SPEECH/08/56
Mariann Fischer Boel Member of the European Commission responsible for Agriculture and Rural Development The CAP Health Check: coherent ideas for a stronger farm sector.
Conference of Confcooperative Rome, 04 February 2008
Minister, President, ladies and gentlemen,
First of all, let me thank you very sincerely for inviting me to join you today, to have a frank and open discussion about the ideas in the Health Check communication.
The co-operative movement is part of the backbone of Italian agriculture. The success of co-operatives in Italy shows us that, so often in farming, the whole really is greater than the sum of the parts.
Since 1992, when the agricultural section of Confcooperative was formed, it has spoken up for its members with a loud, clear voice – and has made a valuable contribution to policy debates in the agricultural sector.
The strength of farmers standing together has been of huge benefit to Italy as a whole – to its countryside, to its economy, to its international image.
Since I exchanged my farm for an office in Brussels to work as Commissioner for Agriculture and Rural Development, I've been working hard to help build on the strength of Europe's agri-food sector.
For example, this was one of the key aims in the recently agreed reform for the fruit and vegetable sector.
In this reform, of course, the power of co-operation has been a dominant theme. It was right to hand a greater role to producer organisations. Retailers have a lot of muscle; to deal with them on equal terms, producers have to present a united front.
It was also right to give producers the flexibility that comes from belonging to the Single Payment Scheme.
The other sectoral reform agreed recently was, of course, the reform of the wine sector – and of course it was because of related discussions that I couldn't be here last December.
In this case, delivering the baby was not easy! But here again, I really wanted to put the sector in a position where it could respond in the right way – respond energetically – to the market opportunities which are opening up around the world.
The right response is not to keep everything tied up in red tape and restrictions. We need greater freedom – but set in the right framework of rules, and supported by a budget spent on genuinely helpful measures. We will have those things available when the reform comes into force, and I expect that the sector will be able to take full advantage over the next few years.
If we're on the subject of health....As you know, the next step in building the Common Agricultural Policy that we need is what we now know as the "CAP Health Check".
I've said many times that the Health Check is "not a fundamental new reform", and I stand by this. We agreed a fundamental reform in 2003; we don't need another one five years on. Agricultural policies shouldn't come and go like fashions in the shops.
On the other hand, the Health Check is not just a set of random "technical adjustments". It is based on ideas that fit together coherently.
First, it's still important that we give farmers the freedom to be competitive, through the Single Payment Scheme. But the nuts, bolts and cogs of the system must work as well as possible, with as little friction as possible.
Secondly, our market instruments must serve a valid purpose that fits in with this push for competitiveness.
Thirdly, the CAP must provide tools to help meet the range of new challenges that are opening up in a much more globalised world.
What does this mean in detail within the Health Check? I would like to pick out a few points of particular interest.
In connection with the Single Payment Scheme, we must look again at direct payments which are still coupled to production.
Decoupling has brought benefits. Farmers have responded to the power of choice that it has brought. They have responded to the opportunity to switch resources between products, safe in the knowledge that their Single Farm Payment will turn up in their bank account anyway. And in many cases, they have responded to the chance to be a bit adventurous – to try for higher quality and higher prices, for example.
Therefore, my working assumption is that we should move forwards with more decoupling.
I recognise the need to keep some coupled payments, but only if they're really the best solution to a significant problem in a given region. Otherwise, we should decouple them.
I also want to give Member States the chance to flatten out differences between the Single Farm Payments received by different farmers.
These differences are especially clear in countries such as Italy, which apply a "historical" version of the Single Payment Scheme.
I should make it clear that I'm talking about giving Member States the option of adjusting their chosen system: I'm not talking about compulsion. It's a possibility for Member States to make adjustments.
But it's important to see the strong case for making those adjustments. Just look at the case of neighbouring farmers. I think that, in the years to come, the public will find it hard to understand why Farmer X is paid more each year than Farmer Y next-door just because of production decisions that he took 10 years earlier – or perhaps, because of decisions taken by his predecessor!
My proposal to reduce very large direct payments received by a given farmer is likewise about public understanding and acceptance. If members of the public raise this issue again and again – as they have done so – I can't bury my head in the sand and ignore them.
On the other hand, of course I'm listening to all the different points of view. In particular, if we did reduce payments above a particular threshold, it might be appropriate to take into account certain aspects of farm structure.
Work on cross-compliance is also continuing within the Health Check.
