1. 0 “CAP health check and the future of milk quota” a Dutch perspective Tallinn, 8 February 2008 Roald Lapperre head of Common Agricultural Policy division Ministry of Agriculture, Nature and Food Quality The Hague, Netherlands

2. 1 Lay out of presentation (1) Facts and figures NL agriculture Health Check Future of dairy quota system

3. 2 Relevance of agriculture in NL Agriculture is a pillar of the NL economy 10,4 % of total employment 10,1 % of total GDP Second biggest agricultural exporter in the world (aim to become no. 1 this year) Flowers and food most competitive sectors of total economy Agriculture covers 70% of NL land surface

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5. 4 Number of farms % change 199020042015 1990-20042004-2015 Total124.90083.89059.170-33-29 dairy39.55022.28013.820-44-38 arable farming16.26012.63010.540-22-17 combined farming14.7907.7704.690-47-40 pig and poultry12.5906.7004.360-47-35 glass horticulture10.2406.3904.240-38-34 open air horticulture9.9906.6805.020-33-25 Farm numbers 1990-2015

6. 5 Expectations for the future Best market expectations for horticulture Positive outlook for dairy sector; however declining EU-support and rising environmental standards factors to watch Difficult times ahead for pig and poultry; production will continue however, albeit at lower output levels

7. 6 Lay out of presentation (2) Facts and figures NL agriculture Health Check Future of dairy quota system

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9. 8 Big changes in policy environment Continuous CAP reform: MacSherry 1992, Agenda 2000, MTR 2003, Meditterranean package 2004, Sugar 2005, Fruits and Vegetables, Wine 2007, HC 2008, etc. More member states: from 12 to 15 to 25 to 27 (and 30?) with unchanging budget; 5 mio farmers in EU-15 in 2004 and 15 mio farmers in EU-27 by 2007! Increased diversity; more changes to come

10. 9 Key elements “Health Check” 1. Changing modalities of direct income support 2. Scaling down remaining market/price policies 3. How to deal with modulation/new challenges? 4. Let’s not forget simplification!

11. 10 Govt coalition agreement NL priorities in CAP domain: Better linking of income support with public goods delivered by agriculture, such as food safety, food quality, food security, rural landscape, environment and animal welfare Financing of CAP within Community framework Stick to 2005 budget agreement for period 2007-2013 Gradual approach

12. 11 Direct income support NL priorities: Linking direct income support to public services delivered by agriculture in cases of market failure NL wants to move from the present historical model to a regional model of income support EU wide flat rate not a good solution!; a “flatter rate” at regional level to be preferred A more flexible article 69 can be a helpful tool Full decoupling of all income support should be end goal Continue but further simplify cross compliance Sympathetic towards towards upper and lower limits in direct income support Sympathy for wish EU-10 to keep SAPS

13. 12 Market and price policies NL priorities: Phasing out export refunds by 2013 (parallelism!) Scale down remaining intervention policies to a genuine safety net mechanism End milk quota system by 2015 and agree on soft landing Keep set aside as a market instrument, albeit at 0% Give special attention to potential negative effects of scaling down market policies for nature, environment and biodiversity (set aside, milk quota enlargement)

14. 13 Modulation NL priorities: Not in favour of 8% extra modulation Addressing new challenges can better be done in first pillar! More flexible article 69 better alternative to modulation If modulation were to take place, flexibility needed in choosing destination of money and no upper or lower spending limits Finding means for national co-financing not an easy task!

15. 14 New challenges NL priorities: Sympathetic to Commission ideas to focus on climate change, water management (and add animal welfare to list) Hesitant to include bio energy and risk and crisis management to list Let’s not forget simplification!

16. 15 EU agricultural support History Future?

17. 16 Lay out of presentation (3) Facts and figures NL agriculture Health Check Future of dairy quota system

18. 17 Future of dairy quota system NL priorities: Clear signal quota system will end in June 2015 as foreseen Soft landing very important from Dutch perspective because of high quota prices Total debt to banks for quota loans amounts to EUR 7 billion at present Farmers need time to write down these investments! Very much in favour of enlarging quota with 2 - 3% this year

19. 18 Options for soft landing NL priorities: Enlargement of quota by e.g. 2% per year first choice Lowering super levy could help, but difficult to control because of lack of predictability Skipping present fat correction factor positive option for NL, but only useful for limited number of other Member States Tradability of quotas between member states acceptable for NL, but unlikely to be acceptable in EU-perspective Ready to accept call for accompanying policies for less favoured (mountainous) production areas

20. 19 Thank you for your attention!