sou · GLB3151 · 1998-01-01 00:00:00 — The overriding objectives of the regional and structural policies carried out in Union are to level out regional differences between various parts of Union. This also applies to food production, including primary production and processing industries, and the income which this production provides. The resources of rural areas must be made use of in an efficient and sustainable . A future sustainable society, in ecological balance, will involve a role of increasing significance for agriculture. A geographical spread of arable and livestock farming is important. Production which is spread out also means less transport, something desirable from an environmental point of view. For this reason, local and environmentally friendly production should be encouraged. It has long been a Swedish objective of agricultural policy to make possible agricultural production over in principle the entire country. In the 1990 decision relating to food policy it was stated that notable reductions in revenue as a result of market adaptation and deregulation would not be accepted for agriculture in northern . Having now joined Union, this objective still remains. Rural areas, and in particular sparsely populated rural areas, have for a long time been inclined to small scale and diversified production, and this have given a special character to employment in these areas. The populations have largely been employed in a number of different businesses, each part-income contributing to the total household income. This especially applies to agriculture. The agricultural sectors economic significance in society has diminished over the years. 92 Agriculture and regional development agriculture has fallen as technical developments have taken place. However, the sectors contribution to the regional economy is still of major significance in certain regions. Agriculture has a direct effect on other parts of the rural area economy. Agricultural production results in the creation of employment in sectors outside primary production and the food industry, thanks to such factors as the demand for various products and services. In addition to these directly related businesses, agriculture plays a central role in a number of other businesses based in rural areas. Both socially and in terms of the landscape and countryside, rural areas are affected by agriculture. Many of the things most appreciated in rural areas are linked to farming the land. A number of other businesses have also sprung up and which are dependant on the special features of rural areas. The recent development of various forms of rural tourism is a living example of such businesses. 8.2.2 Opportunities for future development The financial advantages for companies of greater scale lead to a greater concentration of production in many fields, both in production, trade and retailing. As long as unit costs in small scale production remain higher, the opportunities to make a living outside the expansive areas where production is concentrated decrease. If there is a deregulated, competitive market in the agricultural sector, this will probably mean increased difficulty in sustaining agricultural production in a number of EU regions, such as northern and other LFAs. There is an increasing need for adaptation, in the agricultural industry itself and in employment in other related businesses. It is necessary to secure the joint opportunities for farming households and to create opportunities for both men and women to remain in rural areas. the years an increasing share of family income has come from sources other than agriculture, often as a result of women working away from the farm. This indicates a need for a variety of employment opportunities. In a future society in ecological balance, agriculture will have new and important functions. In order to make use of natures capacity for production in a more sustainable way than today and to minimize the burdens which agriculture places on the environment, e.g. to ensure the replenishment of nutrients, the significance of agriculture and the Agriculture and regional development 93 farming land will increase. Production of energy and biomasses can also be included in these functions. In such a situation, the geographical spread of production is of major importance. 8.2.3 Large scale and small scale regional policies Regional policy in is usually divided into what is known as major and minor regional policy. A similar division could be applied to Union as a whole. Major regional policy is made up of measures which affect the general order of things in society: taxes, social services, infrastructure, education, employment, etc. This type of policy has probably been of very great significance for the viability of rural areas, even though it is only indirectly aimed towards regions of special need. Major regional policy has a significant effect in weak areas, such as sparsely populated areas, mainly because of its objective to level out the resources in society. Since these issues are not primarily concerned with agriculture and rural areas, they will not be further dealt with in this report. regional policy covers the same areas, but is more regionally oriented, aimed directly at companies, business and business sectors. As such, minor regional policy also encompasses measures aimed at agriculture. Various types of company support, investment support and other specified measures are instruments in this policy. 