = 20.6% (46.1 million) of EU jobs

In the context of growing world food demand, the agri-food sector is the 4th largest export sector in EU: it increased the value of its exports by 70% in the last 5 years (faster than overall EU exports)

There are important upstream/downstream linkages with other sectors (from the fertilisers to the R and D sectors), not to mention the key role it plays in the economic development of rural areas.

The implementation of the new CAP offers a good opportunity to maximise the contribution to growth and jobs agenda:

Increased market orientation encouraging the modernisation of the sector.

The new Rural Development Policy will be a key driver to encourage investments in rural areas and support business start-ups and innovation projects.

With the boost to agricultural research, European farmers will have better access to knowledge to increase productivity.

In order to make the most of the potential of the agricultural sector in terms of growth, jobs and investments, the European Commission is currently also working to improve access to finance for farmers, particularly young farmers, as they start their career in agriculture. We are working on this in close cooperation with the European Investment Bank.

Young farmers are important for the future of EU's agriculture with a view to growth, competitiveness, jobs and investment. The agricultural sector in the EU is still characterised by an aged – and in many Member States ageing - farming population, though recently there have been signs of improvement.

As you know, for the first time in the 50 years’ history of the CAP, the first pillar has a specific instrument to support young farmers which is compulsory for Member States. They will get a 25 per cent top-up to the basic payment for the first five years.  

In addition, there is a wide range of support measures for Young Farmers under the new Rural Development policy, for example the business start-up aid for Young Farmers subject to a business plan, a higher support of up to 90 per cent for investments in physical assets, support for information, advice and training, for cooperation activities and so on.

The transfer of knowledge into practice can also be fostered through the European Innovation Partnership 'Agricultural Productivity and Sustainability' priority.

With these measures, we can help ensure that farming remains an attractive career choice for young people across Europe.

With regard to access to finance, it is essential that Member States explore the new financial instruments available in the new Rural Development Programmes with a view to attracting additional funds and reach more beneficiaries.

With the new Horizon 2020 and the aforementioned European Innovation Partnership, we will boost agricultural research and encourage better access to knowledge for farmers. These are the key tools in the years ahead to increase productivity and promote modern and knowledge-based agriculture. We need to be able to feed more people in an environmentally sustainable manner, it is through research and innovation that we meet this challenge.

(Simplification)

Simplification is a top priority for my work programme in 2015. "Red tape" entails direct costs for farmers and operators, and can interfere with their business decisions.

Simpler rules will make for greater competitiveness and will enhance the job-creating potential of agriculture, of rural areas and of agricultural trade.

This is why I have committed to deliver within a year of my mandate. We need to simplify our rules now and cut red tape in an effective way. We should be pragmatic and flexible in our approach. Simplification does not come as a "big bang" and will not be achieved at a given point in time. It should rather consist of a constant flow of smaller and larger actions aimed at making the lives of farmers and other operators easier. We should implement these actions wherever it is possible and as soon as it is possible, to avoid losing precious time for our agricultural sector to become more competitive and more profitable.

In doing so, our action should be guided by the following principles:

First, since our centre of attention is farmers and rural communities, we need to avoid changing the rules too often, and in particular before they have been applied at all.

We need to ensure stability for beneficiaries and national authorities, which in itself is a contribution to simplification and a reduction of the administrative burden. Our simplification actions should thus concentrate on those elements which can be changed within the current policy framework. Farmers need predictability!

Second, all the institutions need to participate in this exercise. We all have to engage with national and regional authorities and, above all, with farmers, other beneficiaries and stakeholders. They are best placed to assess and judge the implementation of the CAP measures on the ground. We must listen to their experience and suggestions for simplification.

For this reason, I encourage you, Honourable Members, to engage in a discussion with your constituents and to channel to us any concerns and ideas for improvement. You are the democratically elected representatives of European farmers. So I am here today to ask you to join me, Honourable Members, in this process. I believe that if we all work together, farmers, member state authorities, MEPs and the Commissioner, we can deliver on this priority.

I also intend to raise this point with the Member States in the Council.

I have already launched a comprehensive screening exercise of the entire agricultural policy to identify which areas and elements can be simplified and which, in line with the subsidiarity principle, should be better left to the Member States.

While awaiting the results of the screening exercise and the ideas coming from you and from the Member States, I can already see four important areas where our rules can and should be simplified over the next months and years:

Firstly, I will make sure that any proposal that is on the table delivers in terms of simplification and, where possible, its simplification potential is reinforced in the legislative process.

Secondly, more than 200 Commission regulations implementing the Common Market Organisation will be revised. This exercise has a significant simplification potential for operators in the agri-food sector, which we should exploit to the fullest extent possible.

Thirdly, the new direct payments regime. I shall, of course, honour the previous Commission's commitment to review, after the first year of application, the rules on the Ecological Focus Area.

