Proposals for further CAP reforms are outlined
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CTA. 2003. Proposals for further CAP reforms are outlined. Agritrade, November 2003. CTA, Wageningen, The Netherlands.
Permanent link to this item: http://hdl.handle.net/10568/52775
Speaking to the European Parliament on September 23rd 2003 the Agriculture ...
Speaking to the European Parliament on September 23rd 2003 the Agriculture Commissioner Franz Fischler outlined the proposals contained in the second round of the CAP mid-term review proposals. He pointed out that the trend towards decoupling was now firmly established, and argued that the more products which would be included in the single farm payment scheme the better. Against this background the Commission has put forward a communication on reform of the common market organisation for olive oil, tobacco and cotton. Reform proposals in the olive oil, tobacco and cotton sectors are aimed at reorienting support to 'reward healthy, high quality products and practices' and to supporting the development of 'alternative sources of income and economic activity'. In order to achieve this the majority of support is to be decoupled from production and integrated into the single farm payment scheme. Since the production of these crops is concentrated in less favoured regions of the EU it is also proposed to strengthen the rural development measures for these regions. For tobacco the existing tobacco premium is to be decoupled over a three-year period alongside a phasing out of the tobacco fund. During this transition period a special fund will be set up under the rural development pillar to support restructuring in tobacco-growing areas. By the end of the reform period more than 70% of the current tobacco premium will have been converted into the single farm payments and at least 20% will be deployed as restructuring assistance. In the olive-oil sector the approach is to be modified, for there are concerns that a complete conversion into a single decoupled payment scheme could lead to land abandonment in traditional production areas. For this reason 40% of payments are to remain linked to production with 60% being decoupled and incorporated into the single farm payment scheme. In the cotton sector the Commission has proposed to incorporate part of the current support into the single farm payment scheme and to transform the rest into production aid granted as an area payment. Here again only partial decoupling is to occur. Commissioner Fischler noted that a slightly different approach was being adopted in the sugar sector with three options being put forward for further discussion. This follows the approach adopted in the dairy sector and is designed to find an approach which will minimise land abandonment throughout the EU. Further discussion was felt to be necessary since 'the sugar sector is a sensitive and also complicated sector, which has never, until now, been fundamentally reformed'. It is felt that there is therefore a need for a political debate on sugar-sector reform. Commissioner Fischler noted that in the sugar sector it was clear that any reform of the sugar market will have to: bridge the gap between domestic and world market prices; involve a decoupling of support; weigh the pros and cons of the quota system; take into account the international impact of reform. A concise summary of the situation in the raw tobacco, olive oil and cotton sectors, an explanation of how the common organisation of the market works and a summary of the situation on world markets can be found in the Commission memorandum of September 23rd 2003. Comment: Reform of the EU tobacco regime is likely to exert a downward price on EU tobacco prices, which could affect ACP earnings from tobacco exports. More fundamentally, the facilitation of disengagement of EU farming from tobacco production will intensify pressures to reduce tobacco consumption in the EU, which could result in a shrinking of the EU tobacco market. In the olive oil and cotton sectors only partial decoupling is proposed. This highlights the extent to which the EU is willing to retain coupled farm payments where this is necessary to keep land under production, setting limits on the extent to which the EU can move over to decoupled farm payments. The Commission's cautious approach to sugar-sector reform highlights the sensitivity of this sector within the EU.