Opinion of the Committee of the Regions on the "Communication from the Commission to the Council and the European Parliament: Mid-Term Review of the Common Agricultural Policy"
Date: 2002-11-20
Institutions: European Committee of the Regions
Subjects: agricultural guidance, aid to agriculture, common agricultural policy, common organisation of markets, distribution of aid, food safety, mode of production, rural development

26.3.2003

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Official Journal of the European Union

C 73/25

Opinion of the Committee of the Regions on the ‘Communication from the Commission to the
Council and the European Parliament: Mid-Term Review of the Common Agricultural Policy’

THE COMMITTEE OF THE REGIONS,

(2003/C 73/07)

having regard to the Communication from the Commission to the Council and the European Parliament:
Mid-Term Review of the Common Agricultural Policy (COM(2002) 394 final);

having regard to the decision of the European Commission of 10 July 2002 to consult it on this matter,
under the first paragraph of Article 265 of the Treaty establishing the European Community;

having regard to the decision of its Bureau on 14 May 2002 to instruct the Commission for Sustainable
Development to draw up an opinion on this subject;

having regard to its opinion on The proposals for Council Regulations (EC) concerning the reform of the
common agricultural policy (CdR 273/98 fin) (1);

having regard to the draft opinion (CdR 188/2002 rev.) adopted on 3 October 2002 by the Commission
for Sustainable Development (rapporteur: Mr Robert Savy, President of the Limousin Regional Council,
F/PES),

adopted the following opinion at its 47th plenary session, held on 20 and 21 November 2002 (meeting
of 20 November) by a majority vote.

The Committee of the Regions’ points of view and
recommendations

1.1.
The Committee of the Regions endorses the initiative
taken by the European Commission to make proposals, in its
mid-term review of the CAP, which can contribute to the
broad debate on the future of the Common Agricultural Policy
underway among the Member States, the farming sector and
the general public.

1.2.
The need for a discussion on the future of this sectoral
policy had already become abundantly clear: it accounts for
almost 50 % of the European Union’s resources, and has
implications for rural areas throughout the 15 Member States
at a time when the CAP is likely to be affected — and perhaps
challenged — by a range of events:

— the recent health issues (BSE, foot-and-mouth disease,
dioxin), regular warnings on nitrate levels in water, and
questions about the use of GMOs have eroded consumers’
confidence in the ability of European agriculture and the
European food industry to provide healthy, high-quality
products under environment-friendly conditions. Farmers
are often the victims of these devious practices, in the
same way as consumers are;

— the opening of a new round of negotiations on trade
liberalisation in Doha, including a chapter on agriculture,
the call
for reform of agricultural subsidies in the
developed world by the G77 group at the World Summit
on Sustainable Development in Johannesburg, and the

( 1) OJ C 93, 6.4.1999, p. 1.

unilateral decisions on the part of the United States (Farm
Bill) compel the European Union to deliberate on the best
way to uphold the European agricultural model, as called
for by the Committee of the Regions as long ago as 1999
(CdR 273/98 fin);

— the imminent entry into the EU of new countries, where
the farm sector’s level of preparedness for the CAP varies,
means that there must be discussion on how best to
prepare these new members for Community requirements
in areas such as food safety, traceability or environmental
awareness. Common EU standards apply in principle to
all Member States — there must be no scaling-down of
the higher EU standards and differing standards must not
be applied;

— the profound changes presently under way in rural society
are leading farmers to question their place and role, the
way they are viewed by society in general, and the future
of the countryside against a backdrop of inter-territorial
competition.

The Committee of the Regions is pleased to note, in
2.1.
this regard, that the European Commission restates the need
to continue a long-term common agricultural policy. While
there may still be room for progress in trade liberalisation, a
common agricultural policy will continue to be essential in
order to safeguard the European agricultural model and
enable agriculture and rural communities to respond to the
expectations of present-day society.

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2.2.
The European Commission’s communication generally
builds on a process launched some ten years ago which it
seeks to complete and safeguard in the long term, but which
sets out a number of fundamentally new elements to be
included in the CAP. The purpose is to strike the best possible
balance between demands which are difficult to reconcile, but
which are equally crucial. Agenda 2000 set objectives around
which a consensus has been established which the European
Commission does not call into question:

3.2.
The CoR wishes to see a greater acknowledgement of
the role of local and regional authorities in promoting rural
development in a reformed CAP. This is because local and
regional authorities have legal responsibility for a range of
statutory and discretionary rural activities which are directly
related to the European Commission’s proposals, such as
strategic land management, and promoting the economic,
social and environmental well-being of rural communities.

