# CE2004088EN.01019101.xml

| 8.4.2004 | EN | Official Journal of the European Union | CE 88/191 |
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8.4.2004

EN

Official Journal of the European Union

CE 88/191

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(2004/C 88 E/0197)

WRITTEN QUESTION E-0545/04

by Erik Meijer (GUE/NGL) to the Commission

(26 February 2004)

Subject:   CAP: consequences of the distribution of the reduction in income in agriculture and financing of techniques which promote animal welfare or are environmentally sound for use on small farms

Subject:

| 1. | Is the Commission aware of the report commissioned by the Netherlands Minister of Agriculture, Nature Management and Fisheries and submitted on 1 April 2003 by the Agricultural Economics Research Institute (LEI) which analyses the impact of the Commission's reform proposals on developments in agriculture and particularly on farm incomes, and which indicates in particular that in the Netherlands the areas under cereals and fodder maize will decline substantially while cultivation of potatoes and vegetables will increase, the area of pastureland will increase by 5 % and family incomes will fall by 28,4 % from their present level of approximately EUR 30 000, the largest fall being 49 % in dairy farming? |
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1.

Is the Commission aware of the report commissioned by the Netherlands Minister of Agriculture, Nature Management and Fisheries and submitted on 1 April 2003 by the Agricultural Economics Research Institute (LEI) which analyses the impact of the Commission's reform proposals on developments in agriculture and particularly on farm incomes, and which indicates in particular that in the Netherlands the areas under cereals and fodder maize will decline substantially while cultivation of potatoes and vegetables will increase, the area of pastureland will increase by 5 % and family incomes will fall by 28,4 % from their present level of approximately EUR 30 000, the largest fall being 49 % in dairy farming?

| 2. | How is this decline in income likely to work out for the EU as a whole in the categories < 25 ha, 25-50 ha, 50-75 ha, 75-100 ha, 100-500 ha, 500-1 000 ha and 1 000 ha, broken down in percentages by type of farm in arable farming and livestock farming? |
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2.

How is this decline in income likely to work out for the EU as a whole in the categories < 25 ha, 25-50 ha, 50-75 ha, 75-100 ha, 100-500 ha, 500-1 000 ha and 1 000 ha, broken down in percentages by type of farm in arable farming and livestock farming?

| 3. | In the reform plans, the Commission rightly intends to emphasise farming which promotes animal welfare and is environmentally sound, as an additional condition for payment of subsidies. How will the Commission ensure that this emphasis does not result in the most subsidies going to large farms which have greater resources by means of which to apply new and expensive techniques, while smaller farms which have already opted to adopt organic cultivation methods unaided are placed at a disadvantage? |
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3.

In the reform plans, the Commission rightly intends to emphasise farming which promotes animal welfare and is environmentally sound, as an additional condition for payment of subsidies. How will the Commission ensure that this emphasis does not result in the most subsidies going to large farms which have greater resources by means of which to apply new and expensive techniques, while smaller farms which have already opted to adopt organic cultivation methods unaided are placed at a disadvantage?

| 4. | Small farms in the new Member States which currently operate without new environmentally friendly techniques are particularly likely to find themselves at a disadvantage as regards the share they receive of grants to help finance desirable technical innovations. What will the Commission do to promote [‘prevent’? — translator's note] this? |
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4.

Small farms in the new Member States which currently operate without new environmentally friendly techniques are particularly likely to find themselves at a disadvantage as regards the share they receive of grants to help finance desirable technical innovations. What will the Commission do to promote [‘prevent’? — translator's note] this?

| 5. | In view of the anticipated unintended effects, will the Commission amend elements of its reform plans? |
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5.

In view of the anticipated unintended effects, will the Commission amend elements of its reform plans?

Supplementary answer given by Mr Fischler on behalf of the Commission

(28 April 2004)

(28 April 2004)

| 1. | The Commission is aware of the study prepared by the Agricultural Economics Research Institute LEI. The study refers to the Commission's proposal for Common Agricultural Policy (CAP) reform published in January 2003. Meanwhile, the LEI has published a new study assessing the impact of CAP reform and the World Trade Organisation (WTO) Doha Round (report No 6.04.03, February 2004). The results of this latter study from LEI are similar to the majority of independent scientific studies analysing the impact of the CAP reform. |
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1.

