Opinion of the European Economic and Social Committee on the "Communication from the Commission to the Council and the European Parliament on the Mid-term review of the Common Agricultural Policy" (COM(2002) 394 final)
Date: 2002-12-11
Institutions: European Economic and Social Committee
Subjects: EU policy, State aid, agricultural expenditure, common agricultural policy, common organisation of markets, rural development, sustainable development

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Opinion of the European Economic and Social Committee on the ‘Communication from the
Commission to the Council and the European Parliament on the Mid-term review of the Common
Agricultural Policy’

(COM(2002) 394 final)

(2003/C 85/19)

On 6 December 2002 the Commission decided to consult the European Economic and Social Committee,
under Article 262 of the Treaty establishing the European Community, on the above-mentioned
communication.

The Section for Agriculture, Rural Development and the Environment, which was responsible for
preparing the Committee’s work on the subject, adopted its opinion on 14 November. The rapporteur
was Mr Kienle.

At its 395th plenary session, held on 11 and 12 December 2002 (meeting of 11 December), the European
Economic and Social Committee (EESC) adopted the following opinion by 82 votes to 3 with
10 abstentions.

1. Preliminary observations

The importance of the debate on the further develop-
1.1.
ment of the EU’s Common Agricultural Policy (CAP) goes far
beyond the economic and social concerns of the agricultural
sector. Food safety, security of food supplies and consumer
protection also enter into the debate. As by far the main user
of land, agriculture has a considerable role to play in terms of
both environmental protection and nature conservation and it
is important for the development of attractive rural areas
offering a good quality of life.

1.2.
Agricultural enterprises have to satisfy and strike a
balance between economic, environmental and social require-
ments, with due regard to the principle of sustainability and a
European agricultural model that is geared to the promotion
of a competitive, multifunctional agricultural sector. If agri-
culture is not economically successful, many of the social goals
which it has been set will be impossible to fulfil.

1.3.
There is no doubting the fact that in recent years
agriculture and agricultural policy have come under the critical
gaze of society on an unprecedented scale. Attention has been
focused on food scandals and the conclusions to be drawn
from these scandals. The need for better EU food legislation
and overall quality assurance schemes has taken on a com-
pletely new significance both for farmers and the whole of
the food chain. Farmers, the food industry, consumers and
politicians have recently started to offer a constructive response
to these challenges.

The EESC has carried out a detailed, up-to-date and
1.4.
proactive examination of the CAP and the operation of
Agenda 2000 in a number of documents,
in particular its
own-initiative opinion on the Future of the CAP (20/21 March
2002) and its own-initiative opinion on a policy to consolidate
the European agricultural model (20/21 October 2000). Close
cooperation with the European Parliament’s Committee on
Agriculture and Rural Development has proved to be particu-

larly valuable in this context. In addressing these issues, the
EESC was seeking, not least, to exploit the heightened interest
in these matters on the part of many individuals and organis-
ations in order to provide the European model for a multifunc-
tional agricultural sector with long-term political guarantees.
The opinion set out below on the Communication from the
Commission on the mid-term review of the CAP thus rep-
resents a continuation of the EESC’s earlier approach to this
issue.

The agreement reached at the Brussels Summit on 24
1.5.
and 25 October 2002, which clears the way for the historic
eastward enlargement of the European Union, and already
clearly defines the CAP’s financial framework for agricultural
market regimes and direct payments in the period up to 2013,
in no way alters the EESC’s determination to examine in
detail the observations and proposals put forward by the
Commission in its Communications.

2. Key aspects of the Commission’s Communication of

10 July 2002

2.1.
The Communication refers to the mandate given by
the Berlin European Council to the Commission to submit a
mid-term review of Agenda 2000. The objectives are essentially
the same as those set at the Berlin and Göteborg European
Councils, viz.: a competitive agricultural sector; environmen-
tally-friendly production methods and quality products; a fair
standard of living and income-stability for farmers; preser-
vation of cultural
landscapes; simplification of agricultural
policy and a socially-acceptable justification of support for the
services provided by farmers. The Commission rejects the
notion of abolishing support or renationalising the CAP; it
likewise rejects the notion that EU agriculture should limit
itself to a passive role.

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2.1.1.
The Commission’s idea is that, following consultation
of the EU institutions and interested parties, legislative pro-
posals are to be submitted by the end of 2002/beginning of
2003.

2.2.
The proposals provide for a further reduction in price-
support for some agricultural market regimes. In particular,
cereals and rice will be affected. The Commission takes the
view that in such cases intervention is to form only a lower
safety net which is rarely triggered. In return, compensatory
payments are to be granted or increased. The Commission is
also seeking to abolish the monthly increments for the cereal
intervention price without any form of compensation. The
abolition of intervention for rye is a further proposal. In the
case of durum wheat and dried fodder, the current aid linked
to production is to be reduced or replaced by income-support
measures for farmers. For nuts, the Commission proposes
introducing a permanent support system comprising a flat-
rate payment which may be topped up by the Member States
up to a given ceiling. In the dairy sector the Commission
merely presents four different options for the future. Although
the Commission makes no direct proposals in respect of
oilseeds and beef, the impact which a possible decoupling and
modulation would have on these products — and also on milk
— is of the utmost importance.

2.3.
The Commission proposes revamping the previous
system of compensatory payments in respect of prices by
introducing ‘decoupling’. Payments for field crops, livestock
premiums and, from 2005, compensatory payments for milk
will be affected in particular. It is proposed that compensatory
payments be decoupled from the current basis of calculation
(e.g. per head of livestock or per hectare of cultivated land)
and that they be paid directly to farmers in the form of an
income-support payment (general
‘farm income payment’).
Under the Commission’s proposal, the size of the farm income
payment will be geared to the level of EU compensatory
payments made hitherto to a farm (historical basis). In future,
however, new criteria are to be applied to all direct payments.
These payments will thus be redefined and, to a certain extent,
‘recoupled’ (see point 2.5 below).

