# CE2004084EN.01061801.xml

| 3.4.2004 | EN | Official Journal of the European Union | CE 84/618 |
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3.4.2004

EN

Official Journal of the European Union

CE 84/618

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(2004/C 84 E/0693)

WRITTEN QUESTION E-0543/04

by Erik Meijer (GUE/NGL) to the Commission

(26 February 2004)

Subject:   CAP: the declining contribution of EU funds to the survival of small farmers in a context of low consumer prices and low world market prices

Subject:

| 1. | In the Commission's opinion, has the existence of the Common Agricultural Policy in recent decades and the financial assistance from Community funds which it provides helped to enable small and medium-sized farmers, in both the arable and livestock sectors, despite relatively low consumer prices for their products and falling prices on the world market, to remain able to earn an acceptable income and thus to ensure the continuity of production? |
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1.

In the Commission's opinion, has the existence of the Common Agricultural Policy in recent decades and the financial assistance from Community funds which it provides helped to enable small and medium-sized farmers, in both the arable and livestock sectors, despite relatively low consumer prices for their products and falling prices on the world market, to remain able to earn an acceptable income and thus to ensure the continuity of production?

| 2. | In the light of the recent study by the development organisation Oxfam, can the Commission confirm that the funding currently provided under the CAP is increasingly failing to guarantee the survival of small farmers and that the bulk of it goes to large farmers and large land-owners? |
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2.

In the light of the recent study by the development organisation Oxfam, can the Commission confirm that the funding currently provided under the CAP is increasingly failing to guarantee the survival of small farmers and that the bulk of it goes to large farmers and large land-owners?

| 3. | When did the change referred to at 2 occur? Did it happen after the accession of new Member States with bigger disparities in land areas owned than existed in the six founder Member States of the European Communities? |
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3.

When did the change referred to at 2 occur? Did it happen after the accession of new Member States with bigger disparities in land areas owned than existed in the six founder Member States of the European Communities?

| 4. | To what extent was the existing financing method responsible for the fact that, after previous increases in scale, the number of farms in the present 15 Member States declined by a further 15,7 % between 1995 and 2002? Why was this method of financing unable to prevent the development concerned? |
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4.

To what extent was the existing financing method responsible for the fact that, after previous increases in scale, the number of farms in the present 15 Member States declined by a further 15,7 % between 1995 and 2002? Why was this method of financing unable to prevent the development concerned?

Supplementary answer given by Mr Fischler on behalf of the Commission

(19 April 2004)

(19 April 2004)

| 1. | Over recent decades, the instruments of the common agricultural policy have progressively evolved away from supporting products by maintaining high internal prices and providing major protection at the border.
  With the 1992 reform, those prices were progressively reduced and direct aid to producers introduced to compensate farmers' income losses.
  The direct payments were proportional to livestock reared and areas cultivated. They were therefore indirectly linked to production.
  This latter component was recently radically altered by the reform adopted in June 2003 with the introduction of direct payment decoupling. Income support is now independent of the farm's production volume.
  At the same time, a structural rural development policy has been progressively devised to support the process of modernising European agriculture, to pay for farmers' non-commercial — environmental — activities and to support the income of farms located in areas with a natural handicap. Throughout this process the Commission has been attentive to the situation of small and medium-sized farms, which form an important part of Europe's rural fabric. The Commission can affirm that the evolution in types of support has helped to maintain the income of numerous small and medium-sized farms. |
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1.

Over recent decades, the instruments of the common agricultural policy have progressively evolved away from supporting products by maintaining high internal prices and providing major protection at the border.

With the 1992 reform, those prices were progressively reduced and direct aid to producers introduced to compensate farmers' income losses.

The direct payments were proportional to livestock reared and areas cultivated. They were therefore indirectly linked to production.

This latter component was recently radically altered by the reform adopted in June 2003 with the introduction of direct payment decoupling. Income support is now independent of the farm's production volume.

