WRITTEN QUESTION E-0336/03

by Ilda Figueiredo (GUE/NGL) to the Commission

(10 February 2003)

Subject: Financial impact of the interim review of the common agricultural policy

On 21 January 2003, the Commission presented its legislative proposals on the interim provision of the CAP. The financial statement annexed to document COM(2002) 23 estimates the financial impact of the current proposals vis-à-vis the status quo. The results of these estimates indicate an approx. EUR 2 180 million reduction in agricultural spending in respect of the markets budget for the EU15, and approximately EUR 1 560 million for the EU25, between 2004 and 2013. The same financial statement estimates the impact of so-called digression and modulation, and the sums to be transferred to the rural development budget. The Commission estimates that these transfers will increase annually from EUR 228 million in 2007 to EUR 1 481 million in 2013, to be allocated by the Member States, following criteria which include the agricultural area, agricultural employment and economic prosperity levels.

Taking due account of the method employed, I should like to know:

- What the Commission estimates as being the financial impact on Portugal of the current proposals vis-à-vis the status quo by year (from 2004-2013) and by intervention type (total for market measures, total for direct subsidies and overall total)?

- What transfers for rural development the Commission estimates as a result of applying modulation and digression, by year (from 2006-2013) and by Member State (and particularly Portugal)? Given that the sums to be transferred will be co-financed by the Member States, what additional amount of national co-funding will be required, by year and by Member State, to guarantee the full uptake of the new funding to be made available?

- Given the method employed for calculating cash contributions to the CAP, which the Commission employed for its Second Cohesion Report, what annual impact does it estimate the current proposals as having on CAP cash contributions in Portugal?

Answer given by Mr Fischler on behalf of the Commission

(13 March 2003)

As outlined in the explanatory memorandum of the interim review of the Common Agricultural Policy (CAP), the intention of the proposed reform is to enhance the competitiveness of Community agriculture and to promote a more market oriented and sustainable agriculture. In general, the proposals imply a shift from product to producer support. Expenditure on market measures is expected to decrease as indicated in the financial statement of the proposal and as noted by the Honourable Member. The estimates of expenditure on market measures have been established at Community level and are based on the one hand on the medium-term projections of Community market developments (published in December 2002) and on the other hand on various impact analyses made available in January 2003. The basic modelling of the impact analyses is designed to give projections at Community level. At this time, no further analyses have been made in order to estimate the financial impact by Member State, as regards expenditure on market measures.

The horizontal draft Council Regulation provides for a reduction of direct payments in Article 10 for years 2006 till 2012. A part of the resulting amounts will be reserved for strengthening rural development under the second pillar of the European Agricultural Guidance and Guarantee Fund (EAGGF) Guarantee Section as set out in Article 12(1) of the same Regulation. The amounts to be transferred to rural development are at the moment estimated at Community level as indicated in the financial statement. The principles of how these amounts shall be reallocated to the Member States are given in Article 12(2). Portugal's share has been calculated at 4,9 %.

As regards the capacity of utilisation of the amounts to be allocated to each Member State for the period after 2006, it should be remembered that the total envelopes for rural development and their distribution between Member States will be decided later in the framework of the new Financial Perspectives. Therefore, the need for national co-financing to ensure full use of the rural development programs can only be estimated after the new Financial Perspectives and new Rural Development programs have been decided upon.

In the context of the preparation of the Third Cohesion Report, the Commission intends to update the analysis referred to by the Honourable Member. Nevertheless, it is already possible to assert that the present Common Agricultural Policy reform proposal will strengthen the contribution of CAP to economic and social cohesion and a positive impact could be expected for Portugal.