— adjusting intervention mechanisms in order to strengthen
their role as a safety net, with the aim of cutting export
refunds, which distort trade and have earned worldwide
criticism. Appropriate provisions must, however, ensure
that European agriculture continues to have good oppor-
tunities on the national and world markets, without
making matters even more difficult for the least developed
countries;

— gearing agricultural production to the products or services
wanted by the public, rather than to those offering the
greatest financial incentives, by providing special support
for traditional, high natural value production systems;

— upholding and stabilising farm incomes so as to ensure a
fair standard of living for agricultural populations and to
retain the greatest possible variety as regards both the
form and size of farms. The CAP must help to promote
hand-over to the new generation in the farm sector by
offering attractive and economically stable prospects to
young farmers. In this connection, the Committee would
point to the guidelines set out in its opinion (Young
people in European farming — a blueprint) adopted on
13-14 June 2002, and its backing for the joint declaration
on young farmers issued by the European Parliament, the
Committee of the Regions and the Economic and Social
Committee on 6 December 2001;

— ensuring that concerns about food safety, product trace-
ability, respect for the environment, protection of farm
employment and occupation of the land are built into the
CAP.

3.3.
The Committee of the Regions endorses many of the
proposed approaches. It approves and supports the payment
of direct aid to offset falls in farmers’ incomes and it supports
the desire to make more of rural development as the second
pillar of the CAP. It is also in favour of taking greater account
of environmental and animal-protection requirements on a
scale acceptable to farmers, with compensation for the
additional costs incurred. It also understands the European
Commission’s wish to lower intervention prices. However,
the Committee of the Regions also wonders whether the
decoupling of direct payments from farmers’ output, the
nature and scope of the ‘phasing-out’ of direct payments in the
area of market organisation and the method chosen for
incorporating additional ecological requirements and monitor-
ing compliance with these will actually lead to the stated
objectives. Further close study of the proposed measures is
needed.

The Committee of the Regions believes in particular
3.4.
that the European Commission’s proposals are a good basis
for discussion for the further development of the CAP after the
expiry of Agenda 2000, but that the most significant of these
proposals should not be implemented before the expiry of
Agenda 2000. It would thus be appropriate to establish a legal
and support framework for the PAC exceeding the duration of
the present framework (six years), in order to ensure that
farmers have sufficient confidence and trust in the legislative
framework in force for the development of their activity in the
medium term.

2.3.
The Committee of the Regions’ opinion on the Euro-
pean Commission’s general approach will be based on these
considerations.

In the CoR’s view,

3.1.
the communication from the
European Commission does not contain the details necessary
to gauge the exact scope of each of the proposals. The way
they are specified and implemented may substantially alter
their thrust. They are simply outlines for a debate in the course
of which Community interests, national concerns, and the
specific interests of certain products or territories can then be
voiced. Political arrangements may be reached after the debate
has been completed.

4.1.
Entirely decoupling payments from any reference to
production and introducing a single income payment per farm
offers advantages. Basically, it confirms the principle by virtue
income support
of which price falls are offset by direct
payments to farmers. The principle of single payments may
streamline the administrative work involved in implementing
the CAP. Decoupling reflects the wish to reinforce the market
in its role in shaping agricultural production and farmers’
entrepreneurial function: farmers’ decisions would no longer
depend on public incentives but primarily on market prices.
The CoR also supports the principle of decoupling as a method
of protecting European and Member State public finances.
Direct aid decoupled from production would have to reflect
the need to uphold agricultural employment,
in order to
prevent a rise in unemployment in certain regions.

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4.2.
The Committee of the Regions would, however, draw
attention to the risks of the proposed system of decoupling,
since it would confirm the current regional differences. The
present proposal would maintain the present situation, where
farmers with the highest yield receive much more aid per
hectare than those producing less. Granting aid unconnected
to production may distort the conditions of competition
between farmers and destabilise certain products, as would be
the case whenever an assisted farm was able to both keep the
payments and switch from its former production to more
profitable types, threatening other farms practising this type
of production which had not previously received any public
aid.

The proposed system might lead to some drawbacks,

4.3.
which need to be studied further, as for example:

— a decision by farmers to undertake new productions
could generate over-capacity in certain markets presently
in receipt of little aid, with a resulting fall in prices and
possible abandonment of some farms. The Commission
itself acknowledges this in point 2.5: decoupling ‘... may
also create pressures towards abandonment in some
marginal areas’;

— changes in production may cause supply difficulties in
certain branches of
the food industry, and lead to
company relocation (e.g. towards ports of arrival of
imported farm products) detrimental to the economy of
rural areas;

— this system might tend to drive up the price of farmland,
where the reference to ‘historical payments’ would pro-
vide an entitlement to a high single payment: the resulting
pressure on farmland might encourage the formation of
large holdings rather than new farmers setting up. In the
it might accelerate the trend to
opposite direction,
abandonment observed in some areas;

— the new system does not make provision for compen-

sation or for the incorporation of new farmers.

