SPEECH/07/816
Mariann Fischer Boel
Member of the European Commission responsible for Agriculture and Rural Development Taking the next steps for a better CAP
Speech to the EESC (European Economic and Social Committee) Strasbourg, 12 December 2007
[President, ladies and gentlemen],
First of all, let me thank you very warmly for giving me this chance to explain the Health Check of the Common Agricultural Policy.
When I read through your Opinion on the Health Check and on what we could do with the CAP after 2013, I saw that our discussion would almost certainly get off on the right foot.
You identify that "the 2003 reform of the CAP was a major paradigm shift". That's right. And it's essential to be clear on this point – because only when we understand where we are can we think usefully about how we go on from there.
I say "go on" for a reason.
As you know, the term "paradigm shift" was first used by Thomas Kuhn, the historian of science. And an important point about paradigm shifts is that they should not take place too often!
Isaac Newton brought about a paradigm shift in physics; so did Einstein. But between the two, people had more than 200 years in which to get used to Newton's system before they had to understand the theory of relativity!
Of course, I'm not putting the CAP reforms of 2003 on the same level as the theories of Newton and Einstein.
But let's remember that some Member States have only recently started implementing the reforms of 2003. And since 2003, we have not seen that our new model is failing. On the contrary: clear benefits are emerging.
So now is not the time for a brand-new model – a new "paradigm". It would be unjustified, and unfair to our farmers.
On the other hand, the world keeps changing. A European Union which had 15 Member States in 2003 now has 27. And certain trends are becoming clearer in global markets.
So what we need to do now is improve our model. We have to check that the reformed CAP is meeting its objectives as effectively, efficiently and simply as it can.
This is essentially what the Health Check is about. It's not a fundamental rethink of the CAP – but it's more than "fine-tuning".
It's an important exercise in its own right, which will lead to changes to the period 2009 to 2013.
But it's also a stepping-stone towards the Mid-Term Review of the Financial Perspectives – which will examine the period after 2013.
You already have access to the Commission's communication on the Health Check, so I instead of taking you through all of it in detail, I would like to highlight a few points.
The first section of the communication is about the Single Payment Scheme.
The Single Payment Scheme is one of the key innovations of the 2003 reforms. It's the system under which farmers receive direct payments which do not depend on current production. (We call these payments "decoupled" payments.)
A farmer's decoupled payment can be reduced if he or she does not respect high standards of environmental care, animal welfare and public health. This link between payments and standards is called "cross-compliance".
The Single Payment Scheme is now one of the main pillars of the CAP, and I believe it's a good innovation. Nevertheless, now is the time to make it work even better – and to simplify it, where appropriate.
We need to look at the implications of some models for applying decoupling.
Within the Single Payment Scheme as implemented by Member States – especially in the so-called "historical model" - there are significant differences in some Member States between the decoupled payments received by different farmers.
Some national governments would like to reduce these differences within their territory.
This is partly an issue of fairness. It's also an issue of public acceptance of the payments. This is because, in the long term, nobody will understand why the differences in payments are exclusively due to the production decisions that a farmer took during the reference period 2000 to 2002 – or even due to decisions taken in that period by one of his predecessors!
Reducing the differences would involve averaging out payments to a greater extent than at present - either within regions, or within a given Member State as a whole, but not across the whole European Union.
This is what we mean by "allowing Member States to adjust their chosen model towards a flatter rate".
I believe we should allow Member States to do this for the period 2009 to 2013.
We also need to look at introducing more decoupling.
Where we have applied decoupling so far, it seems to have worked well. So we should examine the remaining coupled payments case by case.
Some of them may still be relevant for the time being – in situations where decoupling payments in particular regions could carry a high risk for their viability.
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.
In your Opinion on the Health Check, you raised the topic of cross-compliance. In particular, you recalled an earlier prediction that it would be quite a struggle – and an expensive struggle – for farmers to meet cross-compliance standards.
Two points are important here.
First, the fundamental principles of cross-compliance are non-negotiable in the Health Check. If we unpick those, we can forget about keeping public support for direct payments in the long term.
But secondly, according to a recent study, the real administrative burdens which cross-compliance places on farmers are fairly light.
