Opinion of the Economic and Social Committee on 'The agricultural aspects of the Commission's Communication "Agenda 2000"'
Date: 1997-12-10
Institutions: European Economic and Social Committee
Subjects: Central and Eastern European countries, World Trade Organisation, common agricultural policy, common organisation of markets, liberalisation of the market

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C 73/71

Opinion of the Economic and Social Committee on ‘The agricultural aspects of the
Commission’s Communication “Agenda 2000”’

(98/C 73/21)

On 2 October 1997 the Economic and Social Committee decided, in accordance with Rule 23(3)
of its Rules of Procedure, to draw up an opinion on ‘The agricultural aspects of the
Commission’s Communication “Agenda 2000”’.

The Section for Agriculture and Fisheries, which was responsible for preparing the Committee’s
work on the matter, adopted its opinion on 6 November 1997. The rapporteur was Mr Bastian,
the co-rapporteur, Mr Wilms.

The Economic and Social Committee adopted the following opinion at its 350th plenary
session of 10 and 11 December 1997 (meeting of 10 December 1997) by 93 votes to 23 with
9 abstentions.

1.

Introduction

1.1.
The proposed reforms of the common market
organizations (COM) in the arable crop, beef/veal and
milk sectors come at a time when agriculture is subject
to the following influences:

— a predicted rise in the world’s population of about
1 billion people over the next ten years, as well
as growth in the effective demand for foodstuffs
(particularly in Asia);

— the resumption in 2000 of negotiations on the
liberalization of international agricultural markets
under the auspices of the World Trade Organization
(WTO) and in accordance with the Uruguay Round
agreements;

— the probable accession to the EU of countries of
central and eastern Europe (CEEC), as well as
Cyprus;

— the continuation of European partnership with the
countries of the southern Mediterranean (inter alia
through the establishment of a free-trade area with
these countries by the year 2010), a policy of vital
importance for the development and stability of this
area, as well as for the future of EU Mediterranean
products.

1.2.
In Agenda 2000 the Commission comes out
strongly in favour of the increased competitiveness of
Community agriculture in order ‘to ensure that Union
producers take full advantage of positive world market
developments’ (1). It therefore proposes to deepen and
extend the 1992 reform ‘through further shifts from
price support to direct payments, developing a coherent
rural policy to accompany this process’ (1).

2. General assessment

2.1.
The Committee welcomes Agenda 2000 as a
basis for a comprehensive debate. The European Union,

EU farmers, EU industrialists and their counterparts in
the applicant countries, all need a clear vision of what
the future is likely to hold for the common agricultural
policy (CAP).

The Committee considers that the agricultural
2.1.1.
aspects of Agenda 2000 provide a sufficiently detailed
basis for further discussions of the changing face of CAP
and for the adoption of appropriate decisions. Any
decisions taken will help to lay down the direction of
future agricultural policy and will inevitably have to
take account of the future developments outlined in
paragraph 1.1 and the effects these might have on
European agriculture.

2.2. Whilst generally endorsing the objectives as-
signed by Agenda 2000 to the future CAP, the Committee
is convinced that unanswered questions remain and that
the ways in which these objectives are to be realized
lend themselves to criticism.

2.2.1.
The Commission sets out a number of ‘pol-
icy’ (2) objectives for the future CAP, viz.: boosting the
competitiveness of Community agriculture, externally
and internally, particularly in the light of the forthcoming
WTO negotiations; giving consumers guarantees about
food safety and food quality; ensuring a decent standard
of living for the farming community and contributing
to the stability of farm incomes; incorporating environ-
mental objectives into the CAP; promoting sustainable
agriculture and renewable energy sources; creating
alternative sources of income for farmers and their
families; simplifying EU legislation (particularly for the
purposes of CEEC membership).

2.2.2. Whilst emphasizing that the fundamental CAP
objectives laid down in the Treaty of Rome will continue
to remain valid in the future, the Committee broadly
approves Agenda 2000’s objectives although it considers
that they should not be artificially ranked since they are
all important. The Committee regrets however that the

(1) Agenda 2000, Rapid Text File IP/97/660 p. 6.

(2) Agenda 2000, Vol. I, p. 27.

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Commission has not dwelt on two aspects of agricultural
policy which it considers to be of paramount importance:

— encouraging greater use of the land, bearing in mind
specific regional features and taking into account
the impact of the CAP on the sectors upstream and
downstream of agriculture, which are important for
the development of rural areas, and considering
in particular the strengthening of the economic
organization of producers and the maintenance and
development of a real policy for the processing and
marketing tools existing in these areas; in practice
this means encouraging a more balanced distribution
over the countryside of productive farming activities
and the chain of ancillary activities, through a fairer
spatial and social distribution of opportunities for
development and growth, with special reference to
rural areas, and taking account of the impact of
agricultural policy on each link in the chain and
related effects on income distribution;

— keeping a close watch on employment in the agricul-
tural sectors further upstream and downstream as
well as in rural areas as a whole, so as not
to aggravate the situation, bearing in mind that
job-creation is a priority in the EU.

2.2.3.
The Committee considers that the EU and
Member States must — not least in the interests of
safeguarding jobs — do everything to further improve
the productivity and competitiveness of agriculture,
encourage young farmers to set up in agriculture and
promote the creation of skilled jobs in upstream and
downstream agricultural sectors and in craft-based
industries.

2.2.3.1.
The Committee considers that in order to
achieve these objectives (improving productivity and
competitiveness of agriculture, encouraging young far-
mers to set up in agriculture and creating jobs), the
necessary steps must be taken to encourage the creation
of cooperatives and support lines for those already
in existence, given the decisive contribution of farm
cooperatives to the economy of rural areas, and the
value added they give to farm produce through direct
placement on the market: this constitutes the best
possible guarantee for farm incomes and, consequently,
of employment and spatial planning objectives.

2.2.3.3.
The Committee also recognizes that the
CEEC are in a different situation in that they are faced
with serious under-employment in agriculture. The
Committee is most concerned about the way ‘social
issues’ are being handled in these countries in the context
of agricultural modernization. The Union needs to be
particularly vigilant about these matters both before
and after their accession.

2.2.4.
The Committee also queries whether the Com-
mission’s proposed budgetary framework is capable
of consolidating existing common policies within an
enlarged EU.