The Commission is aware of the study prepared by the Agricultural Economics Research Institute LEI. The study refers to the Commission's proposal for Common Agricultural Policy (CAP) reform published in January 2003. Meanwhile, the LEI has published a new study assessing the impact of CAP reform and the World Trade Organisation (WTO) Doha Round (report No 6.04.03, February 2004). The results of this latter study from LEI are similar to the majority of independent scientific studies analysing the impact of the CAP reform.

| 2. | The Commission has estimated, as have a number of independent studies, that the income effect of the 2003 CAP Reform is largely neutral. While for EU-15 the quantitative analysis projects a slight decline of income of 0,5 %, for EU-25 income development under the CAP reform is projected to remain virtually neutral (+0,1 %).
  The Commission has not published detailed analyses about the income effects for different farm size categories because income effects will strongly depend on the national implementation of the Single Farm Payment scheme. In Member States, which intend to implement regionalised area payments, redistributions of income from dairy and beef farmers, currently receiving high levels of direct payments per hectare, to arable crop farmers, may take place. Implementing the Single Farm Payment on an individual basis does not entail redistributions of income and income effects would remain neutral, along the lines estimated by the Commission. |
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2.

The Commission has estimated, as have a number of independent studies, that the income effect of the 2003 CAP Reform is largely neutral. While for EU-15 the quantitative analysis projects a slight decline of income of 0,5 %, for EU-25 income development under the CAP reform is projected to remain virtually neutral (+0,1 %).

The Commission has not published detailed analyses about the income effects for different farm size categories because income effects will strongly depend on the national implementation of the Single Farm Payment scheme. In Member States, which intend to implement regionalised area payments, redistributions of income from dairy and beef farmers, currently receiving high levels of direct payments per hectare, to arable crop farmers, may take place. Implementing the Single Farm Payment on an individual basis does not entail redistributions of income and income effects would remain neutral, along the lines estimated by the Commission.

| 3. | The Single Farm Payment is based on a historical reference and, as such, does not alter the distribution of support to farmers. Modulation, however, will have a positive redistribution effect for smaller farms due to the franchise, as outlined in the reply to the Honourable Member's Written Question E-0544/04 (1). Cross-compliance should not be seen as an additional condition for the direct payments but as a penalty system for any farmer not respecting the compulsory standards found in Annex III of Council Regulation (EC) No 1782/2003 (2). In order to ease compliance with these compulsory standards, a new measure, providing support for all farmers under rural development, was set up. |
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3.

The Single Farm Payment is based on a historical reference and, as such, does not alter the distribution of support to farmers. Modulation, however, will have a positive redistribution effect for smaller farms due to the franchise, as outlined in the reply to the Honourable Member's Written Question E-0544/04 (1). Cross-compliance should not be seen as an additional condition for the direct payments but as a penalty system for any farmer not respecting the compulsory standards found in Annex III of Council Regulation (EC) No 1782/2003 (2). In order to ease compliance with these compulsory standards, a new measure, providing support for all farmers under rural development, was set up.

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| 4. | Upon Enlargement, the agricultural area in the EU will increase by about 30 %, while production will only increase globally by 10 % and total agricultural income by 6 %, as compared to the EU-15. This suggests a lower intensity of production in the new Member States. However, in order to assist farmers in the new Member States in complying with compulsory EU standards, specific measures were foreseen to include investments in the ‘Meeting Standards’ measure. |
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4.

Upon Enlargement, the agricultural area in the EU will increase by about 30 %, while production will only increase globally by 10 % and total agricultural income by 6 %, as compared to the EU-15. This suggests a lower intensity of production in the new Member States. However, in order to assist farmers in the new Member States in complying with compulsory EU standards, specific measures were foreseen to include investments in the ‘Meeting Standards’ measure.

| 5. | The possible impacts of the 2003 CAP Reform on incomes, small farms and farmers in the new Member States were deeply debated during the lead-up to the adoption of the Reform package and the counter measures described above were introduced into the final agreement. Therefore, at this stage, the Commission has no intention to revise those recently agreed measures. Nevertheless, the Commission is aware that the forthcoming debate about the new generation of rural development programmes does offer a further opportunity to reflect upon and, if necessary, reorganise the support offered to these measures. |
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5.

The possible impacts of the 2003 CAP Reform on incomes, small farms and farmers in the new Member States were deeply debated during the lead-up to the adoption of the Reform package and the counter measures described above were introduced into the final agreement. Therefore, at this stage, the Commission has no intention to revise those recently agreed measures. Nevertheless, the Commission is aware that the forthcoming debate about the new generation of rural development programmes does offer a further opportunity to reflect upon and, if necessary, reorganise the support offered to these measures.

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(1)  OJ C 84 E, 3.4.2004, p. 620.

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(2)  Council Regulation (EC) No 1782/2003 of 29 September 2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers, OJ L 270, 21.10.2003.

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