At the same time, a structural rural development policy has been progressively devised to support the process of modernising European agriculture, to pay for farmers' non-commercial — environmental — activities and to support the income of farms located in areas with a natural handicap. Throughout this process the Commission has been attentive to the situation of small and medium-sized farms, which form an important part of Europe's rural fabric. The Commission can affirm that the evolution in types of support has helped to maintain the income of numerous small and medium-sized farms.

| 2. | As stated above, CAP support was originally linked to the quantities produced and then to the areas cultivated and livestock kept. For structural reasons which preceded the CAP, the large structures present in some Member States therefore received a major share of the support. Since the 1992 reform there has been a slight redistribution of support in favour of small and medium-sized farms, as can be seen from the figures published by the Commission at Parliament's request (1). This evolution has nevertheless been limited by the fact that only two Member States have introduced the modulation mechanism. This mechanism, which provides for a levy on funding intended for direct aid in order to transfer it for the benefit of rural development measures, has so far been optional. Under the 2003 reform, the Commission's proposal that modulation should be made compulsory was adopted by the Council. The transfert will be 3 % from 2005, rising progressively to 5 % from 2007. However, the mechanism will not entail any reduction in direct aid for farms receiving less than EUR 5 000/year. |
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2.

As stated above, CAP support was originally linked to the quantities produced and then to the areas cultivated and livestock kept. For structural reasons which preceded the CAP, the large structures present in some Member States therefore received a major share of the support. Since the 1992 reform there has been a slight redistribution of support in favour of small and medium-sized farms, as can be seen from the figures published by the Commission at Parliament's request (1). This evolution has nevertheless been limited by the fact that only two Member States have introduced the modulation mechanism. This mechanism, which provides for a levy on funding intended for direct aid in order to transfer it for the benefit of rural development measures, has so far been optional. Under the 2003 reform, the Commission's proposal that modulation should be made compulsory was adopted by the Council. The transfert will be 3 % from 2005, rising progressively to 5 % from 2007. However, the mechanism will not entail any reduction in direct aid for farms receiving less than EUR 5 000/year.

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| 3. | There were farm size disparities and large structures in the original six Member States (for example, in Italy), then in some Member States which joined the Union at the time of the successive enlargements (the eastern German Länder, Spain, the United Kingdom), just as there are in some new Member States which are emerging from a centrally-managed economic system. That is also why a structural policy was introduced from the early 1970s to support the process of restructuring and modernising farms. |
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3.

There were farm size disparities and large structures in the original six Member States (for example, in Italy), then in some Member States which joined the Union at the time of the successive enlargements (the eastern German Länder, Spain, the United Kingdom), just as there are in some new Member States which are emerging from a centrally-managed economic system. That is also why a structural policy was introduced from the early 1970s to support the process of restructuring and modernising farms.

| 4. | The reduction in the number of farms in the EU is the result of numerous factors, including: increased productivity in agriculture and the related increase in farm size, the urbanisation process and employment market changes in the advanced economies.
  It may also be noted that the rate of reduction in farm numbers and in agricultural employment is largely independent of the common agricultural policy's evolution. The CAP's objective is to develop sustainable agriculture — i.e. agriculture which is competitive, economically viable and environmentally compatible — by improving production structures at a socially acceptable cost. |
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4.

The reduction in the number of farms in the EU is the result of numerous factors, including: increased productivity in agriculture and the related increase in farm size, the urbanisation process and employment market changes in the advanced economies.

It may also be noted that the rate of reduction in farm numbers and in agricultural employment is largely independent of the common agricultural policy's evolution. The CAP's objective is to develop sustainable agriculture — i.e. agriculture which is competitive, economically viable and environmentally compatible — by improving production structures at a socially acceptable cost.

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(1)  http://europa.eu.int/rapid/start/cgi/guesten.ksh?p_action.gettxt=gt&doc=MEMO/02/198|0|RAPID&lg=EN&display=

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