The Committee of the Regions also has some questions
4.4.
about
the proposed methods for
the appropriateness of
calculating the single income payments. It would be based on
the level reached by all aid paid previously to the farm
according to procedures yet to be specified. This gives rise to
three questions, on which further investigation would be
needed:

— Is the reference to historical entitlements compatible with
gearing single payments to the objectives of the CAP?

— Is it acceptable that this system penalises those who,
because they have opted for a more sustainable and less
production-intensive way of agriculture, have received
less subsidy?

— Is it sensible not to require any commitments regarding

production on the part of beneficiaries?

4.5. Without ruling out decoupling in advance, the Com-
mittee of the Regions hopes that a rigorous assessment of the
risks involved will be carried out prior to any decision, and
that there will be a discussion on how to avoid this pitfall.
There might be some drawbacks to the system proposed by
the Commission, which need to be further studied.

5.1.
The Committee of the Regions notes the European
Commission’s proposal to set up a progressive payment
modulation system in all the Member States of the European
Union, accompanied by capping and franchise arrangements.
This can serve as a means of redressing the non-egalitarian
nature of the current method for distributing aid, under which
20 % of farms receive 80 % of the Community contribution.

The introduction of a franchise will enable smaller and/
5.2.
or labour-intensive farms to be exempted from the progressive
payment reduction. This is a step closer to meeting the concern
earlier expressed by the Committee (CdR 273/98 fin) to
encourage family farming and employment in rural areas. At
the same time allowance should also be made for the peculiar
structural situation of farming in some regions which results
from the size of its businesses — in particular to avoid job
losses. The question is, however, whether:

— the amount of the franchise should be raised; whether

— it would be appropriate to introduce supplementary
franchises of up to 100 % of aid for young farmers,
upland regions and islands, as well as farms concentrating
exclusively on organic farming; and whether

— the rate of EU cofinancing should be improved for all
measures under Regulation (EC) 1257/1999, rising to
75 % for non-Objective 1 areas, and 90 % for Objective 1
areas.

5.3.
EU proposals to cap direct payments must be thought
out and designed to reflect the diversity of land-ownership
structures and farm sizes across the Member States’ regions. A
uniform maximum of EUR 300 000 is probably not a good
solution throughout the European Union. It can sometimes
encourage concentration of farms of up to 800 or 1 000 hec-
tares, wiping out the previous family-run structure; on other
occasions,
it can jeopardise employment and
competitiveness in large farms.

in contrast,

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The Committee of the Regions urges that territorial
in the rules governing

5.4.
diversity be taken into account
implementation.

The Committee of the Regions endorses the Com-
6.1.
mission’s proposals to consolidate and strengthen rural devel-
opment as the second pillar of the CAP. It welcomes the new
accompanying measures aimed at encouraging farmers to
participate in quality assurance and certification schemes,
including geographical indications and designations of origin,
animal and environmental protection, and organic farming.

However,

6.2.
it regrets that the European Commission
sees rural development principally as an extension of farming
activity. In most rural areas nowadays, agriculture is not the
main economic activity: tourism, crafts, services, small-scale
industry and cultural activities now complement farming as
components of rural development. On the basis of experience
with the Leader programmes, the Committee of the Regions
calls for procedures to be devised for implementing rural
development measures as part of a comprehensive strategy
drawn up at individual territorial level by local actors them-
selves. It also calls for greater flexibility in the rules for use of
the EAGGF guarantee section, so that rural territories can bring
an innovative approach to their development projects.

7.1.
The Committee of the Regions agrees with the indi-
cations set out in the Commission’s communication for
promoting more environment-friendly production methods. It
specifically approves stronger standards in this area, a system
of checks effectively making payment of aid dependent on
compliance with requirements, and transitional help to facili-
tate farmers in adjusting.

7.2.
The Committee of the Regions is, however, concerned
at the difficulty in reconciling producers’ compliance with
environmental standards and their market competitiveness in
a context of trade liberalisation. The Committee believes that
actual implementation of the rules governing the environment,
food safety, working conditions and animal welfare must be
verified either within the WTO or at the point of entry of
products into EU territory: otherwise, European producers will
be penalised and there will be no appreciable impact on the
main ecological balances.

8.1.
Lastly, the Committee of the Regions considers that
the future of the CAP must be shaped in the broader setting of
the main challenges facing the European Union. The EU must
present itself as a power capable of upholding its values and
interests at world level.

Since the European Union is a world power,

8.2.
it
must wield its influence to ensure that the rules governing
international trade in farm produce match its interests and
values. In keeping with this, the new CAP must take realistic
account of the new international context arising from Amer-
ican unilateralism, and seek to set up a balanced, fair system
of trade with the developing nations. These inseparable twin
concerns do not stand out sufficiently in the European
Commission’s communication.