I think, however, that we should not stop there. We should seize the opportunity to also simplify the other rules of the new direct payments regime, provided that we do not re-open the basic policy decisions of the 2013 reform in this area, as democratically negotiated and ratified by you, Honourable Members.

Fourthly, I want to take a close look at the rules for Geographical Indications. Geographical indications help food producers make more money and keep jobs in the countryside. I want this success to continue and grow; and I want to be sure that the rules we have in place are as effective and simple as possible.

I am confident that when we put all our efforts together we will be able to make a real difference for farmers and other beneficiaries and, at the same time, significantly reduce administrative burden for Member States.

(Market situation)

Moving on - regarding the market situation, I have listened to your concerns and have been working on possible solutions to certain immediate challenges affecting our agricultural sector.

(Russian Ban)

First of all, I am very conscious of the deteriorating market conditions in the dairy sector, exacerbated by the impact of the Russian ban, and the effects that it has on dairy producers.

In recent days, the Commission adopted additional market measures, prolonging availability of private storage aid and public intervention until after the first of January 2015. This is essential for ensuring the safety net is active and operational in order to contribute to the stabilisation of the market.

Furthermore, we have also adopted specific targeted support for dairy farmers, and we continue to closely monitor the situation in all countries affected by the ban.

For other sectors, the Commission is carefully monitoring the situation. I am well aware that the economic situation is not looking good for some of the product affected by the Russian ban. The Commission reacted quickly earlier in the year by rolling out a series of measures to help affected farmers and producers, and we will continue to remain vigilant on this issue, which is of the highest geopolitical and economic importance to European agriculture.

As you know, measures taken to date include

Measures to stabilise the markets for producers of peaches & nectarines this summer, which withdrew 33 293 tonnes from the market. Added to this, we increased the promotion budget to help find new markets for product.

Measures to stabilise perishable fruits & vegetables sector, which included withdrawals, green and non-harvesting and resulted in 335 000 tonnes being removed from the market.

A further, more targeted measure for fruit and vegetables has been adopted on 29 September and will run to the end of 2014. Over 100,000 tonnes of product have been withdrawn from the market under this scheme.

However, let me also sketch a more positive broader picture. When we compare September 2014 to September 2013, the value of EU exports of agricultural and food products has increased by almost 500 million Euro. Aided by a weaker Euro, this also confirms the capacity of the European Union to adapt to the new geopolitical context and find alternative destinations for its product.

(Global Markets)

In fact, the growing world demand continues to be a key driving factor for the growth of European agriculture. This trend confirms the importance of our strategy to open markets on the one hand, and guarantee the appropriate protection for high value EU products around the world on the other.

The EU has offensive agriculture interests in many of the bilateral trade deals currently being negotiated, including in TTIP. I will be proactive in promoting the opening of international markets to high quality EU product, however, I will repeat the commitment from my hearing: EU standards and sensitive sectors will not be sacrificed on the altar of a trade deal. I have already engaged with both US Trade Representative Mike Froman and US Agriculture Secretary Tom Vilsack on these points.

(Food chain)

I am aware of the existing problems in the functioning of the food chain. The rapid concentration of retailers and processing industries has resulted in uneven bargaining power with respect to a multitude of farmers. We need to intensify our efforts to address this imbalance in bargaining power. I will work with my colleagues to address these concerns and improve the distribution of value added in the food supply chain. I also wish to commend the work carried out by the European Parliament in highlighting this issue.

Once again, I will reiterate what I said the last time I was here in Comagri. I will look at every option, including legislative proposals if feasible, to tackle this issue in the interest of fairness in the food chain.

(Rural Development Programmes)

With regard to the elaboration of Rural Development Programmes at national and regional level, so far, we have received 116 out of 118 programmes and around 80 observation letters have been sent to the Managing Authorities.

We have now also reached a stage where the first programmes will be adopted shortly. We estimate that around 8 programmes will be adopted by the end of this year. A further 13 to 15 will not be adopted but will be "ready for adoption" and will therefore qualify for the carry-over procedure, being adopted before the end of March 2015. The remaining programmes will be adopted after the MFF revision and budget amendment in the second quarter of 2015.

We need to recognise that the late adoption of the MFF and the Rural Development Regulation had a significant impact on the MS ability to submit programmes in 2014, and the majority were only submitted in the second half of 2014.

(Concluding remark)

Members of the Committee on Agriculture and Rural Development,

I have given you an overview of my simplification agenda, of the state of play regarding market stabilisation measures and of the enormous opportunities on the world market for European product, on the progress of the various Rural Development programmes across the EU and finally on the importance of addressing shortcomings in the food chain.

With your help, your active engagement and your support, we can work together to make a positive contribution to our shared political objective of creating growth and jobs in the European Union.

SPEECH/14/2343

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