Opinion of the Economic and Social Committee on 'The problems of agriculture in the EU's most remote regions and islands` (97/C 30/11)

On 25 October 1995 the Economic and Social Committee, acting under the third paragraph of Rule 23 of its Rules of Procedure, decided to draw up an opinion on 'The problems of agriculture in the EU's most remote regions and islands`.

The Section for Agriculture and Fisheries, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 5 September 1996. The Rapporteur was Mr Quevedo Rojo.

At its 338th Plenary Session (meeting of 25 September 1996) the Economic and Social Committee adopted the following Own-initiative Opinion by 97 votes to two with three abstentions.

1. Introduction

1.1. The first tangible evidence of the Community's approach to the most remote regions was the approval and application of the Poseidom programme for the French overseas departments; on 22 December 1989 the Council adopted a decision establishing a Programme of Options Specific to the Remote and Insular Nature of the French Overseas Departments (Poseidom), followed in 1991 by Poseican (for the Canary Islands) and Poseima (for Madeira and the Azores).

1.2. This desire to lay down appropriate measures for the development of the most remote regions was formalized in the signing, on 7 February 1992, of the Treaty of European Union at Maastricht. The Treaty includes a DECLARATION (No 26) on the outermost regions of the Community (Azores, Madeira, Canary Islands and French overseas departments) in which the Conference acknowledges that these regions suffer from major structural backwardness compounded by several phenomena (remoteness from Europe, geographical and economic isolation, small scale of their productive sectors and markets, difficult topography and climate, economic dependence on a few products), the permanence and combination of which make it necessary to adopt specific provisions for these regions ().

1.3. The Poseis are based on the twofold principle that these regions are part of the Union - which makes them different from the overseas territories of some Member States - and recognition of their permanent handicaps and specific features which justify the adjustment of the 'acquis communautaire` to their particular cases. Thus the programmes constitute an array of multi-sectoral actions which include regulatory measures and financial agreements, especially in those fields (such as transport, taxation, R& D, fisheries, customs policy, protection of the environment) where the structural fragility of these regions is most clearly evident, given that structural fund assistance is not in itself sufficient to ensure their full economic and social development.

1.4. In the most remote regions agriculture is, over and above its relative importance in regional GDP (at all events above the Community average), a key sector for the economy (with considerable indirect impact on transport and other allied activities), social and labour relations stability, spatial planning, conservation of the natural and cultural heritage, and, for strategic reasons, security of supply. It is not surprising, therefore, that a high proportion of the measures adopted in the programmes concern farming.

1.5. On 30 October 1995 the Council adopted Regulation (EC) 2598/95 amending the Poseidom programme with regard to certain agricultural products. Amendments to the agricultural aspects of Poseima and Poseican are in the study and proposal stage at the Commission.

1.6. Furthermore, when the countries in question joined the Union, the Treaties allowed for the special conditions under which farming operates in its northernmost regions (extreme climate, small markets, low population density and considerable remoteness); it is vital for social stability and conservation of the natural environment in these regions to maintain a vigorous farming sector which can contribute to their development.

1.7. This is the background to the decision of the ESC's plenary assembly to instruct the Section for Agriculture and Fisheries to draw up this own-initiative opinion which deals not only with the most remote regions, but also with the Arctic regions of the new EU Member States. It was preceded by a visit to Martinique, Guiana and northern Sweden by a delegation from the section study group, which would like to thank the authorities responsible for this visit; it enabled members to gather information and assess the situation on the spot, which was invaluable for their work.

2. General comments

2.1. Although one region differs from another in specific respects, agriculture in the most remote regions has two features in common: duality and dependence. Modern, 'export-oriented`, farming co-exists with traditional, quasi-subsistence farming and there is a high degree of dependence on external markets, both for supplies of inputs for the local market and as an outlet for local produce. The trade balance clearly reveals exports of one or two 'specialist` products and imports of a wide range of farm products for internal consumption.

2.2. At all events, rural development is facing a series of permanent common problems stemming primarily from the geographical and economic isolation of these regions and their remoteness from the rest of the Community, exacerbated by the other natural handicaps already mentioned. These problems include:

2.2.1. the cost of transport, distribution and collection, for both the import of foodstuffs and inputs and the marketing and export of final products;

2.2.2. limited physical resources (e.g. water, land, energy, and other inputs) and human resources (technology and specialized staff);

2.2.3. lack of economies of scale, with small and frequently fragmented local markets (double insularity), which further aggravates the problems referred to in point 2.2.1 (formation of strategic stocks);

2.2.4. excessive dependence on a 'monoculture`, leaving them highly vulnerable to technological or market changes, and the lack of a 'hinterland` which could help offset the ups-and-downs of the economy;

2.2.5. the extreme fragility of an environment highly sensitive to natural catastrophes and degradation (forest fires, waste disposal, coastal pollution, etc.);