2.2.4.1.
The extra appropriations proposed by the
Commission for Structural Funds and economic and
social cohesion may seem inadequate, especially in the
light of the enormous financial needs of the applicant
countries if they are to restructure and modernize their
economies, particularly in the agricultural and agri-food
sectors.

2.2.4.2.
As far as agricultural policy is concerned, the
Committee fears that the Union’s aim of ‘stabilizing’
farm incomes cannot be achieved with the measures
proposed by the Commission in Agenda 2000. The
Committee regrets that the Commission has not studied
the possible effects of its proposals on trends in farm
incomes, as well as on the future structural development
of agriculture and on consumers, as it has done in the
case of market trends.

Finally, the Committee wonders whether the
2.2.5.
Commission has adequately gauged the impact on the
European economy of the transition to the third stage
of Economic and Monetary Union (EMU) and the single
currency when it stipulates an average annual growth
rate in the EU of 2,5 % between 2000 and 2006 as the
basis for its assumptions. The Committee would like to
know to what extent the EU’s financial perspectives,
especially for the EAGGF Guarantee Section, would be
jeopardized if growth falls below 2,5 % (cf. 5.1). The
Committee also attaches considerable importance to the
development of the agri-monetary regime during the
third stage of EMU and will closely scrutinize the
Commission’s proposals on this subject.

2.2.3.2. Moreover, agriculture must continue to act
as a locomotive in the development of the rural economy
(for instance by strengthening upstream and downstream
links and by forging closer ties between jobs in agri-
culture, craft-based sectors and industry ...). In the view
of the Committee, this is how agriculture will contribute
to the stabilization of the rural population in EU-15
during the next decade.

2.2.6.
The Committee urges that all these points be
properly taken into account when the future of the CAP
is being discussed. The Committee considers that it is
vital for the EU to secure the broadest possible consensus
on the future direction of the CAP based on a discussion
of Agenda 2000. A consensus is needed both for CAP
reform and to defend the EU’s common agricultural
policy objectives and instruments during the forth-
coming international trade negotiations.

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2.3.
In the Committee’s opinion, what is at stake is
the EU’s agricultural identity, which is built on the
production of wholesome, high-quality foodstuffs (par-
ticular attention should be paid to local specialities, given
their importance in spatial planning and employment),
protection of the environment and a living countryside.

The Committee considers that the EU must
2.3.1.
maintain its multi-functional vision of agriculture when
it reforms the CAP. In Europe, agriculture’s role is not
simply to produce wholesome, high-quality food and
non-food produce. It also plays a vital role in land-use
and spatial planning, and is a sine qua non for the
economic and social development of rural areas, and for
the conservation of natural resources and the landscape.

In this context the CAP is above all a policy
2.3.2.
for managing agricultural and food markets. However,
it has considerable implications in social, environmental
and land-use terms. And it is its attempt to embrace all
these fields that singles out EU agricultural policy. As
confirmation of its international role, the Committee
would like the EU to preserve this approach to the CAP
and to highlight all the work done in Europe to satisfy
the expectations of consumers and the public at large
with regard to agriculture.

2.3.3.
Given the complexity and fragility of the
balances underpinning the CAP, the Committee would
also like the reform to be global. It must take account
of all sectors, and not simply those for which the
Commission has submitted proposals in Agenda 2000
(cf. 3.5).

All the remarks and suggestions put forward
2.3.4.
in this opinion spring from the resolve to promote this
model of a multi-functional agriculture sector in the
Union.

3. Comments on individual sectors of production

The proposals set out in Agenda 2000 must be analyzed
in the light of the Commission’s forecasts of agricultural
market trends for the years 2000 to 2006, as presented
to the Council of Agriculture Ministers on 21 and
22 April 1997 in the report entitled CAP 2000 (see
Appendix 2) (1).

3.1. Cereals

3.1.1.
From the year 2000 the Commission is propos-
ing a one-step 20 % reduction in the cereals intervention
price to a level of ECU 95,35/t in order to consolidate
the single market and pave the way for participation in
the expected expansion of the world market.

(1) SEC(97) 819 final.

3.1.1.1.
The lower price would be (partly) offset by
the establishment of a non-crop specific area payment
set at ECU 66/t (2). The Commission proposes to lower
this payment ‘if the market prices are sustained at a
higher level than currently foreseen’ (3). The Committee
would nevertheless like to know what the Commission’s
forecasts are in this area. It would also like to know
what the Commission’s analysis would be if the trend
were reversed, i.e. if market prices were to fall below the
level covered by the proposed compensation (ECU 95/t).

3.1.2.
common organization of the cereals market should:

The Committee considers that by 2006 the

— enable the EU to export worldwide while making
only limited use of the export refund mechanism,

— steer clear of the use of set-aside as far as possible,

— protect EU farmers against the volatility of world

prices.

3.1.3.
The Committee considers that to satisfy these
three conditions it will not be necessary to lower the
intervention price for cereals by as much as 20 %. But if
this happened, the new intervention price would be too
far below the average cereals price on international
markets (approx. ECU 125/t (4) for red soft winter
for 1991-1996) and existing common market regime
instruments would only come into play in the event of
a sharp fall in prices (in which case intervention would
operate as a ‘safety net’). This being so, farmers and all
other operators in the sector would have to learn to
protect themselves against the volatility of world prices
without the benefit of the day-to-day protection afforded
by the common market regime.

3.1.4.
Although the Commission believes that world
cereal prices should normally be above the proposed
intervention prices, the Committee considers that it
would be dangerous for the EU to agree to the total
abolition of cereal export subsidies at the next WTO
negotiations. The effectiveness, in terms of international
competitiveness, of a reduction in the European inter-
vention price might in fact be weakened by a downward
drift in the currency of the EU’s principal competitor,
the United States. It is therefore very important for the
EU to maintain room for manoeuvre in terms of
exportable cereal tonnages (with refunds) and to secure
the globalization of authorized tonnages for all types of
cereals (5).

(2) The theoretical ‘shortfall’ of ECU 12/t for farmers would
be easily made up for by gains in productivity and the
current trend towards bigger farms.

(3) Agenda 2000, Vol. I, p. 29.
(4) Figure taken from information published by the Inter-

national Cereals Council.

(5) The Union currently requires a higher level of export
refunds for secondary cereals such as barley than for wheat.