The conclusion must be that cross-compliance is a sound idea, but we need to continue our work to make some aspects of it easier in practice.
By the way, the study to which I just referred identified a number of other ways in which we could simplify the Single Payment Scheme, and we will be following these up.
Let me now move on to the second section of the Health Check communication, which is about market support instruments.
Market support instruments are tools like export refunds, intervention, aid for private storage etc.
They used to be right at the centre of the CAP. Nowadays, their role is less important – especially because of the Single Payment Scheme. Nevertheless, we still have them, they are still significant, and we must ask ourselves what we should be using them for.
Of course, this reflection takes place at a time when agricultural prices have been showing tremendous strength.
This year has seen pasta boycotts in Italy and food riots in Mexico. And the food price index of the Food and Agriculture Organisation is at its highest level since it was launched in 1990.
We must not fall into knee-jerk policy responses to this. Nevertheless, we need to make sure that our supply management tools serve a valid purpose, and don't simply slow down the ability of European agriculture to respond competitively to market signals.In your Opinion, you express anxiety about a world without export refunds.
I hear what you're saying, but I have to reply that this is a world that a lot of people want. Over the years, export refunds have been a real lightning rod for criticism around the world – especially with regard to development issues. Also, it's hard to see how they contribute to the competitive agriculture that we want.
This is why we have offered conditionally within the Doha Round talks to phase them out by 2013. And it's also why I believe we should phase them out in any case.
On the other hand, it would be important to do so in the right way, taking into account the needs of various sectors.
With regard to intervention systems, the main aim is to make sure that these work as genuine safety nets and that we don't 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.
Your Opinion from October sounded the alarm about what could happen in certain disadvantaged areas when we abolish milk quotas.
Let me be clear: I do say "when", not "if". The legal position is that the quota system will run out in 2015. We must let it do so. The quota system is out of step with the reformed CAP: instead of supporting our drive for competitiveness, it holds it back. This is widely recognised.
As you point out in your Opinion, it's very important for farmers to have a stable perspective in which to plan. This is especially true with regard to milk quotas, which have drawn in considerable investments.
Therefore, it's time to move on in the milk quotas debate. Now the question is how to prepare for the system's abolition – and within the Health Check, we will look at a range of options.
Your comment about fragile regions is a valid one, and I take it seriously. It's true that some areas depend heavily on dairy production – especially mountainous areas – because no other economic activity would be open to them.
There is more than one possibility for helping them. One is through rural development policy. Another could be to set up specific support measures under a revised "Article 69". This is a provision in the Single Payment Scheme which allows Member States to top-slice decoupled payments and spend the money on particular projects in a given sector. I think we could make the related rules even more flexible.
The final section of the Health Check communication deals with "other challenges" that we have to face. These are identified as:
managing risk; fighting climate change, and adapting to its effects; managing water more efficiently; making the most of the opportunities presented by bio-energy; and preserving biodiversity.
Some of these are very familiar challenges; others are relatively new, or are now emerging more clearly.
You draw particular attention in your Opinion to the level of risk that farmers take on.
I would point out that one of the best forms of protection against risk is an income support payment which is decoupled from production – in other words, what we have in the Single Payment Scheme. Also, economists say this is one of the most efficient ways of protecting against risk.
Above and beyond this: as I have said, we probably still need market tools that act as safety nets to help deal with market-related risks.
But what about risks related to natural disasters or animal disease crises? Here particularly, we may need to do more. But 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 climate change: farming is already making a strong contribution to the fight against climate change, but we must do more. And adaptation to climate change is just as important.
On bio-energy: in particular, 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 usage target that has been fixed.
And it's clear that we have to push harder on second-generation biofuels. This will help get us out of the debate about competing uses of land: food and feed "versus" energy.
To conclude, I could summarise my main message by saying that "work goes on".
The Health Check is not about creating another "paradigm shift" – just four years after one of the most ground-breaking reform agreements ever made about the CAP.
Certainly, we must not let our imagination be blinkered – especially when we look beyond 2013.
But this is no time to rip up our work and start again with a blank sheet of paper. It's time to build on what we've already achieved. This is what I want to do through the Health Check.
Thank you for your attention.
