EN Official Journal of the European Union C 318/66

Opinion of the European Economic and Social Committee on ‘The future of the Common Agricultural Policy after 2013’ (Additional opinion)

2009/C 318/12

Rapporteur: Mr KIENLE

On 24 February 2009, the European Economic and Social Committee, acting under Rule 29A of the implementing provisions of the Rules of Procedure, decided to draw up an additional opinion on:

‘The future of the Common Agricultural Policy after 2013’

The Section for Agriculture, Rural Development and the Environment, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 2 September 2009. The rapporteur was Mr KIENLE.

At its 456th plenary session, held on 30 September and 1 October 2009 (meeting of 30 September 2009), the European Economic and Social Committee adopted the following opinion by 167 votes to 3 with 13 abstentions.

1. The role of the EESC in the CAP's future development

1.1 The EESC has a long tradition of dealing with future reform of the Common Agricultural Policy (CAP) in depth and good time, whenever possible before the European Commission communications or legislative texts. With the 2007 exploratory opinion on the Health Check of the CAP and its future after 2013 (1) requested by the European Commission, the EESC was actually the first European institution to offer a broader reflection on the future of the Common Agricultural Policy.

1.2 Under both the French presidency in the second half of 2008 and the Czech presidency in the first half of 2009, efforts were made to press ahead with the debate on the post-2013 CAP, which have not so far produced any results. It is precisely because the Agricultural Council has yet to specify any content or arrangements that the EESC now believes it is absolutely vital to draw up an ‘additional opinion’ on current key developments without delay. This could act as a bridge between the 2008 health check and the debate on the future of the post-2013 CAP. In addition, the EESC believes that a further, in-depth opinion should focus on the full range of issues relating to the CAP.

1.3 Since the decision of the Agriculture Ministers’ Council on the CAP ‘health check’ in November 2008 the agricultural markets have seen some dramatic falls. The falling price of milk has been especially dramatic. The EESC believes that the safety nets, including the current rules on quantity, should be reviewed once again to see whether they are suited to mitigating a situation of this kind.

2. Basis for the CAP's future development after 2013

2.1 With the 2005 CAP reform, agricultural direct payments were largely decoupled from production and in some Member States these payments were redistributed regionally either in part or in full. In addition to the direct payments, agricultural development measures (EAFRD) form an important second pillar of the EU agricultural policy. By using these measures and the direct payments, the aim is to make agriculture sustainable from a competitive, social and environmental point of view, within the framework of ‘multi-functionality’.

2.2 For decades, the ability to ensure a secure and relatively low-cost supply of food for European consumers seemed a matter of fact and unproblematic. However, a global trend towards higher prices for both agricultural and non-agricultural raw materials (e.g. crude oil) is predicted in the coming decades. At the same time, rapidly increasing price volatility is on the cards.

2.3 The extreme fluctuations in producer prices for important agricultural products over the past two years – most recently the extremely low prices, e.g. for milk and cereals - should be seen as a wake-up call. In future, the social dimension of a secure food supply - especially for people on low incomes - will once more gain in importance, not least because the agricultural markets generally are particularly susceptible to price fluctuations. These can have negative repercussions on the stability of supplies and farms. Furthermore, there are clearly considerable imbalances in the food chain. The concentration of retail trade has given rise to strong economic pressure on primary agricultural production and the processing stages. A debate has emerged about whether agricultural production receives a fair share of the profit margins in the food chain.

2.4 The European Union and the Member States are pursuing ambitious goals in food safety and environmental, climate and animal protection. This is an important part of the European agricultural model. With the 2003/2005 CAP reform, it was decided to link the decoupled single farm payment to maintaining basic standards and ‘good agricultural and environmental condition’ (cross-compliance). In addition to this ‘baseline’, agro-environmental measures are also possible. However, since 2007 the incentive component of these measures has been dropped. The development policy architecture for attaining environmental policy and social goals in agriculture is to be further developed post 2013. The EESC has stressed its basic belief on several occasions that gearing European agriculture purely towards world market conditions or world market prices would be the wrong approach.

2.5 In order to achieve the outlined goals and tasks, adequate funding will be required for 2014-2020. Spending on the Common Agricultural Policy as a proportion of the EU's Gross Domestic Product (GDP) currently amounts to less than 0.4 %. A long-term task will be to inform citizens about which of the important contributions to society are supported through the CAP budget. Agricultural spending as a proportion of the overall EU budget is set to fall from around 50 to 33 % in the 1993-2013 period.

3. Anticipated schedule for discussions and decisions

3.1 Initial debates on the EU agricultural policy after 2013 have already or are due to take place in the Council under the French and Czech Council presidencies.

