SPEECH/06/531
Mariann Fischer
Boel
Member of the European Commission responsible for Agriculture and Rural
Development
The European Model of
Agriculture
Informal ministerial meeting
Oulu, Finlande, 26 September
2006
Let me start by congratulating and thanking the Finnish Presidency for their excellent and timely background paper on “The European Model of Agriculture and the Challenges Ahead of Us”.
I welcome Presidency's initiative. In light of the checks and reviews of the CAP and the Financial Framework, which lie ahead of us, I believe it will greatly help with our future discussions if we begin a reflection on the future of the European Model of Agriculture today.
At its origin, almost half a century ago, this model began with a strong emphasis on the family farm, improved productivity and efficiency. I think that a lot of what was said at that time, in for example the conclusions of the Stresa conference, is still valid today. Indeed, much has been taken up by the reforms of the last 15 years.
In particular, during the build-up to the Agenda 2000 Reform, attention was given to defining – or should I say "redefining" – our agricultural model. Furthermore, following the conclusion of the Uruguay Round in 1994 and the inclusion of agriculture into the GATT, it was increasingly necessary to define the essence of our agricultural model, in order to defend better our agriculture on the international scene.
Consequently, it was in 1997 that the Luxembourg Agricultural Council offered to the European Council a clear vision for EU agriculture, which has since then been known explicitly as the European Model of Agriculture.
Coming up to date, those same Agenda 2000 principles, which define our agriculture – an agriculture which is competitive, sustainable, diverse, environmentally respectful, responsive to society, simplified, and justifiable – have guided us through the subsequent 2003, 2004 and sugar reforms and will continue to do so.
What then is the political calendar in which we should now address the future of the European Model of Agriculture?
At the time of the adoption of the 2003, 2004 and sugar reforms, a series of "health check" clauses were introduced into the final agreements.
Over the period 2007 to 2009, the Commission must report on cross-compliance, the consequences of partial decoupling and the choice of model for implementing the Single Payment Scheme, as well as reporting on certain agricultural markets, most notably the dairy sector.
This "health check" will essentially be about ensuring that the CAP is working as it should, and simplifying things where this is possible. It was never meant to be about further fundamental reform.
But at the same time, the “health check” will also be an ideal opportunity to make sure our agriculture is really in line with society’s needs and expectations.
We must not be blind to the fact that we may come under pressure to find savings in the CAP and that certain issues – such as compulsory modulation and capping – may also have to be addressed in terms of the broader, societal acceptance of our reformed CAP.
Let us turn now from the Health Check, to our longer-term vision for the period post-2013. This subject, will be without doubt on the table in the mid-term review of the 2007-2013 Financial Framework which the Commission has been requested to undertake in 2008/9. This review will explicitly include the CAP and its financing. I could well imagine that in this context some of the CAP financing subjects which were already discussed under Agenda 2000 – without leading to a conclusion at that time – will come up again. Think for example about the progressive reduction of direct payments over time, another subject on the table during the Agenda 2000 discussions.
Some seem even to believe that this rendez-vous could be the moment to dismantle the CAP, or to change it radically whatever this might mean after the wide-reaching reforms of the recent years.
Do not expect me to be in this camp. On the contrary, our agriculture and our rural areas will continue to need a strong CAP, also after 2013.
To do this we need clear ideas about the model of agriculture that we want to promote. The European Model of Agriculture should not be seen as something static, rigid, out of time and reality, but something which is dynamic and evolves over time. As it always has been.
Let us compare our environment today with that of ten years ago.
Since the Agenda 2000 proposals we have grown from 15 to 25 and soon 27 members. Agricultural enlargement has been a great success! The integration of the New Member States into the institutional mechanisms of the CAP and EU markets has gone smoothly. As always, there are problems to solve, but we have achieved this so far in a constructive and positive manner. And there is no reason why we should not continue in this way the future. But we have also to recognise that the centre of gravity of European agriculture has moved eastwards, with new challenges and aspirations. In particular, the importance of promoting growth and jobs in rural areas takes on new significance when we see the need for modernisation and restructuring in many parts of the enlarged Europe.
The international trading environment has also evolved significantly. Ten years ago, we were just starting full implementation of the Uruguay round. Today, we face the uncertainty of the direction of the Doha round. But it is clear, that over time, we will face increased competition either in a multilateral or bilateral context. At the same time, globalisation has changed the nature of competition but also the opportunities for our exports. Consumers have access to products from all over the world, and are developing increasingly sophisticated tastes. Information technology, advanced supply chains, marketing are now all part and parcel of selling in the global market. You will not be surprised to hear me say that innovation is also key in this context.