8.2.4Current EU structural and regional support within the CAP EU structural and regional policy is partly comprised of measures aimed at the agricultural sector. There are currently a number of measures which together comprise a complex structure. Structural and regional issues relating to agriculture are discussed in section 2.3.4. In certain cases there are clearly conflicting objectives in various areas of agricultural policy. However, in our opinion the regional policy initiatives inside the framework of the CAP are beneficial and form the basis for continuing efforts in this area. The need for both structural and regional policy measures will increase with market adaptation and deregulation of the CAP. The agricultural sector is an important element in the opportunities for development in rural areas, partly through the environmental and 94 Agriculture and regional development cultural values which agriculture gives rise to, and partly through the production of food and other agricultural goods. 8.3 Instruments for regional development The instruments which society has at its disposal in regional production of foods are primarily direct financial support. The current measures of structural and regional policy reveal a very split picture of which it is difficult to gain an overall understanding. For this reason co- ordination and simplification are needed. At the same time, the situation and conditions vary greatly in different parts of the Union, and this, in many cases, is a reason to favour local solutions. Structural and regional policy measures should be designed to facilitate the adaptation of agriculture to new conditions. Support should be forward thinking, e.g. designed to stimulate investment in new forms of farming to provide a younger generation with the opportunity of taking over. Support which reinforces poor structures and which locks up resources in the long term should be avoided. As mentioned, the existing structural and regional policies inside Union provide a sound basis for future development of rural areas in the event of a reform of the CAP. By co-ordinating various measures of regional and environmental policy within the CAP, significant steps can be made towards a more integrated policy, in which agriculture is seen as a part of the whole. To begin with measures in the agricultural sector can play a part in rural area development in that they provide wider income opportunities in these regions. One way of achieving this could be by rewarding work relating to environmental and cultural values which the agricultural sector contributes, as we suggested in chapter 6. When opportunities for income are broadened there are possibilities for further developments, such as rural area tourism, thereby making any adaptation to a CAP reform easier. However, a continued structural change towards larger units can be expected, and for this reason there should be initiatives in areas of business other than agriculture. Other measures which would involve benefits to the agricultural sector would be to adapt general frameworks to the conditions of small businesses in order to promote production and processing in smaller units. Agriculture and regional development 95 The development of rural areas must, in the long term, take place with regard to an overall perspective, with consideration for the wishes of consumers and society in various sectors. Agriculture, like small businesses in other sectors, plays an important part in this development, and this requires the general instruments to be adapted to specific local situations. Smaller companies can find it difficult to obtain favourable loans. Various kinds of investment subsidy can therefore promote a certain return to locally sustainable food production, which in turn would contribute environmental and cultural values. Such instruments should be of a general nature in order to give different businesses the same opportunity to develop. 8.4 Where should decisions be made? In the same way that environmental policy and support aimed at a better environment can affect competitiveness within Union, there is also a link between measures of regional and structural policy and competitiveness. This applies to support directly aimed at agriculture and also to support to supplementary businesses. Seen from a cultural and social perspective, Member States reveal major differences. These differences have an enriching effect on the Union and should be preserved. For this reason, regional policy for agriculture should also be flexible and allow for local variations. Each or region inside a possesses the knowledge necessary to develop an individual region and should thus be empowered to make regional decisions. However, in our opinion, consideration for competition between different regions and ensuring the production which only takes place within the terms of the market indicate the desirability for co-ordination of initiatives on the regional and structural policy level in the same way we suggest for environmental policy. The Commission should have overriding responsibility for these issues. By making overriding decisions at EU level, measures which lead to competitive imbalance can be avoided. However, the details of measures in individual cases should, as far as possible, be worked out at national or regional level in respective countries to which the measures apply. Care must be taken to ensure that these measures fall within the common frameworks. 96 Agriculture and regional development 8.5Who finances measures for regional development? Those cases in which policy is aimed at an overall levelling of economic differences between various Member States justify fully common financing. If financing is common there are also reasons to adopt common regulations. For other measures, i.e. measures, which affects only one country, common financing provides better supervision and sanction capabilities than if financing were to be at a national level. Bearing in mind the aspects of competition mentioned earlier, we therefore propose that these measures should be partly joint-financed, as they are today. In addition, the opportunities which exist today to opt for purely national financing should be maintained, yet remain subject to approval of the Commission. 