EN Official Journal of the European Union CE 78/118

(2004/C 78 E/0119)

WRITTEN QUESTION E-2484/03

by Daniel Varela Suanzes-Carpegna (PPE-DE) to the Commission

(24 July 2003)

Subject: Galicia and CAP reform

With a view to assessing the possible short-, medium- and long-term effects of the recent mid-term reform of the CAP and specifically its application in a less-favoured Objective 1 region such as Galicia, it would be extremely useful to have information on the Commission's data, studies, reports and opinions on the subject:

1. Does the Commission have any studies on the impact which the application of this reform may have on a strong livestock farming region such as Galicia, where farms are small, are not yet technologically advanced and receive low levels of agricultural support?

2. Has the Commission taken sufficient account of the fact that, in certain inland areas of Galicia, the economies of medium-sized municipalities chiefly depend on milk production? Has it therefore considered the effects which the decoupling of aid might have on production?

3. Can the Commission provide any study assessing these scenarios? If no such study is available, does the Commission not consider it necessary to make this type of forecast, at least in strong farming regions recognised as less favoured regions, in order to analyse the impact of the reform in the medium and long term (10-20 years)?

4. Can the Commission provide the following information on the application of CAP reform in Galicia: what figures does it envisage as regards developments affecting the population of rural areas? What proportion would have crop and/or animal production as their main activity? What would be the anticipated volume of production? How would the local agro-industry be affected? What indirect repercussions would there be on local and even regional economies?

Answer given by Mr Fischler on behalf of the Commission

(11 September 2003)

During the last couple of years the Commission has carried out an unprecedented number of studies in order to assess the possible impact of the Common Agricultural Policy (CAP) reform proposals.

In July 2002, together with the Mid-Term Review Communication, the Commission presented the main results of a study to assess the possible impact of future options for the milk quota system and the common market organisation for milk and milk products. Further details about this study were published in October 2002.

In January 2003, the Commission published an impact analysis of the July 2002 Mid-Term Review proposals, which included four studies carried out by independent experts and two internal analyses carried out by Commission services.

In March 2003, the Commission has published an impact analysis of the January 2003 legal proposals for CAP reform, which included two internal analyses carried out by Commission services.

In the coming months, the Commission will publish an impact analysis of the CAP reform decisions as agreed at the June Luxembourg Agricultural Council.

These studies are based on macro-economic models developed for the Union as whole (current 15 Member States and enlarged Union), and, in some cases, at Member State level. An enormous amount of reliable statistical information and parameters is required for the estimation, calibration and validation of these models. The lack of reliable information at regional level makes it difficult to develop quantitative tools at regional level and therefore limits the possibility to carry out impact analysis at regional level. The few quantitative studies which have been published recently by research institutes across Europe have shown sometimes puzzling and implausible results, very difficult to explain on the basis of past experience and economic theory. For all these reasons the Commission has not published an impact analysis at regional level. However, most of the conclusions of the impact studies at Union level can also be useful for some considerations for the regional impact assessment.

1. The impact of the latest CAP reform agreement is currently being investigated by the Commission in view of publication in the next few months. However, previous analyses have shown that the introduction of a single payment based on historical entitlements is expected to have moderate impact on income of Union farmers, as the expected reduction in production would be counterbalanced by higher producer prices. In the case of a livestock oriented region like Galicia one might expect similar results.

2. The Commission is well aware of the importance of the milk sector for a region like Galicia, which concentrates more than 50 % of Spanish milk producers, representing more than 30 % of Spanish milk production. The Commission considers that the latest CAP reform offers a clear, long term planning framework for their business decisions, allowing them to carefully evaluate the restructuring needs in view of future market demands. Decoupling aids from actual milk production is expected to have a moderate impact compared to other sectors, as the milk quotas system, which validity has been prolonged until 2015, will continue to play a role in supply control.