1. Ministry of Agriculture LATVIA Agricultural reform in Europe: 2013 and beyond May 14, 2008 Tallinn

2. CONTENTS CONTENTS CAP in future – CAP in future – Basic principles Basic principles Vision and objectives Vision and objectives Possible policy instruments Possible policy instruments

3. CAP in future Basic principles of policy SUSTAINABLE SUSTAINABLE MARKET ORIENTED MARKET ORIENTED COMPETITIVE COMPETITIVE REGIONAL DIFFRENCES REGIONAL DIFFRENCES PUBLIC GOODS PUBLIC GOODS

4. 2 CAP in future VISION Agriculture – appreciated by general public Agriculture – appreciated by general public Rural economy – economically active and knowledge based. Rural economy – economically active and knowledge based. Viable rural holdings – with or without support Viable rural holdings – with or without support production according to market demand and climatic conditions production according to market demand and climatic conditions increasing added value and shifting from quantity to quality increasing added value and shifting from quantity to quality

5. 4 CAP in future VISION Prosperous people in sustainably populated countryside of Latvia: Prosperous people in sustainably populated countryside of Latvia: development of capacities of rural people development of capacities of rural people sustainable management - rural natural resources and landscape sustainable management - rural natural resources and landscape development of rural living environment development of rural living environment Promoting entrance of young farmer in agri-business with a view of improving the aged structure of farm owners Promoting entrance of young farmer in agri-business with a view of improving the aged structure of farm owners

6. 5 CAP in future OBJECTIVES CAP in future OBJECTIVES Global competitiveness Doha Round should not lead to a further reform of the CAP: Doha Round should not lead to a further reform of the CAP: Green box provisions shall be retained As in the current draft modalities; Green box provisions shall be retained As in the current draft modalities; Level of customs tariffs shall ensure farmers competitiveness on domestic market; Level of customs tariffs shall ensure farmers competitiveness on domestic market; Export subsidies and elements with similar effect shall be eliminated ensuring fair competition in world market. Export subsidies and elements with similar effect shall be eliminated ensuring fair competition in world market.

7. CAP in future OBJECTIVES Fair, equal conditions for direct support among all MS: Fair, equal conditions for direct support among all MS: distribution of financial envelopes for decoupled payments; distribution of financial envelopes for decoupled payments; new support criteria must reflect actual activities of farmers at present, instead of historical figures; the same possibility to choose level of coupling and historical model in transition from the same possibility to choose level of coupling and historical model in transition from SAPS SPS

8. DP +RD area payments per MS 2013 (in DP +RD area payments per MS 2013 (in € /hectare UUA in 2007)

9. Arable crops reference figures and actual area/yield

10. Impact to income & efficiency – employed in agriculture and payment for employed/ UUA ha

11. Impact of decoupled support on land market price 0 500 1000 1500 2000 2500 3000 3500 4000 Land price in reference year,DP=0Land price at DP= EUR 100/ha Land price at DP = EUR 300/ha EUR/ha

12. Impact of decoupled support on rent price of farm land and buildings/ average farm size UUA ha

13. CAP in future POSSIBLE POLICY INSTRUMENTS “Capped” direct support rate per hectare “Capped” direct support rate per hectare  support for multifunctional services providing societal benefits State aid - SA Rural development area based measures (RDP) Direct payments CC including GAEC (DP) MAX rate = ∑(SA+RDP+DP) ≤ 1000 EUR/ha

14. CAP in future POSSIBLE POLICY INSTRUMENTS   An equal support rate per unit must be laid down all over the EU for compliance with the same conditions Direct payment 50 EUR/ha (for grass cutting) Y EUR/ha GAEC Other CC requirements restructuring of direct payments according to inputs and to avoid “support cutting” restructuring of direct payments according to inputs and to avoid “support cutting” why support for landscape maintenance costs be radically different in different member states? why support for landscape maintenance costs be radically different in different member states?

15. CAP in future POLICY INSTRUMENTS Modulation Modulation... must serve as an instrument diminishing the differences among rural areas in the Community BUT, too much of direct support, based on production criteria in the past, is simply shifted to Pillar II in respective MS - without analysing the rural development needs LV about modulation principles: LV about modulation principles: –not more than 50% of financing modulated to be channeled to respective MS –50 % - to EU budget and finance distribution based on objective criteria

16. CAP in future POSSIBLE POLICY INSTRUMENTS Risk management Risk management role of Community risk management tools ? role of Community risk management tools ? clearly defined EC and MS responsibilities to ensure transparency clearly defined EC and MS responsibilities to ensure transparency promote motivated participation of producers promote motivated participation of producers

17. CAP in future POSSIBLE POLICY INSTRUMENTS Safety net Safety net income loss compensation mechanism should be introduced in order to allow compensate income losses arising from market fluctuations, natural disasters (animal diseases, crop losses etc.). income loss compensation mechanism should be introduced in order to allow compensate income losses arising from market fluctuations, natural disasters (animal diseases, crop losses etc.). Financing from Pillar I (intervention, Article 69) Financing from Pillar I (intervention, Article 69) Strengthened producer organizations decrease risk of hazards due to market fluctuations (French approach) Strengthened producer organizations decrease risk of hazards due to market fluctuations (French approach)

18. Thank you for attention!