CAP mid-term review proposals are explained
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CTA. 2003. CAP mid-term review proposals are explained. Agritrade, February 2003. CTA, Wageningen, The Netherlands.
Permanent link to this item: http://hdl.handle.net/10568/52420
The Agricultural Commissioner Franz Fischler outlined the findings of the...
The Agricultural Commissioner Franz Fischler outlined the findings of the recent impact assessment studies and the rationale behind the EU legislative proposals for further reform of the CAP to the European Parliament on January 22nd 2003. He highlighted the fact that the proposals: would remove the structural imbalances in the rye, beef and rice markets; would not, through de-coupling, lead to farmers leaving the industry in droves, but would boost overall farm incomes, as farmers switched to more profitable products. He also highlighted two major changes in the proposed regulations compared to the July 2002 proposals, namely the adoption of a proposal for reform of the dairy regime and wholesale changes to the arrangements for dynamic modulation. Savings on the EU budget have no made it possible to bring forward dairy sector reform. The specific proposals put forward in the dairy sector involve: extending the quota system until 2014; a further reduction in the support price for milk and an increase in quotas of 1% per annum in 2007 and 2008 in the EU-25; a reduction in the intervention price for skimmed milk powder by 3.5% per year; a reduction in the intervention price for butter by 7% per year; compensation of dairy producers for price reductions at an level equivalent to 58% of the price cut. Commissioner Fischler expressed the view that these proposals would make the EU dairy sector more competitive and increase the EU's room for manoeuvre of at the WTO. The proposals for dynamic modulation now consist of the following elements: no reduction in payments to farmers receiving up to €5,000 in payments; a 12.5% reduction in payments to farmers receiving between €5,000 and €50,000; a 19% reduction in the payments to farmers receiving more than €50,000. Some 6% of the total amount saved would be re-deployed to rural development, with the remainder being used to finance further reform and being directed to farmers in greatest need. The Commissioner took the trouble to explain in simple terms how de-coupling will work: 'For every holding, the direct payments to which they are currently entitled would be bundled into a single payment, the level of which would be based on the amounts they received in the 2000-02 period as a result of their full entitlements under the present scheme. All the criteria on which this support was based during the reference period would be taken into account (area payments, head of livestock, per tonne payments etc).' These payments would be conditional upon compliance with binding standards in environmental protection, food safety, animal health and welfare and occupational safety. Holdings would have their support cut for non-compliance. To facilitate the transfer of payment entitlements from one holding to another, payment entitlements would be worked out by dividing the level of payment per holding by the size of the area on which payments were based. Thus areas of pasture, cereals and oilseeds would be included but those used for growing sugar beet or potatoes would not.' Member states would be allowed to implement the scheme according to regional circumstances providing the principles of cross compliance were adhered to. He pointed out that the Commission's proposals would not entail de-coupling in all sectors, since this could lead to unacceptable reductions in the production of some products. As a consequence certain aids would continue to be tied to production, for example, durum wheat, potato starch, rice and feed proteins. Indeed, de-coupling would only be introduced to the extent that it was necessary to meet EU goals, including securing international recognition and acceptance of the EU system of support. With reference to the WTO, Commissioner Fischler argued that if the EU was proactive it would make it easier to protect the European model of agriculture and secure international acceptance of EU positions on non-trade issues. Comment: It should be noted that the use of savings on the EU budget to bring forward dairy-sector reform means that sugar-sector reform may well be further deferred. By highlighting that de-coupling would be introduced only as far as necessary to meet EU goals such as securing international acceptance of the EU support scheme, the Commissioner made clear that he would not allow reform to in any way threaten continued production of any CAP-covered products in the EU. This suggest some very real limits to the extent of reform of the CAP and the extent to which the EU will reduce public aid to the agricultural sector.