Opinion of the Economic and Social Committee on the 'Proposal for a Council Regulation (EC) establishing common rules for direct support schemes under the common agricultural policy` () (98/C 407/34)

On 4 June 1998, the Council decided to consult the Economic and Social Committee, under Articles 43 and 198 of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Agriculture and Fisheries, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 9 July 1998. The rapporteur was Mr Liverani.

At its 357th plenary session of 9 and 10 September 1998 (meeting of 9 September), the Economic and Social Committee adopted the following opinion by 66 votes to three, with three abstentions.

1. Introduction

1.1. The above-mentioned proposal is one of the draft regulations presented by the Commission to enact the CAP reform guidelines contained in the Commission Communication 'Agenda 2000`, which won the recent broad approval of the Committee. In its opinion, the Committee reiterated the considerable social, environmental and occupational implications of the CAP within Europe. It also reaffirmed that one of the CAP's most important aims was to improve the productivity and competitiveness of agriculture, while safeguarding jobs and stabilizing the Union's rural population ().

1.2. The Commission's highly innovative proposal envisages:

- the introduction of ceilings on the total amount of payments which would be granted to farmers under the support schemes ();

- modulation, by Member States, of the overall amount of aid according to the size of the farm labour force ();

- additional conditions to be met (cross compliance), also with regard to environmental measures ().

2. General comments

2.1. The proposal on modulation of aid is designed to stabilize employment in the agricultural sector at current levels and possibly increase it. According to the Commission, the introduction of a modulated ceiling is justified by the need to take into account the economies of scale that could be achieved on certain holdings.

2.1.1. As stated in the above-mentioned opinion, the Committee fully shares the aim of safeguarding the current level of employment in the agricultural sector. Action is needed to stem the flight from the land, especially in upland and disadvantaged regions where a human presence is necessary in order to protect the environment, preserve the land and maintain an income-producing agricultural economy.

2.2. As things stand, employment could be increased if an effective policy to develop 'non-food` and high quality production were implemented, together with a rural development policy which also focuses on soil conservation, afforestation and hydrogeological protection.

2.3. With regard to the employment aspect, the Committee considers it necessary to highlight the difficulties that could arise from the proposed implementing arrangements, since the application of the mechanism and the determination of the minimum number of workers per farm () is left to the discretion of the individual Member States. In addition, difficulties could arise from the different systems used in each country to regulate the labour market.

2.4. The Committee considers that a regulation thus formulated risks creating broadly divergent situations among Member States. Further difficulties will arise - even within the same country - when it comes to identifying the minimum labour force according to the various types of holding and their geographical position. There could also be difficulties in assessing the employment variables of other fields that are agriculture-related or typical of the agri-food sector, such as product marketing and processing. In addition, there could be disparities at Community level between holdings in those states that decide to apply the system and those that decide not to; clearly this would entail a risk of competition distortion, as well as difficulties for the EU in supervising such a system.

2.5. The establishment of modulated ceilings proposed by the Commission, although addressing the fairer redistribution of funds between the various agricultural operators and sectors as desired by the Committee, could have the opposite effect. It could lead to the division - or fictitious division - of holdings in order to keep them below the ceiling. This would hamper the land consolidation and the structural improvements that are necessary in view of the further liberalization of international trade in agricultural products and of growing global competitiveness.

2.6. The Committee agrees with the Commission's idea of making Community aid conditional upon respect for EU rules on environmental matters, since it is clear that the new CAP must be based on the conservation of the natural environment as well as on production of food which is as safe as possible for consumer health.

2.6.1. The Committee believes it would be a mistake to give individual Member States the right to decide on sanctions in the case of breach of the agri-environmental measures, since this could lead to differences in treatment from State to State and could result in some farmers being more heavily penalized than others, with consequent distortions of competition.

2.7. Another important question concerns the setting aside of the proceeds from the reduction of aid for the implementation of environmental measures.

2.7.1. It goes without saying that the entire environmental issue merits particular attention and that incentives and disincentives and special obligations can and must encourage farmers to meet environmental protection targets. It is just as clear that any such legislation must also ensure that third countries respect minimum environmental and health standards, if the competitiveness of European agriculture is not to be jeopardized.

2.7.2. The problem, therefore, should also be addressed at a more general level, namely during the WTO negotiations that are to begin in the year 2000.

3. Specific comments

3.1. With reference to Article 3 (cross compliance), the Committee points out that the Community aid policy should be consistent with environmental regulations based on Community laws and national and regional laws of Member States.

3.2. Turning to the implementation of Article 4 (modulation), the Committee feels that the Commission should require each Member State to communicate (according to the type of holding and region) the criteria it intends to apply in order to effectively stabilize employment in each country, with reference to the existing situation. This should be done by laying down comprehensible and easily enforceable rules which do not entail costly and complicated red tape for farmers.

3.3. With regard to Article 5 (common provisions), although the Committee agrees with the principle of maintaining the amounts currently granted to each Member State in CAP direct support schemes, it believes that, for the application of Articles 3 and 4, the extra Community support granted for agri-environmental and rural measures should be directed towards extra job-creating measures.

3.4. The Committee reiterates its doubts as to the effectiveness of establishing a ceiling (Article 6); it considers that the Commission should oblige Member States to adopt special regulations and monitoring procedures to ensure that holdings are not divided up artificially in an effort to evade the ceiling.

3.5. As regards Article 8 (restriction of payments), the Committee supports all efforts to prevent misuse of the system but believes that too much is left to the discretion of Member States. Moreover, the definition of those who are not entitled to support due to their exercising of predominantly non-agricultural activities, is somewhat vague.

4. Conclusions

4.1. As the Committee stated in its previous opinion (), it agrees with the general CAP reform guidelines contained in the Commission's Agenda 2000 and also with the need to lay down common regulations for direct support schemes for farmers.

4.2. The Committee cannot help but be concerned by the fact that some aspects of the Commission's draft regulation appear to show an unwelcome trend towards the renationalization of the CAP. This would jeopardize its basic objectives both with regard to income protection and the development of agri-environmental policies to protect the land and rural areas. It would also risk creating turmoil on the EU market, to the detriment of both farmers and consumers, and would jeopardize the job-protection policy.

4.3. The Committee therefore asks the Commission and the Council to carefully consider the practical consequences of the proposal, bearing in mind the specific comments contained in this opinion.

Brussels, 9 September 1998.

The President of the Economic and Social Committee

Tom JENKINS

() OJ C 170, 4.6.1998, p. 93.

() Opinion on the agricultural aspects of the Commission's Communication 'Agenda 2000` - OJ C 73, 9.3.1998, p. 71.

() Article 6 of the proposed regulation.

() Article 4 of the proposed regulation.

() Article 3 of the proposed regulation.

() The labour force is expressed in 'annual work units` (see Article 4(1) of the proposed regulation).

() Opinion on 'The agricultural aspects of the Commission's communication "Agenda 2000"` - OJ C 73, 9.3.1998, p. 71.