2.2.6. farms - on which the role of women is crucial - are generally small and family-run, with considerable impact on part-time employment; extensive farming faces major obstacles (excessive fragmentation of land and mechanization problems);

2.2.7. lacking a substantial industrial base, economic development gravitates towards the tourist sector; this exacerbates the fragility of the natural environment and places agriculture in competition - where it is at a disadvantage - for the best land, water and labour. The relocation of the population towards the coastal zones creates problems of erosion and desertification inland;

2.2.8. natural constraints and difficulties in obtaining capital goods and adequate technology result in high production costs. Compared with their geographical neighbours, the application of EU-level wages, social protection and environmental measures leads to additional costs which are difficult to surmount;

2.2.9. their products are more expensive than those from mainland Europe and also have great difficulty in competing with imports on local markets because these regions are scattered, fragmented and lack adequate structures for post-harvest treatment and marketing. The increasing number of hypermarkets and major distribution networks does not exactly help to improve this situation;

2.2.10. in various cases the proximity of ACP or developing countries with which the EU has preferential arrangements means fierce competition (social dumping) without any reciprocal benefits. This competition occurs on both the European and their own local markets;

2.2.11. the local processing industry also suffers from similar obstacles to development and does not have an adequate customer-base, which gives it only very limited scope to achieve added value;

2.2.12. the difficulties are similar for exports: scattered and fragmented supply-side structure, shortcomings in marketing systems and infrastructure, difficulties in gaining access to distribution centres at the place of destination and in reacting quickly enough to changes in the market, etc.

2.3. In the arctic regions, farming also faces permanent structural problems: production is highly specialized, with specific costs, and each product would require different treatment. In all cases, for social as well as cultural and environmental reasons, the Committee supports the promotion of actions which open up opportunities for safeguarding and creating jobs in the agro-food sector in all these regions.

2.4. Consequently it is clear that these problems - which are leading to an exodus from the land - could be overcome with continued structural fund aid and recognition of the need for relevant EU acts to include specific measures to help these regions, strengthening and stepping up the measures already taken under the Posei programmes.

3. Specific comments

3.1. The objective should be to maintain agricultural activity and a rural population with living conditions comparable to those of farmers in the rest of the EU, by supporting traditional production and promoting diversification and the search for new openings.

3.2. The Committee would like to highlight the important part played by the agro-food sector in combating unemployment in these regions, where there is a high level of concealed unemployment. For some of their inhabitants, and perhaps more especially for women, work in the agri-food sector represents their sole independent source of income.

3.3. The fisheries sector is also very important for these regions and faces similar problems to those outlined above:

- non-industrial fishing, which suffers from the drawbacks of small and overexploited coastal shelves;

- high-seas fishing, which has many possibilities (migratory species especially) but for which appropriate vessels and techniques are lacking and whose expansion would clash with international agreements and policies aimed at reducing the fishing effort;

- at all events, an ageing working population with inadequate technical training, a lack of infrastructure on land and shortcomings in marketing.

3.3.1. Encouragement should be given to research into indigenous resources, especially the development of aquaculture, a policy of adjusting the fishing effort to the resources of each region, and to maintaining the marketing aid and extending it to other species (including those produced by marine fish farming). Fishing for sport could also play an important role in any strategy for developing tourism in these regions.

3.4. In short, the struggle against unemployment in these regions must be based on comprehensive development programmes which pursue the search for alternative employment and the preservation and modernization of traditional sectors.

3.5. Boosting production for the local market should help to raise the present low level of self-sufficiency. For this it is necessary to improve the image of regional products, starting with research and a transfer of technology which, when it exists, is geared almost exclusively to export products. Improving the quality of products and their market presentation also requires adequate infrastructure (slaughterhouses, dairies, standardization and packaging facilities, etc.) which in some cases either do not exist or are inadequate. Because of the special production conditions, in many cases this infrastructure cannot benefit from economies of scale; small units should be preferred to large plants which would be underused. Incentives for the creation of designations of origin, craft quality designations and biological products would be a very valuable measure.

3.6. The conflicts of interest between producers and importers-distributors should be suitably resolved by encouraging inter-trade agreements; producers should agree to supply products regularly in the required quantities and qualities and the other economic operators (which would include, in some cases, the agro-processors) to give preference to the marketing of local products. Economic support for this type of agreement would have a far-reaching impact.

3.7. The development of tourism - in the form of high-quality, environmentally friendly tourism - should not be an obstacle but an additional support, not only through the increase in internal demand (if the aforementioned conditions are met, i.e. presentation of quality products with an attractive regional flavour), but also through the boost it can give to craft industries and related activities. Support for rural tourism should be a priority line of action.

3.8. Export products require aid for transport to offset the additional costs occasioned by the distance from the market of destination. They also come up against the increasing liberalization of the Community market within the framework of both the WTO and the international agreements with developing countries. These agreements, which play down the principle of Community preference, lack adequate back-up measures to offset the disadvantages of the most remote regions which suffer the negative effects of such agreements without benefiting from their positive aspects.

