1. Olof S. Hvordan ser den kommende reform af den fælles europæiske landbrugspolitik ud? Europa-Konference, Vejle, 29. oktober 2010 Lars Hoelgaard, vicegeneraldirektør Generaldirektoratet for landbrug og udvikling af landdistrikterne Europa-Kommissionen

2. 2 Importance of agriculture in the EU territory 13.7 million farms (70% with less than 5 ha) The agrifood sector has 17.5 million employees (7.7% of total employment)

3. 3 Recent evolution of agricultural input and output prices Source: Eurostat

4. 4 EU developments in agricultural income (agricultural income/AWU in real terms) Source: Eurostat EU-15 EU-12

5. 5 5 CAPen p.t. - instrumenter Direct payments Adjusted SPS GAEC Markets Price support/ Quotas reform Rural development Competitiveness & innovation Environment and land management Quality of life, diversification Income Structural adjustment Public goods Income safety net

6. 6 6 Rural Development Direct payments Markets Pillar I Pillar II Instrumenternes budgetvægt Instrumenternes budgetvægt Modulation

7. 7 Evolution of CAP share in EU budget…

8. 8 … and alternative views on its cost CAP cost in 2009 (in relative terms) CAP cost in 2009 (in absolute terms) 0.5% of EU GDP 41% of EU budget Source: European Commission - DG Agriculture and Rural Development

9. 9 CAP reform fra Gul til Grøn WTO Box EU-12EU-15EU-27

10. 10 What are the objectives with the reform? Viable food production Sustainable management of natural resources Balanced territorial development to contribute to farm income and limit its variability to improve sector competitiveness and share in food chain value-added to compensate areas with natural constraints to guarantee the provision of public goods to foster green growth through innovation to pursue climate change mitigation and adaptation to support rural vitality and employment to promote diversification to allow social and structural diversity in rural areas Common EU response needed

11. 11 Climate change - Possible impacts on EU agriculture Floods risk Hotter and drier summers Sea levels Risk crop pests, diseases Crop, forage yields Animal health, welfare Water availability Risk drought, heat spells Risk soil erosion Growing season, crop yields Optimal crop areas Summer rainfall Winter storms, floods Length growing season, yields Suitable farmland Pests, diseases risks Winter rainfall, floods Summer rainfall Risk drought, water stress Soil erosion risk Yields, range of crops Source: DG Agriculture and Rural Development, based on EEA reports, JRC and MS academic studies

12. 12 Average direct payments per potentially eligible area and beneficiary Direct payments net ceilings fully phased-in (in 2016) Source: European Commission - DG Agriculture and Rural Development 360 = 2600 kr/ha

13. 13 Relative situation of agricultural income in the EU Income gap with the rest of the economy (average 2005-2007) Agricultural income level between Member States (2009) Source: European Commission - DG Agriculture and Rural Development, based on Eurostat data

14. 14 What policy instruments? Better targeted to objectivesBased on two pillar structure Direct payments Market measures Rural development Market orientation Streamline and simplification Improved food chain functioning Environment, climate change and innovation as guideline themes Improved coherence with other EU policies More effective delivery mechanisms Address risk management New distribution criteria Redistribution Redesign Better targeting

15. 15 4c. What policy options? Option 1 Adjusting Continue the reform process by introducing further gradual changes while adjusting the most pressing shortcomings (e.g. more equity in the distribution of direct payments) Option 2 Balancing Capture the opportunity for reform ensuring that CAP becomes more sustainable and balanced (between policy objectives, MS and farmers) through more targeted measures Option 3 Refocusing More fundamental reform focusing entirely on environmental and climate change objectives through rural development, moving away from income support and most market measures

16. 16 What policy options? Direct payments More equitable distribution among MS and among farmers Greening of direct payments Capping of payments Small farmers Gradually phase out direct payments Market measures Streamlining and simplification of existing measures Phase-out most measures Keep disturbance clause for severe crises Rural development Continue emphasis on climate change, biodiversity, bio energy and innovation Importance of environment, restructuring and innovation, local initiatives Risk management tools and income stabilisation tool New distribution criteria Primarily focus on measures linked to the environment and the delivery of public goods Option 1 Adjusting Option 2 Balancing Option 3 Refocusing

17. 17 Share of DP and total subsidies in agricultural income EU-15 EU-12 Source: European Commission - DG Agriculture and Rural Development

18. 18 Conclusions from Scenar 2020 - II Finally, the removal of Pillar 1 payments under the Liberalisation scenario would also translate into reduced agricultural land use, as an important source of revenue for farming is removed. Reducing first pillar payments leads, on the one hand, to intensification of the use of land in the core production areas to earn a decent living and, on the other hand, to land abandonment in marginal production areas, as it becomes unprofitable in these regions.

19. 19 Tidsplan (1) Kommunikation 17. november 2010 Forslag – juridiske tekster – juli 2011 Polen – formandskab - 2/2011 Danmark – formandskab - 1/2012 Cypern – formandskab - 2/2012 Irland – formandskab - 1/2013 Litauen – formandskab - 2/2013

20. 20 Tidsplan (2) Budget review Kommissionens meddelelse 19. oktober 2010 Forslag – sommer 2011 Periode 2 x 5? EP UK – budgetrabat FR – CAPen Beslutning?

21. 21 For further information The CAP after 2013 http://ec.europa.eu/agriculture/cap-post-2013/index_en.htm The Communication on the future of the CAP http://ec.europa.eu/ Impact Assessment of the Communication http://ec.europa.eu/ Agricultural Policy Analysis and Perspectives http://ec.europa.eu/agriculture/analysis/perspec/index_en.htm