Within the Health Check, we're making sure that the scope of cross-compliance is right. It must cover obligations which are fundamental: nothing more, nothing less. If this means taking elements out, or adding one or two, we must do this.
In parallel with our work on the Single Payment Scheme, we must take another look at our market instruments.
In some cases, this means preparing to clear obstacles from the path of farmers who quite legitimately want to make the most of expanding world markets.
The obvious example is milk quotas.
There are different views on this issue in Italy, as I saw when I went to Brescia last autumn.
We agreed in 2003 that we would let the quota system end in 2015. The case for honouring this agreement is overwhelming.
Quotas are a straitjacket. They don't fit in with the kind of market-orientated farming that we need. My personal opinion is clear: we need to get rid of them.
On the other hand, we can't just cut the straitjacket off and expect everything to turn out well. We have to loosen it first for a while, to prepare the dairy sector for the coming change.
This is why I have already proposed to expand milk quotas by 2 per cent as from quota year 2008. Overseas markets want more dairy products, and if we don't get our foot in the door quickly, Oceania will move in and for us the door could close.
Of course, we made the necessary calculations before proposing 2 per cent. And if we don't take this opportunity, we'll regret it at a later stage.
At the same time, if there are economically fragile areas which really depend on milk production, I want to help them survive in a world without milk quotas – whether through rural development policy, or possibly measures under "Article 69". Our intention is to make Article 69 more flexible.
What about other market tools, like intervention or aid for private storage?
As I said earlier: these must serve a valid purpose that does not hinder farmers' ability to respond to market signals.
I think that means they should be a genuine safety net. They should not set market prices.
Managing a broader range of risks is in itself a topic set out in the Commission's communication on the Health Check.
In this discussion, we're not starting from a blank sheet of paper. Member States have already talked about the issue in detail. In 2005 they concluded that, if we take any further policy steps at the level of the European Union, this should not interfere with what is already available within Member States, and it should not be seen by the WTO as distorting trade.
I think we should focus on risks related to bad weather and animal disease crises. There seems to be something of a gap here, and it might be possible to set a new framework for related measures.
The Commission's communication on the Health Check also covers a number of other challenges which have a growing relevance for agricultural and rural policy.
Among these are climate change and water management.
Anyone who has been following the news recently couldn't possibly doubt that the European Union takes climate change very seriously.
Last month, the Commission put forward detailed proposals for cutting our emissions of greenhouse gases by at least 20 per cent by 2020 (compared with 1990 levels).
European agriculture has already made a contribution: its greenhouse gas emissions dropped by 20 per cent between 1990 and 2005. But it can't escape further involvement. We’re all going to have to pull hard on the rope together to meet our objectives. And then there's the task of adapting to the climate change which is already on its way.
Let's be honest: in one form or another, this will mean work for farmers. This is why, in the Health Check, we're thinking about how rural development policy can give extra support in this area.
One aspect of fighting climate change is making the most of bioenergy, including biofuels.
An essential point here is that we start producing second-generation biofuels at a viable cost as soon as possible. This will help to calm anxieties about competition for resources between food, feed and fuel. Rural development money may be able to help here.
But this is an all-important word: "money". We can't run rural development policy on encouraging words. It needs strong financial backing.
Under the European Union's financial plan for 2007 to 2013, rural development policy will get € 88 billion over this period. This is a good start, but it's less than the Commission asked for, and quite simply, it's less than what we need to run our policy at full speed.
This is why I have proposed an increase in the rate of compulsory modulation, to start from 2009.
Finally, a very brief word on where we are now.
What's on the table at the moment is a "communication". The Commission has not yet put forward legal proposals. We're in the period when I want to listen very carefully to what everyone has to say.
I said at the beginning of my remarks that the strength of the co-operative movement is greater than the sum of its parts.
I think that's also true of the ideas that I've put forward for the CAP Health Check.
They're coherent and they're based on clear principles. They should help our farm sector and our rural communities step into the future with confidence.
For Italy in particular, when I look into that future, I can only feel optimism.
Your agri-food sector is already one of the top competitors in high-quality markets. This is where a lot of the action will be in the future – at home in the European Union, in traditional overseas markets, and in other markets which are growing rapidly, such as parts of Asia.
If we also get our foot firmly in the door of large emerging overseas markets, surely the groundwork will be in place for Italy’s very strong brands to make some very healthy profits.
I believe the Health Check can deliver results for you. So in the weeks ahead, as the debate moves along and we aim to get an agreement this year, please make your voice heard loud and clear!
Thank you.
