Presentation on theme: "The EU Common Agricultural Policy (CAP) Flavio Coturni Head of Unit - Agricultural Trade Policy Analysis DG for Agriculture and Rural Development European."— Presentation transcript:
The EU Common Agricultural Policy (CAP) Flavio Coturni Head of Unit - Agricultural Trade Policy Analysis DG for Agriculture and Rural Development European Commission
Minsk, Belarus 3 December Overview The CAP: a continued reform process The cumulated effects of the various reforms What about the future?
Minsk, Belarus 3 December Main drivers of reform Reduce surplus production Control expenditure Maintain rural population Address societal concerns (food safety, environment, animal welfare) Enhance market orientation Improve competition on the world market
Minsk, Belarus 3 December MacSharry Reform, 1992 Objectives: oImprove competitiveness oStabilise markets, income and expenditure oDiversify production oProtect the environnement Measures taken: Price cuts Compulsory set-aside - Full compensation for loss of income Accompanying measures (agri- environment programmes, afforestation, early retirement, diversification)
Minsk, Belarus 3 December Agenda 2000 Objectives: oImprove competitiveness oRural Development Policy oFacilitate the enlargement of the EU Measures taken: Further price cuts (beef -20%, cereals -15%) Partial compensations = direct payments A comprehensive RD policy Ceiling on agricultural expenditure
Minsk, Belarus 3 December Degressivity Modulation Strengthening the 2nd pillar Adjustment of intervention levels Decoupling of direct payments Consolidation of the CAP within strict limits of financial discipline Better balance of support Enforcing standards (environment, food safety, animal welfare) Improving the transfer- efficiency of direct payments Reinforcing farmers’ market orientation and entrepreneurial role Cross-compliance CAP Reform Objectives and measures
Minsk, Belarus 3 December CAP Reform 2003: Complementary Reforms 2004 Cotton, hops, tobacco, and olive oil Continues the approach of reducing support prices by replacing them with decoupled direct payments. CAP Reform 2003: Complementary Reforms 2005 Sugar Price cut (white sugar - 36% over 4 years), partial compensation through decoupled payments (64% of the price cut).
Minsk, Belarus 3 December CAP Reform 2003: Complementary Reforms 2007 Fruits and Vegetables Integration of F&V into the Single Payment Scheme, wide range of tools for crisis management for Producer Organisations, promotion of consumption. CAP Reform 2003: Complementary Reforms 2007 Wine Phasing-out expensive market intervention measures and allowing the budget to be used for more positive, proactive measures which will boost the competitiveness of European wines.
Minsk, Belarus 3 December CAP Health Check, 2008 Simplifies and better targets direct support to farmers: more flexibility for MS to re-orientate direct support, assistance to sectors with special problems (Art. 68); Responds to market opportunities and price crises by removing supply controls: (phasing out milk quotas, abolition of set-aside, market management tools are streamlined and updated); Strengthen Rural Development to respond to new challenges: increase of modulation by 5% between for climate change, renewable energy, water management, biodiversity, innovation
Minsk, Belarus 3 December A consistent reform process… Reform orientation reflects policy objectives –to be competitive in world markets and simultaneously meet the highest environmental, food safety, quality and animal welfare standards within dynamic sustainable rural economies Decisions of reform reflect clear political choice –continue support for EU agriculture (the “not if but how” question) –in a manner that meets citizen, taxpayer and consumer needs and expectations and that is the less trade-distorting
Minsk, Belarus 3 December …built on sound preliminary analysis Impact assessment allows to identify the problem, to define the objectives, to develop policy options and to analyse their economic, social and environmental impacts It ensures collegiality within the Commission (inter- service steering group) and consultation of affected stakeholders
Minsk, Belarus 3 December The effects 80% of the expenditure is now paid directly to farmers Farmers are now encouraged to produce in response to market incentives, not in response to support incentives Farmers are sanctioned if they do not respect strict standards regarding food safety, plant and animal health, environment, animal welfare (cross- compliance) Pillar 2 enhances the development of rural areas
Minsk, Belarus 3 December The paths of CAP reforms and expenditure… EU-10EU-12EU-15EU-25EU-27
Minsk, Belarus 3 December CAP budget cost trend EU-12EU-15EU-27
Minsk, Belarus 3 December WTO boxes (bn €)
Minsk, Belarus 3 December Reductions in EU price support Reductions in EU price support......bringing EU prices in line with world prices
Minsk, Belarus 3 December EU public stocks
Minsk, Belarus 3 December Export refunds, billion € and % of agricultural expenditure and exports
Minsk, Belarus 3 December Passing the stress test… A sound policy in turbulent times…
Minsk, Belarus 3 December Looking ahead: The CAP should… leave room for farmers to be as market-orientated as possible; give farmers some kind of safety net; help farms to modernise; help to provide public goods; help to meet various challenges such as climate change; help to compete in a changing international environment.
Minsk, Belarus 3 December The CAP beyond 2013 Institutional context –New European Parliament and Commission –Lisbon Treaty –WTO –New financial perspectives New priorities for EU budget Budget for CAP? General economic context –Changing world Supply and Demand –The impact of the economic crisis –Oil price –Volatility, Food security, climate change
Minsk, Belarus 3 December General context: The fundamentals Growth in consumption is expected to relocate to the developing world. Other than wheat and coarse grains, production increasingly shifts away from developed countries towards developing countries.
Minsk, Belarus 3 December General context: the economic crisis
Minsk, Belarus 3 December General context: Oil price
Minsk, Belarus 3 December US Wheat volatility has increased since 1980 General context: Price volatility
Minsk, Belarus 3 December …and in the EU too…
Minsk, Belarus 3 December General context: Speculation?
Minsk, Belarus 3 December The CAP beyond 2013: Open questions 1.Direct payments –Income support vs. public goods –Redistribution within and among Member States 2.Market mechanisms –Safety net –Other instruments 3.Rural development –Balance between competition, environmental and rural economy challenges 4.Financing –Distribution between pillars and areas –Co-financing
Minsk, Belarus 3 December The CAP in one click
Minsk, Belarus 3 December Thank you for your attention!