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3.1.5.
The Commission is also proposing the abolition
of aid for silage cereals, and particularly silage maize.
The Committee considers that there is a need to
properly evaluate the impact of this abolition on the
competitiveness of beef and dairy production and on
the maize sector as a whole. The Committee therefore
calls upon the Commission to undertake a comprehen-
sive study of the implications of its proposal regarding
silage maize.

3.1.6.
Finally, the Committee welcomes the Com-
mission’s set-aside proposal. It hopes that the promising
outlook on the international markets will allow the
EU to steer clear of this instrument in future whilst
emphasizing that set-aside should in principle be retained
as an instrument for managing production. In this
context, and given the links between the development
of certain agri-industrial products and set-aside, the
Committee would ask the Commission to make pro-
vision for a specific programme for non-food renewables
and for making greater use of biomass for energy
production and as a raw material for industrial purposes,
in order to contribute to the safeguarding of jobs in
rural areas and the reduction of CO2 emissions.

3.2. Oilseeds and protein crops

3.2.1.
By proposing a non-crop specific area payment
of ECU 66/t, the Commission would in reality be
reducing significantly current aid for oilseeds and protein
crops (although the latter would receive supplementary
aid of ECU 6,5/t).

The Commission claims that its proposal
3.2.1.1.
seeks to a) simplify rules and regulations, b) ensure that
aid is neutral in terms of crop rotation selection, and c)
give a ‘green’ tinge to aid in respect of the ‘boxes’ of the
Uruguay Round agricultural agreement.

3.2.1.2.
The Committee believes that the proposal
would nevertheless deprive the EU of an instrument for
steering production: given identical costs but lower
yields, it would become less advantageous (with the
same premium) (1) to grow oilseeds and protein crops in
the EU than to grow cereals.

3.2.2.
If the Commission proposals were applied in
their present form, they would most likely precipitate a
sharp decline in the European area under oilseed
and protein crops, even though the EU is only 50 %
self-sufficient in vegetable oils and 20 % self-sufficient
in oilseed cake. The Commission’s proposals would
thus jeopardize the fundamental strategy adopted
25 years ago by the EU at the time of the American soya
embargo, namely to encourage the production of oilseeds
and protein crops of European origin. The Committee

would point out that some major international producers
of oilseeds and protein crops (e.g. Brazil and Argentina)
impose export duties on their producers, thereby ham-
pering efforts to supply the Community market.

3.2.3.
Since the prices of oilseeds and protein crops
are already at world levels, there is no urgent or valid
reason for the Commission to propose a radical reform
in this sector concurrently with the one proposed
for cereals (unless the possible budget savings on
oilseeds/protein crops are an end in themselves). The
expected benefits (simplification and ‘de facto’ termi-
nation of the Blair House Agreement) would seem to
totally out of proportion to the other foreseeable effects.
The Committee notes the paradox in wanting to shake
off the shackles of the Blair House Agreement (which
limits any extension of oilseed acreage in the EU) and
yet possibly winding up with a shrinking of oilseed
acreage.

3.2.4.
The Committee considers that oilseed and
protein crop production must continue to be the subject
of substantial ‘positive discrimination’ vis-à-vis cereals
between 2000 and 2006 so as not to jeopardize the future
of an entire sector.

3.2.4.1.
To this end the Committee proposes that
complementary aid be given to prevent a massive switch
from oilseed and protein crops to cereal production and
to guarantee equilibrium between these various crops
(and hence a satisfactory level of self-sufficiency in
oilseed and protein crops). This complementary aid,
which might take the form either of crop rotation grants
or of a different type of aid for crops where there is a
production shortfall (including oilseed and protein
crops), should be conceived in such a way that it
would enable the Union to remain free of Blair House
constraints and so be able to prepare for CEEC accession,
CEEC being agronomically well-suited to oilseed pro-
duction. Since oilseed production in the CEEC is
complementary to that of the Union, there is no cause
for concern about competition between CEEC and EU
products.

3.3. Beef/veal

The Commission is proposing a tapering off of
3.3.1.
‘effective market support’ (2) of 30 %, bringing it down
from the present ECU 2 780/t to ECU 1 950/t over the
period 2000 to 2002. As compensation, annual headage
aid would be gradually increased (rising to ECU 215 for
suckler cows, ECU 368 for bulls, ECU 232 for steers,
and introducing a payment of ECU 70 for dairy cows).

(1) The introduction of specific aid of ECU 66/t will in fact
result in an income shortfall of ECU 28/t for producers of
oilseeds compared with the present situation (i.e. 2,3 times
the cereal sector’s loss of income as a result of partial
compensation).

(2) Agenda 2000, Vol. I, p. 30.

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3.3.2.
As the Commission itself explains in its report
on CAP 2000 (1), this proposal would bring the price of
European beef (ECU 1 950/t) below the estimated price
of American beef in 2000 (ECU 2 125/t). It would
however remain above the expected price of beef in
Australia (ECU 1 738/t) and, a fortiori, in Argentina.

3.3.3.
The Committee considers that, even if the
intervention price fell sharply, the EU would be unable
to depend a priori on exports to offset the considerable
imbalance expected in its beef market until 2006. All it
could do would be to maintain its export market share
and carve out a number of new high-value markets.

3.3.4.
The Committee considers that the proposed
strategy of bringing down official European prices to
match world market prices does not take sufficient
account of the specific role of beef farming in terms of
quality, tracability, jobs, land-use, and the economic
vitality of certain rural areas in Europe. In the view of
the Committee the EU should give priority to stabilizing
its internal market in terms of prices and supply (hence
ensuring a stable income for its producers), whilst
preserving the necessary flexibility to produce enough
beef to supply its traditional export markets (North
Africa, Near East and Russia for example).

3.3.8. T h e C o m m i s s i o n p r o p o s a l s m u s t
t a k e a c c o u n t o f s p e c i f i c r e g i o n a l
f e a t u r e s

3.3.8.1.
The Committee urges that any future reform
of the common beef/veal régime should take account
of specific regional features and different systems of
production in the EU.

3.3.8.2.
Some European regions in fact engage in
more extensive beef/veal production, particularly in
regions specializing in veal-producing suckler herds.
But,
in the event of price reductions, according to
current Commission proposals, the rise in compensatory
payments would essentially involve a special payment for
male bovines (SPMB), available principally to producers
engaged in more intensive stockfarming. Europe’s suck-
ler herds and calves reared for breeding and slaughter
will then inevitably bear the brunt of the fall in prices
and will not receive any specific compensation, thereby
leading the veal-producing suckler herd sector down a
blind alley.