3.9. In this connection one cannot overlook the continual attacks on the common organization of the market in bananas, an important product for most of the outlying regions. The EU should do its utmost to prevent saturation of the Community market by an excessive increase in the 'dollar` banana quota and should maintain the link between the marketing of Community and ACP bananas and 'dollar` bananas by means of import certificates. The EU should also call for a requirement to the effect that production must comply with equivalent environmental and social conditions.

3.10. At all events, farmers in the most remote regions should endeavour to modernize their farms and improve their productivity. For this they will need better infrastructure and, among other things:

3.10.1. research and trials focused on their specific problems and on making the most of endogenous resources (it is not always useful or possible to 'import` solutions);

3.10.2. opportunities to obtain supplies of inputs at both a reasonable price (aid for transport) and of suitable quality (selected plant varieties and breeding animals well adapted to local conditions);

3.10.3. to improve the structure of the sector by strengthening producers' organizations and cooperatives; measures should range over the whole spectrum from the marketing of inputs and produce to their participation in research, trials, vocational training, aid management, etc.

3.11. Some of these measures are covered by the Poseis, others are the responsibility of the Member States or regional authorities. A good proportion of them, however, require derogations from, or ad hoc application of, the CAP and other Community policies, e.g. trade policy and taxation; it would also be necessary to ensure that these regions had access to horizontal Community programmes (especially those concerning the information society, the environment, vocational training, and support for R& TD) on terms appropriate to their specific characteristics.

3.12. For its part, the EU has only to promote the competitiveness of the most remote regions by applying the principle of equal opportunities and ensuring non-discriminatory living and working conditions for their farmers, in line with the Court of Justice ruling against discrimination 'by treating different situations in an identical way`.

4. Conclusions

4.1. The Community has responded positively, through the Posei programmes, to the problems of agriculture in the most remote regions, although there is still room for improvement.

4.2. The programmes include production assistance, which in the case of some products is not enough to make them competitive, and marketing assistance, which needs to be extended to the local market.

4.3. Some restrictions on increased production and subsidies for specific infrastructure have been waived; these waivers should be maintained for as long as inadequate levels of self-sufficiency persist.

4.4. A major part of the programmes comprises a specific system for supplying the local market's needs in certain essential products for direct consumption or for the agro-food industry, at international prices, by allowing them to be imported from third countries without paying duty or from the Community with a subsidy equivalent to that benefit. The gradual alignment of Community and world prices is tending to make this measure inoperative; it would be necessary to include a safeguard mechanism comprising a minimum level of subsidy for those cases where recourse to the international market was not sufficient compensation for the supply difficulties caused by geographical remoteness.

4.5. The special supply arrangements can give rise to conflicts between local products and subsidized imports. The Committee recommends that, when the quantities are assessed annually, account be taken of local production and every effort made to limit subsidies to products for direct consumption which cannot reasonably be produced locally and to products used as inputs in the farming and agro-industrial sector. Similarly, every effort should be made to obtain the maximum added value locally (bulk rather than wrapped products for instance). It should be ensured that the levels of subsidy granted to imported products for direct consumption, compared with those applied to the corresponding raw materials, do not discriminate against local production.

4.6. As the programmes have developed it has become clear that increased cooperation in the planning and implementation of some measures is needed between the administrations concerned (Community, national and regional), the economic and social bodies, and the beneficiaries; where this is lacking, the usefulness of the measures has been slight or zero. Inefficiency has also resulted from the slowness of the authorities in framing and applying some measures and this needs to be remedied.

4.7. The Committee notes that the Arctic regions of the new member states, in common with other remote regions and islands, are at a permanent disadvantage as regards production and marketing, with the result that their agriculture is less competitive. With this in mind, the Committee proposes that the CAP regulations and instruments - as well as R& D actions - be adapted to help the production of characteristic and special regional products (e.g. tropical essences and flowers, reindeer meat, etc.). In the case of the Arctic territories, the Commission would have to study, with the Member States concerned, the possibilities under their accession protocols of establishing a specific integrated programme for agriculture and related activities.

4.8. Finally, the most remote regions have justifiably high hopes for the outcome of the IGC which is expected to amend the EU Treaty. To enable these regions to face the challenges of the new world order and EU enlargement with confidence in the future, it is essential to strengthen their legal status by including an article which provides for derogations from or flexibility in Community law where this proves necessary and an appended protocol which spells out the scope of this article.

Brussels, 25 September 1996.

The President of the Economic and Social Committee

Carlos FERRER

() The European Council in Turin on 29 March 1996, which initiated the work of the Intergovernmental Conference, agreed to examine - among other issues - the status of the outermost regions. The objective for the Member States concerned would be to improve and consolidate the present legal base, changing from Declaration No 26 to the inclusion of an 'ad hoc` article in the new Treaty.