8.3.
The imminent enlargement of the EU must not lead to
a progressive watering-down of the European social and
agricultural model in a vast and open market, with common
policies gradually being abandoned. For this reason,
the
Committee of the Regions welcomes the Commission’s deter-
mination to maintain a strong common agricultural policy.
in its communication the European Commission
However,
remains vague about how farmers in the candidate countries
can meet competitiveness, quality, traceability and food safety
requirements, and about the possible impact of these changes
on the countries concerned. The CoR believes requirements on
food safety and animal welfare need to be maintained even in
an enlarged EU. Nothing less than social and territorial
cohesion are at stake here, and a balanced assessment of the
positive and/or negative effects of the CAP on each of the
territories comprising the post-enlargement EU remains to be
made.
It is therefore important to involve the candidate
countries in the discussions on the mid-term review. The CoR
hopes that in its proposal, the Commission will specify the
help to be given to farmers in the candidate countries in order
to progressively meet these requirements.

8.4.
Lastly, the Committee of the Regions regrets that the
European Commission fails to establish a link between CAP
reform and reform of regional policy. This ties in with the
weakness of the territorial impact analysis for the proposed
measures. As parallel debates are conducted on the two
costliest Community policies, this is the moment for tackling
them together, so that neither is seen as the balancing variable
of the other.

The Committee of the Regions did not believe it
9.1.
practicable,
in the present opinion, to broach the specific
problems posed by the organisation of the market in each of
the main farm products. Firstly, the planned timetable would
not allow it to carry out meaningful consultations with the
various players; and secondly, it seemed appropriate to give
the priority to describing the main lines of the reform and, if
necessary, to point out any ambiguities. At the appropriate
time,
the Regions would hope to be
consulted on the specific measures to be proposed.

the Committee of

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9.2.
Lastly, the CoR is surprised by the absence of any
reference to the regional dimension of the Common Agricul-
tural Policy. This is all the more damaging in that this policy
has a growing structural dimension of direct concern to the
regional authorities, who are increasingly pressed to contribute
to the funding of certain agricultural
flanking measures.
The CoR therefore calls upon the European Commission to
formulate proposals in this area, so that regional and local
authorities can occupy their rightful position and play their
proper role, particularly in terms of alleviating the structural
disadvantages affecting certain upland regions and islands in
the European Union.

9.3.
At this stage, however, the Committee of the Regions
wishes to emphasise the need, when implementing the CAP,
to take on board the diversity of
territories, crops and
production methods throughout the European Union; the
cohesion objective laid down by the Treaty recommends that
Community rules be brought into line with this diversity in
order to reduce disparities between the levels of development
and the backwardness of the least favoured regions or islands.
The following should also be given their proper place, which
they lack in the current text:

— Scandinavian and Mediterranean agricultural production;

— production from regions affected by permanent structural
their island or upland

disadvantages as a result of
situation.

It will probably also have to be accepted that, for certain
products, regulation by the market will not allow CAP
objectives to be met, and that mechanisms similar to those
currently in force for sugar and milk should not be ruled out
systematically.

9.4.
The Committee of the Regions believes that sustainable
rural development can only be achieved by fully involving

Brussels, 20 November 2002.

local and regional authorities in the detailed implementation
of the final reforms. The Mid-Term Review is a good start to
the process of reforming the CAP, recognising that support to
agriculture must be matched by clear measures to promote a
living countryside. A reformed CAP is vital to the future of an
enlarged Europe. The CoR also recognises that it is important
to get these reforms right rather than agree half-measures.

9.5.
In the Committee of the Regions’ view, the growing
debate must not be dogmatic in tone and should, in the final
analysis, achieve a balance between regulation of the market
and regulation by the Community, without which the Euro-
pean agricultural method would be under threat. The stakes
are so high that the EU’s partners must take all the time they
need.

that

In this respect, the Committee of the Regions welcomes
9.6.
the fact
the Brussels European Council of 24 and
25 October 2002 did not call into question the need for, and
the main objectives of, a far-reaching reform of the Common
Agricultural Policy.

It notes the Council’s desire to look at the future of agriculture
from a long-term perspective (2013) and welcomes the
reassertion of the need to maintain multifunctional agriculture
in all areas of Europe and to safeguard the needs of farmers in
the disadvantaged regions.

The Committee of the Regions hopes that the time the
European Council has given itself to complete this reform will
be used to look in detail at the consequences of decoupling
payments and production, to take into account the diversity
of farmers throughout Europe in the modulation of payments,
and to find the resources to finance rural development that is
vital for the territorial cohesion of Europe.

Lastly, the Committee of the Regions hopes that it will be kept
informed of the progress made by the Commission in terms of
its deliberations on the reform of the CAP and consulted on
the legislative proposals it will be required to put forward.

The President

of the Committee of the Regions

Albert BORE