3.3.8.3.
The Committee would point out that some
Member States have called for greater consideration to
be given to ‘area’ or other criteria as the basis on which
to pay compensation for a further reduction in the
official beef price. Hence the question of whether the
effect of introducing per hectare folder premiums has
been studied by the European Commission in any detail
and why the subject of these premiums has not been
addressed in Agenda 2000.

3.3.5.
The Committee considers that the EU will
therefore have to tread carefully between measures
designed to curb the quantities of beef produced and the
reduction of official prices.

3.4. Milk

The Committee believes

3.3.6.
that a certain
reduction of the official price is no doubt necessary
to boost beef consumption and to close the price
competitiveness gap between red and white meats
(pigmeat, poultrymeat) which will have widened with
the fall in cereal prices. Such a reduction might vary
according to the categories of meat concerned. The
Committee feels that there is a need for the Commission
to undertake an analysis of the impact of lower cereal
prices on beef and veal (as well as on sheepmeat).

The Committee is moreover opposed to the
3.3.7.
abolition of intervention and its replacement by private
storage aid. This proposal is extremely sensitive given
the likelihood of imbalances by 2000/2006 on markets
(cf. Appendix 2) whose vulnerability has been shown up
by the recent BSE crisis.

3.4.1.
The Commission proposes that the quota
system be extended until 2006. However, so as not to
give dairy producers ‘the impression that the present
system with its intrinsic rigidities can last for ever’, it
recommends the introduction of greater ‘flexibility’ (2)
in the common milk market. The Commission suggests
a reduction of 10 % in the official price of milk over the
period in question and the introduction of a new yearly
payment of ECU 145 per dairy cow to offset the fall in
price (on top of the new aid of ECU 70 per dairy cow in
the beef sector). The Commission feels that this flexibility
will permit the EU to export over the period 2000-2006
while still honouring its commitments under GATT.

3.4.2.
The Committee considers that the Commission
proposal does not offer a clear road ahead for this
sector. This is because it does not:

— provide a clear view of the future of milk quotas
(given the difficulties posed by their allocation
between Member States),

— release the pressure of the super-levy,

(1) SEC(97) 819 final.

(2) Agenda 2000, Vol. I, p. 31.

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— ensure a real and lasting access to the world market,

— take into account the situation of less favoured

regions.

3.4.2.1.
It therefore leaves EU producers in a state of
uncertainty, does not hold out a real solution to the
difficulties facing operators, and does not give the CEEC
a clear picture of the common régime to which they will
eventually be subject.

The Committee urges the Commission to
3.4.3.
submit a more ambitious proposal. The new proposal
must aim to provide a broader and more lasting
basis for strengthening the sector’s competitiveness and
gaining greater access to international markets, while
also stabilizing producers’ incomes and securing con-
tinued milk production throughout
the EU (and
especially in disadvantaged and upland areas where milk
production is so important).

of the land. Long distances and scattered parcels limit
the scope for structural adjustment. These factors push
up costs in relation to output. With the reductions
proposed by the Commission, market prices would not
cover variable costs and would deter production.

3.6.2.
The Committee points out the importance of
agriculture as the backbone of the rural economy in the
northern countries of the EU. The proposed price
reductions would jeopardize the long-standing viability
of farming in these regions.

3.6.3.
The Committee calls for suitable measures to
maintain adequate production incentives in northern
regions (as well as in southern regions where there
are extreme climatic conditions) — for instance by
implementing the Committee’s proposals whilst taking
into account regional identities in different production
sectors.

3.5. Mediterranean products

4. Comments on the strategy for preparing WTO

negotiations and CEEC enlargement

It is unfortunate that the future of these
3.5.1.
products (tobacco, olive oil, rice, horticultural products,
fruit and vegetables, wine) is not really analyzed in
Agenda 2000. The Commission merely refers to past
reports and to proposals on future reforms. By doing
so, it excludes about 40 % of the Union’s final production
from its study of the future shape of CAP. The Committee
calls upon the Commission to complete Agenda 2000 by
making proposals for these sectors. Such action is
particularly necessary to achieve the Agenda 2000
objectives of environmental
improvement and rural
development, given the importance of European agri-
culture in preserving the environmental and rural com-
munities and in generating jobs.

3.5.2.
The Committee would underline the import-
ance of Mediterranean products for the EU in terms of
employment, landscape conservation and cultivation
and would refer to its different opinions on the subject,
inter alia the opinion on the future of Community policy
in the fruit and vegetables sector (1), the opinion on the
reform of the wine sector (2) and the opinion on the
different options for possible reform in the olives and
olive-oil sector (3).

3.6. Production sectors in areas of extreme climates

3.6.1.
The Committee is thinking in particular here
of production in northern regions, which is characterized
by permanent climatic disadvantages such as short
growing and grazing periods, hard winters and freezing

(1) CES 94/95.
(2) OJ C 110, 2.5.1995.
(3) OJ C 287, 22.9.1997.

4.1. Preparations for WTO negotiations

4.1.1. One aim of the Commission proposals is to
ease the GATT burden on the EU (cf. Appendix III) and
prepare for the forthcoming WTO negotiations.

4.1.2.
The Committee notes that it would be in the
interests of the European Union to avoid entering the
next round of WTO negotiations with a purely defensive
posture. In connection with the evaluation of the
agricultural proposals set out in Agenda 2000, it is also
of crucial importance that the Union can give its farmers
a guarantee that the direct payments envisaged between
2000 and 2006 will not be called into question after these
negotiations.

4.1.3.
The Committee also calls on the EU, which
already constitutes one of the most open markets in the
world, not to jettison external protection where it is
necessary and to make sure that its health and quality
standards are properly respected during the forthcoming
WTO negotiations. The Committee is well aware
how high the stakes will be in future international
negotiations on such subjects as the labelling of food-
stuffs, genetically modified organisms and hormones.
The Committee considers that the EU must encourage
recognition of its food and health standards at inter-
national level. The Committee also shares the view of
the Commission on the need to introduce world-wide
environmental and social standards as well as take more
account of consumers’ interests.