3.2 On this basis, it is likely that the European Commission will table some initial observations (communication) for political discussion on the post-2013 agricultural policy in autumn 2010, once it has been newly appointed. The outstanding financial review must also be taken into consideration here. Legislative proposals on the post-2013 CAP are likely to be presented in mid-2011. The Parliament, the Council and the Commission could then decide on them in the first half of 2012.

3.3 Under the Lisbon Treaty, the European Parliament will for the first time acquire co-decision rights in the Common Agricultural Policy. Strengthening the Parliament in this way will have a fundamental and positive impact on the debate about the future of the CAP after 2013.

4. Pointers for the debate on the CAP's further development

4.1 The EESC believes that the debate on the CAP's development beyond 2013 must continue to be based on the model of multifunctional agricultural geared towards the market and at the same time serving the interests of society. The CAP reforms since 1992 have sought to reconcile the conflicting goals of international market opening (WTO Doha round) on the one hand and high social standards (preventive consumer protection, environmental and animal protection) on the other. A continuation of this agricultural policy beyond 2013 will mean that adequate CAP funding will still be necessary.

4.2 The instrument of direct payments for farmers will continue to play a central part within the CAP. The EESC believes that the role of the CAP will have to change if it is to continue. The task of compensating for falling institutional prices will be scaled down. At the same time, the CAP will acquire new responsibilities, namely safeguarding contributions to society and public goods. In view of the current crisis and the anticipated price fluctuations on agricultural markets, the tasks of stabilisation and ensuring secure supplies are becoming increasingly important. In this way, the CAP will also benefit consumers. Some aspects of climate protection must also be given greater consideration.

4.3 The current combination of the ‘first and second pillars’ under the CAP should be maintained in principle, but they should be coordinated more effectively. There must be renewed efforts to implement the CAP in Member States more uniformly. Above all, the rationale and objectives of support measures must be spelt out more clearly.

4.4 The EESC expects the historical differences in the size of the direct payments from Member States to farmers to be levelled out after 2013. Objective benchmarks must be set here, which take account of the different structural, natural and agro-climatic conditions. Furthermore, consideration should be given to the major differences between regions in terms of the financial resources for rural development. The EESC believes that any further divergence in the approaches pursued by Member States to implement the Common Agricultural Policy should be prevented.

4.5 In view of the sharp fall in prices in some agricultural markets, the EESC expects effective steps to be taken to ensure that agricultural production has a fair share of the value added chain. Furthermore, the EESC expects some conclusions on how safety nets for agricultural markets are to be adapted in light of experiences from the global economic crisis.

4.6 The EESC believes that the process of adapting farms or rather the agricultural sector to market and competition trends must be further supported through measures such as investment to improve quality, food safety and to promote careful use of resources. However, it seems even more important to strengthen the market position of farmers and producer organisations. The future CAP must include tools enabling Member States to finance these priorities with sufficient flexibility.

4.7 The EESC is of the view that wherever there are barriers to the competitiveness of farms, for example in disadvantaged regions and upland areas, then reasonable compensation should be provided in order to ensure that these areas are used for agricultural purposes in future. In the case of dairy cattle farming (practised in some 60 % of the EU's disadvantaged regions and around 25 % of its upland areas) it is clear that state measures to support prices and other regulation of agricultural markets can give rise to particularly strong economic pressures in disadvantaged areas.

4.8 Rural development measures should take greater account of demographic problems (e.g. infrastructure and availability of skilled workers). Special adjustment measures are required when entire branches of production (e.g. sugar, milk, tobacco) in certain traditional producer regions are faced with economic decline. Social aspects such as job security should also be taken into consideration.

4.9 Once the incentive components are officially removed, there is a risk that agri-environmental measures will become a rudderless ship. In order to ensure that farmers maintain their preference for these measures in future, the EESC calls for other action to be taken, beyond the reimbursement of costs incurred, so that farmers are actually rewarded for their environmental contributions. Such a reward should also be developed for the active contributions of farmers to climate and animal protection.

4.10 Cross-compliance is a general obligation linked to the receipt of area-related payments, introduced in 2000 initially on a voluntary basis and made compulsory from 2005 onwards. On the one hand, it has been criticised by the European Court of Auditors for being implemented too superficially. On the other hand, farmers and local supervisory authorities have criticised the system for being too bureaucratic. The EESC recommends that its further development be dealt with cautiously. Any proposal to amend the catalogue of criteria for cross-compliance must be carefully examined to see whether it actually leads to an improvement.

Brussels, 30 September 2009. The President of the European Economic and Social Committee Mario SEPI

(1) OJ C 44, 16.2.2008, p. 60.