9Changes to the Common Agricultural Policy 9.1 The future role of agriculture We consider it important that the CAP is reformed in such a way that agricultural resources are used in an optimum way in the future. The agricultural sector will have many important tasks in the future, not only as a producer of food and agricultural goods, but also as a facilitator of biodiversity, varied farming landscapes, cultural environ- ments and other collective benefits. The agricultural sector also has a vital task in contributing to the fulfilment of globally determined goals. The enlargement of Union to the East together with the promotion of sustainable development and democratic and economic development throughout the whole world are high priority Swedish objectives which should be taken into consideration in a reform of the CAP. Agricultural policy should therefore be changed and expanded from producer issues to include consumer, environmental, animal-ethical and regional issues. In order to be able to discuss the changes in agricultural policy which are necessary, we wish to repeat our proposals for new objectives for the Common Agricultural Policy. The Common Agricultural Policy should aim to facilitate: ·a wide and varied supply of safe food at reasonable prices, In addition to these two principal objectives, the agricultural policy should also aim at ensuring that production, processing and distribution of food is carried on in such a way that: ·biodiversity is conserved and promoted, ·cultural heritage is preserved, ·a varied farming landscape is promoted, ·environmental load is minimized, ·livestock production takes place under strict requirements for animal welfare, ·a regional balance and viable rural areas are promoted, ·internationally competitive agriculture within Union is promoted. 98 Changes to the Common Agricultural Policy Food is crucial to our survival. Our aim is that the supply of food and other agricultural products should be driven by consumer demand. This can be achieved if consumers and producers interact in a competitive market. For producers to be sensitive to consumer requirements and to adapt their production accordingly there must be functioning competition in which consumers receive the information they need. A basic requirement is that food are safe to eat. Consumers should be able to choose the food they want on the basis of information relating to production methods, food quality and prices. There are also agricultural goods for which there is consumer demand which are not food, such as textile fibres and renewable energy. Production of these goods should also be driven by consumer demand. In the long term, this would require EU agriculture to be internationally competitive. Furthermore, the agricultural sector is an important resource in a future society in ecological balance. It is important that agriculture is given the opportunity to provide various types of environmental services such as biodiversity, cultural values and varied farming landscapes. We also need to take care of animals in an ethically satisfactory way which ensures their well-being. Agricultural policy should strive to achieve flexible and varied production systems which provides opportunities to maintain diversity in the environment. One other prerequisite is that the negative effects of agriculture on the environment should be minimized. If future generations will have access to food, production must be sustainable in the long term. Agriculture plays an important part in the development of rural areas. Agriculture has significant indirect effects on employment, partly through purchasing services and necessary goods, and partly since agriculture facilitates tourism, an attractive living environment and puts a cultural stamp on rural areas. For these reasons, continuing agriculture is of great importance. It is our opinion that rural area development must be combined with an increased awareness of the environment and stringent demands for animal welfare. In the same way, the interplay between the agricultural sector and other sectors in rural areas is vital. It is particularly important to create conditions and opportunities for a younger generation to take over and have a production in accordance with the requirements of society and consumers. Agriculture inside Union as such will have several important functions in the future. Agriculture plays an important role by producing food and other agricultural goods which consumers demand. Changes to the Common Agricultural Policy 99 Agriculture must be given the opportunity to adapt production to consumers increasing demands for quality and environmentally sound and animal-friendly production methods, etc. Furthermore, production must be carried on in such a way that agricultural production is sustainable in the long term. Agriculture has a vital significance in a future society in ecological balance. In producing various environmental services and ensuring production adapted to the environment, agriculture can be an example for other sectors. Agriculture also has an important task in the development of rural areas through co-ordination with other sectors. 9.2 Instruments for a new agricultural policy A new common agricultural policy should be designed so that production is given the best possibility of achieving the objectives we have proposed. It is crucial that society should both legislate and pay for the services which will lead to the fulfilment of these objectives. In order to provide a wide variety of safe food at reasonable prices, a functioning market in which consumers and producers meet is necessary. This does not only apply to trade inside Union but to trade in the world as a whole. It is the task of society to ensure that competition functions and that producers provide consumers with information relating to production methods, contents and origins. Society should also ensure, through legislation and controls, that no food harmful to consumers are released onto the market. A precaution principle must apply to all food. As such, producers must be responsible to ensure that no harmful food are released onto the market and that they provide necessary information to consumers. Furthermore, it is our opinion that agriculture has an important duty in a broader perspective on society in which the environment, animal welfare and rural development are important issues. Consumers can influence this to a certain extent through their choice of food. It is, however, of common importance to us all that production is carried out in a sustainable with minimal environmental load and stringent animal welfare requirements, and also that a regional balance is achieved. Society should therefore contribute with legislation, information and education initiatives alongside financial means of control. 