WRITTEN QUESTION P-2521/98

by Sirkka-Liisa Anttila (ELDR) to the Commission

(28 July 1998)

Subject: Agenda 2000 deprives Finnish farming of its spirit of enterprise, leading to "virtual agriculture"

The Agenda 2000 proposal would lead, if implemented, to producer price cuts for cereals (20 %), beef and veal (30 %) and dairy products (15 %). This reform would lead in Finland to a kind of "virtual farming", because the prices we could get for our produce would no longer cover even the production costs. Agricultural production costs are the sum of all the costs entailed by production activity. By comparing this with the total yield from the relevant products one obtains the farm's profitability.

According to official studies the average production costs per kilo for barley and oats at 1996 levels were FIM 1,78 for the smallest farms and FIM 1,32 for the largest. The corresponding range for bread cereals was FIM 2,10 to FIM 1,63. These figures, based on standardised farm models, represent the most efficient farms in terms of yield. On average farms the production costs are even higher. The production costs for pigmeat, based on the same calculation models, vary between FIM 11 and FIM 20,67. Only 18 % of farms are able to produce pigmeat for FIM 11, while 47 % of farms spend FIM 14 and the rest need between FIM 16 and FIM 20,67. In 1995, statistics show that production costs for milk were FIM 3,54 per litre.

If the producer price reductions proposed in Agenda 2000 are implemented Finnish agriculture will not even begin to cover its production costs. In producing their crops, the farmers would be "eating" their own subsidies, and thereby reducing their income. The greatest threat to farming in Finland is "virtual agriculture", depriving the agriculture industry of the spirit of enterprise and motivation to work. For this reason there can be no question of approving the price cuts proposed in Agenda 2000 without special arrangements.

What does the Commission propose to do in the context of Agenda 2000 to protect the spirit of enterprise and motivation in Finnish agriculture?

Answer given by Mr Fischler on behalf of the Commission

(22 September 1998)

The Commission shares the point of view of the Honourable Member on the challenge that Agenda 2000 represents for Finnish farmers. They are still adjusting to the common agricultural policy (CAP) in the aftermath of accession and they have to face a new set of proposed reforms.

The evolution of the Finnish farming economy since accession is notable. Costs of production are decreasing, farm structures are improving and the income evolution is positive. The pessimistic prediction on the dramatic decline of farming has not become a reality.

Particular handicaps such as those that affect Finnish farmers must be dealt with so as to ensure the maintenance of sustainable farming and rural communities in all the Union. This is specifically stated in the Agenda 2000 proposal(1) (introduction, section 3):

"For centuries Europe's agriculture has performed many functions in the economy and the environment and has played many roles in society and in caring for the land. That is why it is vital, as the Luxembourg European Council concluded in December 1997, that multifunctional agriculture must develop throughout Europe, including those regions facing particular difficulties. In connection with Agenda 2000 and its implementation, care will accordingly need to be taken to provide proper compensation for natural constraints and disadvantages."

As in the past, the Commission will continue to help Finnish farmers to achieve a successful integration and to help them to take advantage of all the opportunities allowed by the evolution of Community and world agricultural markets.

(1) COM(98) 158 final.