4.2. Preparations for CEEC accession

The present opinion is limited to the agricul-
4.2.1.
tural aspects of CEEC accession The overall EU strategy

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towards applicant members is the subject of the general
Committee opinion on Agenda 2000 (1).

4.2.2.
The enlargement of the EU to include CEEC
will have a limited impact on the CAP between 2000
and 2006.

4.2.3.
The Commission’s analysis in Agenda 2000
bears out comments in the Committee’s opinion on the
implications for the CAP of CEEC accession (2). Since
the agricultural revival in these countries has been more
sluggish than initially forecast by the Commission in
1995, possible CEEC surplus production will have only
a marginal impact on surpluses in the EU-15 during the
period covered by Agenda 2000 (see Appendix 4). The
Committee considers that transition periods will be
necessary before the CAP can be taken wholly on board
by the CEEC. This is more to protect CEEC from
competition from EU-15 agricultural enterprises and
to allow CEEC to restructure their own agricultural
industries, than the other way round. The Committee
therefore considers that the budgetary implications of
the first round of accessions will be minimal (between
ECU 1.1 bn. and 1.4 bn. per annum out of the EAGGF
Guarantee Section according to the Commission, with
the CEEC not receiving any compensatory payments as
their farm prices are set to rise after enlargement).

4.2.4.
Commission is on the right lines.

The pre-accession strategy proposed by the

4.2.5.
The Committee considers that if the CEEC are
to restructure their production systems and modernize
their processing industries and marketing networks,
they need help from Structural Funds rather than price
support or direct income support for producers. The
overhaul of the Phare programme (focused on training),
the preparation of a package of pre-accession agricul-
tural aid worth ECU 500 million per year, and the
allocation from the Structural Fund budget of a general
‘pre-accession’ aid package of ECU 1 billion per year (3)
from the year 2000, are appropriate proposals for
preparing the CEEC for EU membership.

4.2.6. However, the Committee queries the level of
Structural Funds the Commission would like to see
allocated to those CEEC which will join the EU between
2000 and 2006 (cf. point 7.6.2). The loans proposed by
the Commission seem to be inadequate in comparison
with the financial needs of these countries.

4.2.7.
delicate question.

Acceptance of the ‘acquis communautaire’ is a

4.2.8.
The Committee has deduced from an examin-
ation of Agenda 2000 that the Commission still favours
the ‘big bang’ approach (the immediate extension of the
single market to the CEEC). This presupposes that price
differences between the CEEC and the EU-15 will have
been bridged — a goal towards which the Commission
proposals are working. However, by the year 2006, price
differences will probably still exist, particularly in the
sugar and milk sectors (and possibly the beef/veal
sector). This potential situation raises a number of
questions. Will the new EU members be entitled in this
case to use intervention mechanisms? Will the EU
be obliged, during a transition period, to introduce
derogations from the rules of the single market? The
Committee has already given its views on this subject in
the aforementioned opinion. The Committee calls upon
the Commission to clarify arrangements for the tran-
sition periods between accession and the total assimi-
lation of the ‘acquis communautaire’ by the newly
acceding states. The Committee considers in particular
that the debate on milk should take place as soon as the
Commission presents concrete proposals in this sector.

4.2.9.
The Committee stresses the importance of
giving aid to the CEEC, both under the Phare programme
and via pre-accession funds, to prepare them for con-
ditions in the EU, particularly in the fields of animal
and plant health and to help them take on board food
harmonization directives. The Committee calls upon
the Commission to exercise special care when using
Community loans to help CEEC in these areas so as not
to skew conditions of competition in the European
agro-food sector.

4.2.10.
for the EU in the fisheries sector.

Enlargement will not create any difficulties

4.2.11.
The Committee notes the Commission’s view
that EU enlargement to include CEEC should not pose
any ‘serious problems’ for the common fisheries policy
(CFP). It approves the Commission’s desire for the EU
to pay particular attention to modernizing the fishing
fleets of coastal applicant countries, as well as to
establishing administrative structures necessary for
accommodating the CFP. The CEEC will have to be
given technical aid in these various fields, first during
the pre-accession period and then as part of structural
aid.

4.2.12.
The Committee considers that the cost of
integrating the agricultures of eastern Europe countries
should be clearly identified in the Community budget.

(1) OJ C 19, 21.1.1998.
(2) OJ C 75, 10.3.1997, p. 4.
(3) The Commission proposes that Structural Fund aid total-
ling ECU 45 billion be earmarked for the CEEC during the
period in question.

5. Comments on the Commission’s budgetary esti-

mates for the CAP

The Commission proposes that

the present
5.1.
method of calculating the agricultural guideline be

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9.3.98

maintained. In so doing it assumes that Community
GNP will grow by 2,5 % per annum and inflation by
2 % per annum.

they cut red tape and promote the efficiency of the EU’s
structural policy. The development of rural areas must
remain a central objective of Structural Fund inter-
vention.

5.2.
The Committee believes that it is essential for
the EAGGF Guarantee Section to have the capacity to
finance the proposed reform in an enlarged EU.

5.3.
Reforming the common market regimes for
EU-15 would, the Commission believes, cost around
ECU 4,3 billion in 2006. The maximum cost of the
first CEEC accessions would be ECU 4,5 billion. The
Commission also puts the additional cost to the EAGGF
Guarantee Section of introducing ‘new accompanying
rural development measures’ and horizontal measures
in the fisheries sector at around ECU 2 billion per year.
Thus, an additional ECU 10,8 billion would have to be
financed under the agricultural guideline in 2006.

5.4.
The Commission considers, on the basis of its
projections, that the present agricultural guideline trend
will allow this additional cost to be covered easily. It
even forecasts a margin of safety between agricultural
expenditure and the agricultural guideline over the
whole period (ECU 4 billion in 2006) so that it can
‘cover market uncertainties and enable the reform of the
common agricultural policy to continue before the end
of the period covered by the financial perspective’.
Provided the Commission figures (1) are watertight, they
encourage ‘budgetary optimism’. The Committee would
nevertheless like to know whether pessimistic hypotheses
would jeopardize the EU’s capacity to keep within the
agricultural guideline. The Committee would ask the
Commission to undertake a full financial study of this
question.

