WRITTEN QUESTION E-3454/00

by Erik Meijer (GUE/NGL) to the Commission

(7 November 2000)

Subject: Limited chances of survival for farms modernised on the basis of the Common agricultural policy

1. Does the Commission still regard as a success the agricultural policy which has been conducted since the first steps were taken towards European integration in the 1950s, and which has led to an increase in scale, mechanisation, massive investment on the basis of loans, high volumes and yields and a huge loss of jobs?

2. How does the Commission judge the fact that, in the Netherlands, where the policy referred to in question 1 has entailed radical adjustment, the large volumes of food produced have led to less of an extent than anticipated to higher revenues, whilst the costs of land acquisition and investment have proved higher than expected, leaving many farmers with a low income despite high capital investment and high turnover?

3. Is the Commission familiar with an article by Peter Vereijken in the Volkskrant of 18 October 2000? The article points out that the average age of farmers in the Netherlands is continuing to rise (it is currently 53). It also states that 50 % of production comes from cultivation under glass and small livestock kept in houses, which account for just 1 % of the 2 million hectares of land used for agriculture. In contrast, the total output of dairy farmers and arable farmers is barely rising, but accounts for 90 % of the agricultural area. The author takes the view that the agricultural sector cannot survive in the face of cheap imports which are the result of low wages and low environmental standards.

4. Can the Commission confirm that, in Member States in which a radical restructuring of the agricultural sector has taken place, farmers cannot survive on the basis of the market and will be dependent in the long term on subsidies, for example being paid by the national authorities for their role as managers of the countryside carrying out extensive farming?

5. Does the Commission consider it possible to continue in the long term to subsidise from the European budget farmers on modernised holdings, in addition to small farmers in Southern Europe and in future eastern Member States, or does it assume that it is necessary for the survival of the agricultural sector for the price of food to rise sharply?

Answer given by Mr Fischler on behalf of the Commission

(11 December 2000)

1. Increasing productivity and assuring the availability of supplies constitute prime objectives of the common agricultural policy (CAP), as set out in the EC Treaty. European agricultural production has increased so rapidly and massively that the Community has become an exporter of agricultural products,

and structural surpluses have built up in some sectors. From that point of view, the CAP has been a victim of its own success. A series of reforms have been undertaken in order to adjust the CAP in line with developments in the markets, the countryside and society. In the 1980s, measures were adopted to limit surpluses and have more control over supply. At the same time, rural development measures were rethought and consolidated so as to provide better back-up for agriculture's structural adjustment. In the 1990s a major new step was taken in the reform process, with the reduction in support prices being offset by introducing direct aid and back-up measures including agri-environmental measures and early retirement aid. This trend continued with Agenda 2000 and has been supplemented by new mechanisms, in particular the modulation of direct aid. Moreover, rural development has become the second pillar of the CAP, and a number of measures in particular the agri-environmental scheme have been enhanced.

2. According to the Commission's analyses, the Netherlands is among the top three in terms of average income per agricultural worker (measured as net value added at factor cost). Admittedly, the average income of farmers and particularly stock farmers in the Netherlands fell in 1998 and 1999. This was mainly caused by the drop in the price of pigmeat, beef and veal, and by the consequences of the epidemics which affected the sectors concerned; the same effects were also felt in other Member States. However, in preceding years average agricultural income increased significantly in the Netherlands (by 22 % between 1993 and 1997) as in most other Member States.

3. The Commission thanks the Honourable Member for providing a copy of the article to which he refers. It is interesting both for its analysis of the development of Dutch agriculture and for the options examined. The share accounted for by specialised production in particular fruit and vegetables and horticultural products has increased sharply, while livestock products' share has fallen. However, milk and beef and veal which receive considerable direct support under the CAP still account for almost 30 % of the Netherlands' final agricultural production. The comparison of mono-intensive with multi-extensive farmers is interesting. Promoting the multi-extensive model reflects the multifunctional agriculture objective pursued in the CAP, particularly through the rural development pillar.

4. Protection at the border and the guaranteed price system result in European market prices being maintained above reference prices on world markets. The reduction in guaranteed prices and the increase in direct aid make support for agriculture more transparent and more evident. Direct aid represents an important part of farmers' income. It also offsets the cost of activities which are connected with agricultural production but not paid for by the market, in particular the contribution to regional development and maintenance of the countryside. In return, environmental requirements have been introduced and Member States may make aid conditional on compliance with such requirements.

5. There is unlikely to be a significant and lasting increase in the price of basic agricultural products. Instead, the long-term trend in real terms is downward. But that does not preclude certain foodstuffs' value added from increasing, in particular those whose characteristics meet consumer requirements. The CAP does not relieve farmers of their responsibility to take consumer needs into account. The reforms undertaken in the 1990s were specifically designed to make agriculture more market-oriented, while encouraging farmers to meet the new demands not only of consumers but of society as a whole. Support granted under the common organisation of markets and in the rural development context must likewise evolve in keeping with society's requirements.