WRITTEN QUESTION E-3040/02

by Ilda Figueiredo (GUE/NGL) to the Commission

(24 October 2002)

Subject: The interim revision of the CAP and the new system of direct aids

The interim revision of the CAP, as proposed by the Commission, will introduce major changes into the system of granting direct aids: aid will be decoupled from production, with the creation of a single income support system based on historical criteria, while the proposal on modulation will have the primary effect of transferring funding between the first and second pillars of the CAP.

In the face of widespread opposition on the part of both farmers' organisations in the EU and several Member States, Commissioner Fischler decided to visit a number of Member State capitals with the intention of explaining the merits of his reform. On 3 July 2002 in Lisbon, confronted with demonstrating farmers and being made aware that several Portuguese farmers' organisations were opposed to the proposed reform, the Commissioner said that Portugal is one of the Member States which receive least from the CAP and that the reform, rather than making things worse, would ensure that Portugal will get more money from the EC's agricultural budget.

Given the above:

- Can the Commission state what data this affirmation was based on?

- Does the Commission not consider that the historical criteria are liable to perpetuate existing inequalities in the distribution of aid between producers and Member States?

What is its answer to the criticism that transferring funds to the rural development pillar will introduce the principle of cofinancing through the back door? What does it believe will be the impact on the Member States' agricultural budgets, given the major differences in budgetary terms and in financial effort which exist between, for instance, Portugal and Germany?

- What estimates can the Commission supply concerning the redistribution of agricultural expenditure between the Member States, on the basis of the proposal on modulation included in the interim revision?

Answer given by Mr Fischler on behalf of the Commission

(27 November 2002)

When the Member of the Commission responsible for Agriculture and Fisheries went to Portugal in early October 2002 to discuss the Commission's proposals on the Mid Term Review (MTR) of the Common Agricultural Policy (CAP), he explained that Portugal would benefit from the expansion of rural development policy and that it could count on more money from the Union's agricultural budget.

This statement referred to the expected effect of the dynamic modulation scheme proposed in the Communication on the MTR that the Commission adopted in July 2002(1) With the system of franchise, the majority of Portuguese farms would not be affected by the reduction in direct payments. By contrast, as the proposed redistribution key includes a cohesion component, Portugal would benefit from increased Community funding for rural development. The principle of co-financing rural development expenditure is not new. The Commission proposes to increase the rate of Community co-funding for some measures like agri-environmental schemes.

The statement of the Member of the Commission responsible for Agriculture and Fisheries is based on a first assessment of the redistributive effect of dynamic modulation This assessment used figures from various Union sources: European Agricultural Guidance and Guarantee Fund, Farm Accountancy Data Network and from the European Farm Survey.

It would not be appropriate to provide figures about the possible impact of modulation at this stage. The Commission needs first to take into account the results of the European Council of Brussels which took place on 24/25 October 2002.

Heads of States and Governments reached an agreement that marks a major step forward in the process of enlargement and that should allow the Union to close negotiations with the ten candidate countries in December 2002. One key element of the agreement is the introduction of a long-term financial ceiling for expenditure related to direct payments and markets. By contrast, no new ceiling has been fixed for rural development expenditure. Heads of States and Governments have even stressed the requirements concerning producers in least favoured regions.

The Commission is convinced that the new long-term framework for agricultural expenditure requires a clear perspective for the future development of the CAP. The needs and challenges identified in the MTR remain unchanged. It is in this overall context that the Commission will table concrete proposals in the form of legal texts by the end of 2002 or very early January 2003.

(1) COM(2002) 394 final.