6. Comments concerning the ceilings, differentiation

and conditions applicable to aid

6.1. On the ceilings, differentiation and conditions
applicable to aid, the Committee feels that practical
proposals from the Commission are needed for an
appraisal to be possible.

The Committee will therefore await such pro-

6.2.
posals before taking a stand.

7. Comments on structural policy, rural development

and environmental services

7.1. Structural policy

7.1.1.
The Committee endorses the Commission pro-
posals set out in the Agenda 2000 programme insofar as

7.1.2.
The Committee regrets that in its proposals
the Commission has limited itself to describing the
broad objectives of structural policy without specifying
the measures which it is thinking of proposing. It seems
clear that the Commission’s basic objective is to improve
the competitiveness of Community agriculture; for this,
the Committee considers it absolutely necessary to
have instruments for improving production structures,
improving product quality and marketing, and reconcil-
ing efficient production with respect for the environment
and animal welfare. Agricultural cooperatives, whose
members are farmers, are often one of the few enterprises
to maintain their presence in many farming regions. The
Committee feels that this fact makes cooperatives the
ideal instrument through which to channel its structural
policies aimed at ensuring the viability of farms and the
development of economic potential, with the objective
of seizing any opportunities which are created and facing
the challenges of the next few years with some guarantee
of success.

7.1.3.
The Committee finds that the proposals are a
necessary but inadequate step towards reducing regional
differences, supporting regions in the throes of economic
reform, and further developing human resources
throughout the Union, as Commission President Santer
made clear in his speech presenting Agenda 2000 to the
European Parliament on 16 July 1997.

7.1.4.
The Committee is particularly pleased that the
proposed reduction of objectives from seven to three
will in future help to make European structural aid more
effective. The Committee also assumes that previous aid
for rural areas (under Objectives 1, 5a, 5b and Leader)
will in future be continued under the new aid schemes
for Objectives 1, 2 and Leader.

7.1.5.
In this connection the Committee would point
to the fact that agricultural workers are not adequately
covered by pre-retirement
schemes. Pre-retirement
arrangements should be worked out in greater detail
within the framework of the planned ‘concentration’
designed to cushion the impact of the general problems
caused by on-going structural changes in agriculture.

7.2. Funding of structural aid

(1) For the 2000-2006 period the Commission presents figures
for all budget lines at constant 1997 prices, with the
exception of the agricultural guideline which is expressed
in current prices.

7.2.1.
The planned funding of structural aid for the
Fifteen during the period 2000-2006 (ECU 230 billion)
will be modulated by geographical area in order to
bolster structural support for disadvantaged regions,
including the northern peripheral regions.

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7.3. Objective 1 and 2 regions

7.5. The Cohesion Fund

7.3.1.
The Committee particularly welcomes the
Commission’s plans not only to apply existing criteria,
but also to develop a criterion that covers regions with
very high unemployment. The Committee calls upon
the Commission to propose as soon as possible a more
precise definition of regions which will in future be
eligible for aid under Objectives 1 and 2. The Committee
likewise calls for statements on the future of the ‘special
arrangements’ intended for the most northerly, sparsely
populated regions.

7.3.1.1.
The Committee welcomes the Commission’s
plans to make transitional arrangements for areas which
will not qualify for structural aid in the future. Such
arrangements will take into account the specific charac-
teristics of such regions and will underpin the benefits
reaped from previous structural aid.

At the present time however the Committee
7.3.1.2.
fails to see in practice how these transitional arrange-
ments could be consolidated and urges the Commission
to take practical steps to identify the regions in question
and to draft appropriate proposals so that interested
parties can be consulted on the actual provisions. This
is true for peripheral EU areas as well as for very low
population-density regions, as is made clear in Agenda
2000.

The Committee is pleased that the Cohesion
7.5.1.
Fund, with due regard for Articles 130d and 104c of the
Treaty, will be available in the future to help those
Member States which are particularly weak in terms of
structures and economic development.

7.6. Structural help for enlargement

7.6.1.
The Committee supports the Commission view
that those states which have opened accession nego-
tiations should receive structural aid. The Funds should
be sufficiently well-resourced to enable these important
obligations of solidarity to be met.

7.6.2.
The Committee is fully aware of the basic level
of appropriations earmarked for the various instruments
and therefore asks whether the planned funding (ECU
38 billion from the Structural and Cohesion Funds for
2000-2006 and ECU 7 billion for pre-accession aid) will
be sufficient to cope with the structural problems of
future Member States.

7.6.3.
The Committee would ask the Commission
how these sums have been calculated and what concrete
problems are to be given priority.

7.3.2.
The Committee welcomes the Commission’s
suggestion that the Community ‘Leader’ initiative should
continue, but would emphasize that it must be provided
with sufficient resources and be applicable in all rural
areas.

7.6.4.
The Committee is particularly interested in
ascertaining how much is to be spent on the necessary
adjustments to agricultural structures and agricultural
social policies in 2000-2006 and what projects would be
involved.

7.4. Objective 3 regions

7.7. Simplification and enhanced effectiveness

7.4.1.
The Committee welcomes the Commission’s
plans to encourage the development of human resources
in regions outside Objectives 1 and 2 areas, so that the
Member States in question can be helped to adapt and
modernize their systems of education, training and
employment.

The Committee would offer the Commission
7.4.2.
its active support and cooperation in framing adequate
criteria and measures to help modernize labour markets
in accordance with the planned employment pro-
grammes and the new employment chapter of the
Amsterdam Treaty. The Committee would in particular
draw attention to its expertise, past record and represen-
tativeness in rural areas,
in the belief that it can
help draw up effective, forward-looking guidelines for
areas:
Europe’s
accompanying economic and social changes; lifelong
education and training systems; active labour-market
policies to fight unemployment; combating social
exclusion. As pointed out above, the ESC expects the
Commission to adopt prompt, concrete measures so
that these goals can eventually be achieved.

employment

strategy

four

in

7.7.1.
The Committee welcomes all Commission
efforts to simplify structural aid measures and make
them more effective.

7.7.2.
The Committee asks the Commission, how-
ever, how a one programme per region approach can
actually promote simplification and achieve greater
efficiencies. This question arises in particular because a
number of different measures — partly co-financed
through programmes under the EAGGF Guarantee
Section — will no doubt continue to be implemented
simultaneously in certain regions.

7.7.3.
The Committee welcomes the Commission’s
intention to give back-up committees greater scope for
action and sees this as an important step in making
structural aid more effective.

