1 Sebastian Stępień, PhD Poznań University of Economics Department of Macroeconomics and Food Economy The EU Common Agricultural Policy and the interest of Polish agriculture Dijon, October 2011

The aim of presentation The aim of the presentation is to identify possible changes in the Common Agricultural Policy and consequences for Polish agriculture 2

A few words about the impact of EU membership… ratio of receipts under the CAP to the Polish contribution to the EU budget amounted to over 1.5 increase the level of support for agriculture increase the value of production and in agricultural income modernization of food sector a positive balance of food trade 3

Table 1. Changes in agriculture income in Poland in the years Specification Agriculture income per AWU (zl) Direct payments per AWU (zl) Ratio: agriculture income to avarange wages in economy 24,256,243,350,358,845,5 Share of direct payments in agriculture income 9,4%39,0%47,0%52,1%42,2%45,0% 4 Source: Goraj L. (b), Wpływ Wspólnej Polityki Rolnej na dochody polskich gospodarstw rolnych, IERiGŻ, Warszawa 2009.

Conditions for CAP reform large disparities in the redistribution of money, primarily in the field of direct payments, need to link support with the provision of public goods and environmental protection, improving the competitiveness of EU agriculture in the international arena, securing food security in the EU and the world, guaranteeing farmers a fair standard of living and maintaining the vitality of rural areas. 5

Issue of direct payments Three important questions involved:  the purpose of payment,  the shape of the system  the redistribution of resource s The span between the highest rate of payment per unit area of ​​ agricultural land (802 euro/ha for Malta), and lowest (95 euro/ha for Latvia) is over 700 euros. 6

Figure 1. Direct payments per ha AA and per farm in 2013 Source: Assessment of the impact of the CAP until project (typescript), European Commission, Brussels

CAP reform scenarios Status quo – base for other scenarios Adjustment Integration Re-focus 8

Adjustment continuation of the CAP policy, with a further, gradual changes, redistribution of direct payments in accordance with criteria showing the level of income support and the role of public goods and diversify economic conditions, Minimum level of direct payment in relation to average payment in the EU (eg. 90%), 9

Adjustment simplification of market intervention mechanisms, and maintaining a safety net against unforeseen declines in prices and farm income, increase spending on environmental and climate change mitigation under the rural development policy. 10

Integration multilayer payments:  basic payment per hectare, lower than at present (cross compliance required),  payment for farms located in less-favored areas or in high natural values areas,  additional component sensitive to environmental issues (tasks related to climate change or organic production), 11

Integration more complex environmental services supported within the policy for rural development (including efficient use of resources, the development of sustainable production and use of renewable energy sources, reduce greenhouse gas emissions in agriculture, protection and development of ecosystems), instruments to support the creation and operation of farms organisations (horizontal and vertical integration, cooperation etc.) tools for risk management small farmers support - minimum level of payment 12

Re-focus budget for the CAP significantly reduced, the remaining funds directed to the task related to environment and climate change in the framework of the second pillar of CAP, resignation from the system of direct payments and market intervention (except for crisis) rural development by the cohesion policy and structural funds 13

CAP reform – position of European Commission (October 2011) The legal proposals are accompanied by an impact assessment that evaluates alternative scenarios for the evolution of The policy on the basis of extensive quantitative and qualitative analysis. Most of solutions consistent with the scenario „Integration” 14

How will the CAP be financed? Source: The CAP towards Legal proposals, European Commission, DG Agri, Brussels

16

New shape of direct payments 17

Figure 2. Changes in direct paymnets – European Commission proposal Source: The CAP towards Legal proposals, European Commission, DG Agri, Brussels

Figure 3. Direct payments: 2013 level and model „90% minimum” Source: Mottershead D., Allocation of Direct Payments, Department for Environment, Food and Rural Affairs, London

Figure 4. Change in direct payments – agricultural area and labor criteria Source: Manana N., Direct payments in the CAP 2020: Distribution criteria, Ministry of Agriculture – Office for Planning and Policies, Lisbon

CAP changes and the results for Poland Agriculture policy will remain the current level of financing and will be in full supported by the Union budget. CAP will maintain its current structure, with the division on the pillar I and pillar II. The gradual alignment of direct payments Lump sum payment for small farms, reduction in paperwork and control Greater support for agricultural producer groups 21

CAP changes and the results for Poland No agreement on the „flat rate” system The low rate of compensation of direct payments, long transition periods criterion relating to the workforce or agricultural income is not taken into account in the amount of direct payments Additional environmental requirements 22

Thank you for your attention