Our rural areas are more diverse than ever and have grown considerably in size with enlargement, but in some respects they are closer than ever. New communications technologies and the internet can change the way people live and work in rural areas, and provide new ways for our farmers to farm more efficiently and sustainably.
Turning finally to the environment. A decade ago, farmers were still seen as the bad guys, polluting the environment and turning a deaf ear. Through the reforms we have agreed, through this Council's environmental strategy and above all through the work of our farmers, we can genuinely say that agriculture is now seen more and more as a key actor in preserving the environment and delivering environmental services. Agriculture and forestry will also play a growing role through bioenergy and biofuels in meeting our climate change objectives.
In short, in my view, we are better placed then ever to defend and explain our agricultural model and agricultural policies. What then are the key elements that should inform our thinking about the European Model of Agriculture?
First, I have made it no secret that I believe that the 2003 Reform, and its extension to the Mediterranean products, sugar, fruit and vegetables and wine is the right policy framework for EU agriculture.
Farmers are focusing now on how to make better returns from the market rather than calculate the best subsidy combination. In an environment where more consumers are looking for higher quality and how their food is linked-up to the environment, animal welfare and safety, those attributes have an increasing value. The current Reform approach equips EU agriculture to face up to the criticisms levelled at it from within the EU and respond better to the challenges of the future trade environment.
Of course, this does not mean that we can rest on our laurels. On the contrary, modernising our policy, adapting it to an evolving environment, making it fit for the future will require continued efforts in terms of reform. For example, we know that in the longer term we shall be less and less able to rely on export refunds. This has consequences as well for other classical market management instruments like public intervention, consequences which will have to be addressed on the basis of sound analysis. And in the context of these developments, do production quota systems not appear more and more archaic? Of course, these are questions in view of the period post-2013. But they need to be asked and they need to be examined now so that our farmers can prepare their businesses for the long-term future, so that they can plan in time.
Second, in line with our approach to decoupling, we should focus on ensuring that agricultural activity rather than specific types of production are spread across the European territory.
At the time of the adoption of the 2003 CAP reform, the response to the potential risk in specific areas of production disruption and abandonment from decoupling was to allow Member States to keep some degree of production-linked payment.
We are now learning that, where regions lack profitability in a certain type of production, coupling of aids is not always the best solution. Indeed, the Commission's first scenario analysis shows that additional benefits could be gained by fully decoupling, in economic terms as well as in terms of simplification of our policy and its implementation.
Usually, where regions lack profitability, there is an underlying structural reason for the socio-economic difficulty. There can be many good environmental and even social objectives for maintaining agricultural activity. However, I am not convinced that production related support is the best way of achieving these goals.
Third, we need to maintain the diversity of European agriculture. This is one of its strengths. The structural diversity of our farms has become greater with enlargement. The reforms we have introduced have brought in new forces for structural change, in my view potentially both positive and negative.
But we do not yet know the scale of these forces. While I know you are much better placed than me to gauge such dynamic effects of the Reform, in my travels around the EU meeting farmers, and from the reports we have received so far, there do not appear to be widespread, dramatic structural impacts. Indeed, there are many other powerful forces at work such as shifting employment opportunities, the pull of towns and cities, and the aspirations of young people. Here it is not only agriculture, but also rural quality of life and opportunities for alternative sources of income that are important for farm households.
Fourth, we need our policies to be in line with the mainstream. This means growth and jobs. And it means sustainability. Our work on integrating Lisbon and Göteborg objectives must continue. In this respect we have to strengthen the link between primary production on one hand and the processing industry and other economic activities around agriculture. Growth and jobs will not be created primarily on farms but in the industries and companies depending on our primary production.
Fifth and finally, for safeguarding the European Model of Agriculture we need to strengthen further our rural development policy.
In short, rural development can and should play a bigger part in delivering the European Model of Agriculture. Rural development policy is clearly in line with the objectives of Gothenburg and Lisbon and can help us ensure that the CAP delivers on broader economic and environmental objectives.
What is important to our farmers and rural communities is that our policies are the appropriate ones, in the right balance and formulated in a predictable framework. To do this our policies must respond to the issues I have just outlined.
The European Model of Agriculture embodies a core set of values that reflects the diversity of European Agriculture. Its strength, like the CAP, is that it has been able to adapt to new challenges over time. Like the CAP, it will face challenges over the coming years. But I am confident that it will prove as relevant in the next ten years, as it has proved in the last ten.
Thank you