7.7.4.
The Committee doubts whether the necessary
funds are available to carry through the Commission
proposal seeking to involve the EAGGF Guarantee
Section in co-financing programmes to promote the

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development of rural areas as part of structural policy
(Objective 1 and Objective 2 regions).

and already cooperate closely with European authorities
in implementing European programmes (Leader, Adapt).

7.7.5. On the other hand, the Committee supports
the Commission’s intention to focus the budget lines
(particularly the ERDF, ESF, FIFG and EAGGF), on
providing structural aid and promoting new targeted
measures.

7.8. Development of rural areas

7.8.1.
The Committee agrees with the Commission
that further changes in ‘market evolution, market policy
and trade rules’ will present new challenges, particularly
for rural economies. These new relations will merely
aggravate the acute economic development problems
already existing today and require the most careful
attention from European institutions and organizations.

The Committee does not however feel that
7.8.2.
concentrating the Commission’s rural development pol-
icy on specific environmental measures, as described in
Agenda 2000, is enough to provide lasting solutions to
the wide-ranging problems of rural areas. This view is
not at odds with the Commission’s statements but seeks
to encourage it to devise a new and effective policy to
secure the sustainable development of rural areas based
on economic projects with a real structural impact.

7.8.3.
The Committee feels that the possibility should
be considered of making rural development a separate
priority in the structural policy charter, within which
all the Structural Funds could be applied.

7.8.4.
The Committee would point out the need for
rural development to specifically include support for the
agro-industrial and agri-food processing sector, and not
only measures to improve technology but also, and
especially, the promotion of research and development
(R&D), quality, specialist training, marketing, etc.

7.8.5.
The Committee would emphasize that agricul-
tural and rural organizations within the European Union
have a wide-ranging experience in rural development

Brussels, 10 December 1997.

It would therefore be logical to make better
7.8.6.
use of these programmes and look at whether they are
targeted effectively and properly.

7.9. The low level of funding earmarked for ‘rural

development’ raises a number of question-marks

specific action taken under

7.9.1.
The Commission estimates that the cost of
‘new rural development accompanying measures’ and
horizontal measures in the fisheries sector (FIFG) will
come to ECU 2 billion in 2006. However, the 1998
preliminary draft budget earmarks more than ECU
3 billion for
these
accompanying and horizontal measures (Objectives 5a
and 5b, FIFG, rural development actions taken under
Objective 1). The Committee therefore concludes that
the Commission is projecting a lower level of EU support
for rural development directly linked to the activities of
farmers (and fishing) in the year 2006. Does this not go
against the general thrust of the proposed reform? The
Committee calls upon the Commission to explain this
point in greater detail?

7.10. Environmental action

The Committee endorses the Commission
7.10.1.
conclusions that ‘a prominent role will be given to
agri-environmental instruments to support a sustainable
development of rural areas and respond to society’s
increasing demand for environmental services’ (1).

The Committee welcomes the proposal that
7.10.2.
‘targeted agri-environmental measures
should be
reinforced and encouraged through increased budgetary
resources and, where necessary, higher co-financing
rates’ (1).

7.10.3.
The Committee welcomes the Commission’s
decision to emphasize in particular ‘services which call
for an extra effort by farmers, such as organic farming,
maintenance of semi-natural habitats and cattle raising
in upland areas’ (2).

7.10.4.
more effectively into common market organizations.

Environmental measures should be integrated

(1) Agenda 2000, Vol. I, p. 33.
(2) Agenda 2000, Vol. I, p. 33 and 34.

The President

of the Economic and Social Committee

Tom JENKINS

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APPENDIX I

to the opinion of the Economic and Social Committee

The following amendments were defeated during the debate:

Insert, after point 3.4.3, a new point 3.4 bis as follows:

‘3.4bis Sugar

The sugar regime has not been reformed since 1968. The Commission now states that by 2005 the
increasing EU-15 surplus will be 3,5 million tonnes plus a further 750 000 tonnes from the CEFTA
countries.

Having stated that, it does not propose any action though the price paid for sugar is already well out of
line with that for competing crops. The discrepancy will increase as a result of the proposals for these
other crops.

In this sector too therefore reform is needed, as noted in 2.3.3. The Committee calls upon the Commission
to complete Agenda 2000 by making proposals for this sector, particularly since the cost is very largely
paid for by higher consumer prices.’

Reason

The sugar regime is becoming increasingly expensive as prices for beet become increasingly out of line
with those for the reformed crops. The Commission has repeatedly put off reform, probably because
the sugar regime is only a small charge on the Community budget (mainly as a subsidy to the ACP
countries and the French Overseas Departments). The bulk is paid by a charge on consumer prices.

The Committee often prides itself in looking after consumer interests. We could be failing in our duty if
we did not press for this reform.

Result of the vote

For: 35, against: 71, abstentions: 6.

Points 6.1 and 6.2

Replace by the following:

‘The Committee calls on the Commission to put forward proposals, as soon as possible, on specific
ceilings for direct payments and other provisions affecting farmers’ incomes, along with criteria for
differentiation aiming to apportion farm aid fairly among the different producers and regions.’

Reason

Reduced resources make it necessary to concentrate farm aid first and foremost on those in greatest need
as opposed to unfairly increasing the wealth of a select few.

Result of the vote

For: 30, against: 65, abstentions: 17.

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APPENDIX II

Agricultural market prospects until 2005 for the EU-15 and the ten CEEC, according to the European
Commission (CAP 2000 report)

— Cereals (million tonnes)

1994/
1995

1995/
1996

1996/
1997

1997/
1998

1998/
1999

1999/
2000

2000/
2001

2001/
2002

2005/
2006

Production

172,2

174,5

200,7

201,2

192,4

195,4

198,4

201,4

213,2

Consumption

158,9

164,9

169,6

171,1

171,8

172,4

173,0

174,0

177,9

Imports

Exports

Initial stocks

Final stocks

of which interven-
tion stocks

5,5

27,4

34,3

26,0

7,0

19,6

26,0

23,0

3,9

31,2

23,0

26,8

4,5

31,7

26,8

29,7

5,0

29,9

29,7

25,3

5,0

28,1

25,3

25,1

5,0

26,4

25,1

29,7

5,0

26,4

29,2

35,2

5,0

26,4

65,4

79,3

9,7

2,7

5,2

10,7

6,9

4,4

8,4

14,3

58,0

Source: European Commission.