100 Changes to the Common Agricultural Policy In order to achieve sustainable agricultural production, an important part in a future society in ecological balance, it is important that necessary legislation is introduced, alongside environmental payments. The duties of society can be divided into three parts: common legislation which defines minimum requirements for permissible burdens placed on the environment throughout Union, the option of imposing more stringent environmental regulations via legislation at national level plus payments over and above this for environmental services such as biodiversity, varied farming landscapes, cultural heritagr, etc. Common environmental regulations should have a high level of ambition. In order to achieve animal production with stringent requirements for animal welfare, something which will also be an important component in a future sustainable society, it is important to introduce necessary legislation for animal welfare, animal care and protection from infectious diseases. As far as possible, legislation should be common so as to achieve competitive neutrality, etc. In addition, individual countries must be able to apply more stringent national requirements, e.g. for ethical reasons. Payments for animal husbandry which provides environmental services such as biodiversity and a varied farming landscape have been discussed previously. The objective of promoting regional balance and viable rural areas can also be best achieved through a change in the CAP. Measures should be designed regionally in accordance with a common legislative framework. When designing regional measures it is also important in this context that competitive neutrality should apply. In order to achieve the objective measures should be designed to facilitate flexible and structural agricultural development. Measures to stimulate investment in new forms of farming which provide the opportunity for a younger generation to take over may be necessary. Instruments are also needed to facilitate regional production. The measures should facilitate coordination with environmental measures and measures in other sectors. In working towards the objectives of safe food, a society in ecological balance and regional balance in which agricultural production is essential, market regulations will become unnecessary with time. Neither will direct payments, which form part of the market regulations and are intended to compensate for lower prices, i.e. area and headage payments, be necessary other than as a temporary interim measure. CAP market regulations will not lead to the fulfilment of the objectives we wish to see. They lead instead to higher food prices and they disadvantage production efficiency between different sectors, Changes to the Common Agricultural Policy 101 between different farmers and between industrialised and developing countries. This means that producer flexibility and opportunities for structural development are hampered. There are several examples of elements in market regulation which work against each other, since there are measures for both the stimulation and the limitation of production. Export refunds, border protection and various means of intervention, including support for production and consumption plus supportive buying when low prices prevail, stimulate production in Union. Production quotas and export fees limit production instead. In principle, direct payments also serves to stimulate production, but is restricted to a certain number of hectares or livestock units in respective . In addition to what has been said, market regulating measures do not lead to better environments for animals nor to environmentally friendly production. In the preceding section we have summed up the objectives we consider that the CAP should have and the instruments needed to achieve these objectives in the long term. Legislation and payments for environmental services and services which help to achieve regional development are necessary instruments. We also observed that market price support will not be needed with time. Apart from the fact that market price support is not necessary to achieve the objectives we would like, removal of this type of support would allow greater scope to provide resources for consumer, environmental, animal welfare and regional issues. As such it would be desirable for the EUs common market regulating measures, with the exception of border protection, to be removed at some future point. The basic principle should be that all sectors should be reformed at the same time in order to avoid an imbalance of profitability between different agricultural goods. Care should be taken that the reform takes place under socially acceptable forms. It is reasonable for direct payments to be paid out under a limited period after the reforms in order to facilitate changes and re-structuring of the agricultural sector. Direct payments should give affected producers the maximum possible flexibility in decision-making, so that resources are not tied up in unprofitable production. The size of the need 102 Changes to the Common Agricultural Policy for such support may be judged based on prevailing conditions in each sector. It may be reasonable to retain border protection during an interim period.