— Adult beef cattle + calves (million tonnes)

Production

Consumption

per capita consump-
tion/per annum (kg)

Imports

Exports

Stock

1995

1996

1997

1998

1999

2000

2001

2005

8,0

7,5

8,0

6,9

7,9

7,1

7,6

7,2

7,2

7,2

7,3

7,3

7,6

7,3

7,7

7,2

20,1

18,6

18,9

19,1

19,3

19,3

19,4

18,9

0,37

1,00

0,02

0,36

0,96

0,43

0,38

0,91

0,73

0,40

0,83

0,59

0,40

0,77

0,29

0,40

0,70

0,04

0,40

0,67

0,04

0,40

0,67

1,50

Production corresponds to slaughtered animals (gross indigenous production + balance of live animals).
As a consequence, imports and exports only concern trade in meat.

Source: European Commission.

— Milk sector (thousands of tonnes)

1995

1996

1997

1998

1999

2000

2001

2005

Whole milk (1)

9 448

9 348

8 791

8 843

8 881

8 903

9 024

9 430

115

85

14

121

107

125

121

68

113

121

39

115

121

18

134

121

7

170

121

0

213

121

0

197

Cheeses (2)

Butter (2)

Skimmed milk powder(2)

Source: European Commission.

(1) Disposable surplus.
(2) Final stocks.

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— 10 CEEC (thousands of tonnes)

Cereals

Oilseeds

Milk

Beef/veal

Source: European Commission.

1994

- 107
288

1 255
- 82

2002

- 3 184
1 225

1 058

70

2005

- 1 078
869

2 006

435

APPENDIX III

Timetable by product of the export commitments of the European Union-15 (1)

(Commitments in volume terms)

Annual ceiling of subsidized exports (2)
(in ’000 tonnes)

Products

Reference
level
1986-1990 (3)

1995

1996

1997

1998

1999

2000

Wheat and wheat flour

18 276,0

20 408,1 19 212,7 18 020,7 16 825,4 15 630,0 14 438,0

Feed-grain

Rice

Colza

Olive oil

Sugar

Butter and butteroil

Skimmed-milk powder

Cheese

Other dairy products

Beef/veal

Pigmeat

Poultrymeat

Eggs

Wine (’000 hl)

Fresh fruit and vegetables

Processed fruit and vegetables

Raw tobacco

Alcohol (’000 hl)

Other products

13 725,6

13 690,2 13 120,6 12 551,5 11 981,9 11 412,3 10 843,2

168,9

131,4

145,6

163,0

126,8

140,5

157,1

122,2

135,4

151,3

117,6

130,3

145,3

113,0

125,2

139,3

108,4

120,1

133,4

105,8

115,0

1 612,0

1 555,6

1 499,2

1 442,7

1 386,3

1 329,9

1 273,5

505,5

344,9

406,7

1 212,8

1 040,1

561,4

362,0

125,0

487,8

355,0

426,5

470,1

322,5

405,4

452,4

310,0

384,4

434,7

297,5

363,3

417,0

285,0

342,3

1 185,4

1 140,0

1 094,5

1 049,0

1 003,6

1 137,0

1 073,9

1 010,9

541,8

434,5

126,1

522,1

404,7

120,6

502,5

375,1

115,2

947,8

482,8

345,4

109,7

884,6

463,2

315,6

104,2

399,3

272,5

321,3

958,1

821,7

443,5

286,0

98,5

2 917,4

2 851,4

2 742,1

2 632,8

2 523,4

2 414,1

2 304,7

653,7

181,4

140,5

92,3

175,1

190,0

886,9

168,7

174,1

853,6

162,4

158,3

820,7

156,0

142,5

786,8

149,7

126,6

753,4

143,3

110,8

1 452,4

1 401,6

1 350,7

1 299,9

1 249,1

1 198,2

1 147,4

—

—

—

—

—

—

—

Source: based on ‘lists’ submitted to the WTO by the EU on 28 February 1996.
(1) Excluding food aid.
(2) Commitments in volume terms are applicable by periods of twelve months commencing on 1 July and ending on
30 June. The exceptions are rice and wine (1 September to 30 August) olive oil (1 November to 30 October) and
sugar (1 October to 30 September).

(3) Figures for 2000 are in all cases equal to (3) — 21 %.

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APPENDIX IV

Financial prospects for 2000-2006

— Agricultural expenditure (current prices)

ECU billion

1999

2000

2001

2002

2003

2004

2005

2006

Guideline (current prices) (1)

45,0

46,7

48,5

50,6

52,5

54,7

56,9

59,2

Agricultural expenditure
(current prices)

EU-15

Reformed CAP

New rural development accompany-
ing measures and horizontal fisheries
measures

New Member States

CAP (market measures)

Specific
companying measures

rural

development

ac-

Preaccession aid (2)

Margin

Source: European Commission, Agenda 2000.
(1) Assumed 2 % deflator per year from 1999 to 2006.
(2) Equal to ECU 500 million at current 1997 prices.

44,0

45,9

49,7

52,1

53,2

53,9

54,5

41,7

41,6

43,4

45,4

47,3

47,9

47,9

47,9

1,9

2,0

2,0

2,0

2,0

2,1

2,1

0,0

0,0

0,5

2,7

0,0

0,0

0,5

2,6

1,1

0,6

0,6

0,9

1,2

1,0

0,6

0,5

1,2

1,5

0,6

1,5

1,3

2,0

0,6

3,0

1,4

2,5

0,6

4,7

— Expenditure on structural operations (1997 prices)

ECU billion (1997 prices)

1999

2000

2001

2002

2003

2004

2005

2006

EU-15

Structural Funds

Cohesion Fund

New Member States (1)

Pre-accession aid

Total

31,4

2,9

31,3

32,1

31,3

30,3

29,2

28,2

2,9

0,0

1,0

2,9

0,0

1,0

2,9

3,6

1,0

2,9

5,6

1,0

2,9

7,6

1,0

2,9

9,6

1,0

34,3

35,2

36,0

38,8

39,8

40,7

41,7

27,3

2,9

11,6

1,0

42,8

Source: European Commission.
(1) Including participation in the Cohesion Fund.