2.4.1.
If farmers transfer, sell or lease out land, a pro-
portionate amount of the farm income payment is transferred
to the new farmer (equivalent to ‘per hectare-payments’). The
Commission wants to ensure that, as a matter of principle, the
decoupling of compensatory payments from production is not
used to bring about a redistribution of payments between
farms, types of products, regions or Member States; the aim is
to ensure that present payments to farmers are, in principle,
safeguarded. The Member States are, however, to be given the
possibility of basing the calculation of
the farm income
payment in part on regional or national average values.

2.5.
In future all direct payments are to be conditional on
compliance with environmental, animal welfare, food safety
and land-management standards (cross compliance). The direct
payments are therefore linked to the observance of criteria in
respect of ‘good farming practice’. The Commission intends to
put forward concrete proposals with a view to defining an EU
framework for these standards.

2.6.
The Commission also proposes that a system of farm
auditing, relating to the observance of environmental, animal
welfare, food safety and management standards, be introduced
on a mandatory basis in the case of farms receiving more than
EUR 5 000 per year in direct payments (farm audits). It is
proposed that a compulsory, 10-year, environmental set-aside
scheme be introduced for arable land in place of the existing
rotational set-aside scheme.
the fact that the
production of energy crops on set-aside land is to be stopped,
the Commission proposes the introduction of a ‘carbon credit’;
this scheme, designed to promote climate protection, would
involve the payment of per hectare aid in respect of land used
for the production of energy crops.

In view of

2.7.
The current system of voluntary modulation is at
present only applied in the UK. It has been discontinued in
France and abolished in Portugal, but Germany plans to
introduce it from 2003. The Commission proposes that a
system of ‘dynamic’ modulation be made compulsory in all EU
Member States from 2004. With this aim in view,
the
Commission proposes that direct payments to farmers be
reduced progressively by 3 % per year. The maximum rate of
20 % would thus be reached in 2010.

The Commission is seeking to convert as many of the
2.4.
existing compensatory payments as possible into a general
farm income payment, to cover field crops, legumes, starch
potatoes, beef, milk (from 2005) and sheep. The Commission
is proposing extensive changes to the organisation of the
markets for rice, durum wheat and dried fodder. Current
production quotas and planting rights are to be maintained.
The Commission’s guiding principle is that farmers should be
given greater room for manoeuvre when deciding which crops
to grow. In the case of set-aside, however, the rules are to
be further tightened; the Commission proposes introducing
compulsory long-term set-aside (10 years).

The Commission further proposes the introduction
2.7.1.
of ‘franchises’ totalling EUR 5 000 in respect of the first
two full-time employees and EUR 3 000 in respect of any
subsequent full-time employees; according to the Commission,
this would mean that three-quarters of all farms in the EU
would be exempt from the reductions in direct payments. The
Commission also proposes that the direct payments paid to
individual farms be capped at EUR 300 000. This, together
with the proposed franchise per employee, would have an
it is therefore essential to make a
impact on large farms;
detailed assessment of the effects which these proposals would
have on farms, jobs and regions.

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2.7.2.
According to the Commission, introduction of the
system of modulation will not, in principle, result in Member
funding for co-
States having to provide extra national
financing measures up to 2006, particularly since the rate of
Community co-financing for agri-environmental measures
(and the proposed animal welfare measures) is to be increased
by 10 percentage points.

2.8.
Under the Commission’s proposals, savings brought
about as a result of modulation are to be credited to the EU
budget and subsequently redistributed to the Member States
for use in rural development programmes (second pillar).
Redistribution is to be based on criteria such as productive
agricultural land, agricultural employment and prosperity. This
may result in some shifts in the pattern of distribution between
Member States. Savings made above the capped limit of
EUR 300 000 per farm plus the franchise may, however, be
kept by the Member States to fund second pillar measures.

New aid measures, in particular the promotion of
2.8.1.
food quality, are to be introduced under the second pillar.
Farmers participating in voluntary quality assurance and
certification schemes are to receive aid. Promotion activities
by producer groups and environmental quality programmes
are to be supported accordingly.

2.8.2.
The Commission would also like to provide assist-
ance to farmers to enable them to observe new standards laid
down in the fields of the environment, food safety, animal
welfare and farm management in connection with a new EU-
wide definition of ‘good farming practice’. Aid is to be payable
in the form of a degressive annual compensatory payment for
a maximum period of five years. Farmers taking part in the
farm audit scheme are also to receive support.

2.8.3.
Finally, the Commission proposes to introduce ani-
mal welfare payments modelled on the agri-environment
measures. In the case of both agri-environment measures and
animal welfare measures, it is proposed to increase the rate of
Community co-financing from the previous level of 50 %
(75 % in Objective 1 areas) to 60 % (85 % in Objective 1 areas).

GENERAL COMMENTS

3. The role of the mid-term review in the context of

Agenda 2000

3.1.
As pointed out in the introduction, many of the issues
now being considered in Commission communications and
proposals on the mid-term CAP review have already been
addressed by the EESC in its own-initiative Opinion on the
Future of the CAP (1). The EESC was clear in its assessment of
the scope of the Agenda 2000 decisions and the mandate of

( 1) OJ C 125, 27.5.2002, pp. 87-99.

the mid-term review, pointing out that ‘the decisions taken
under Agenda 2000 ... cover the period to the end of 2006.
The mid-term review in 2002 and 2003 can make only
minor adjustments to the existing regulations. A dependable
framework is thus in place for the agricultural sector until the
end of 2006’.

3.2.
The EESC continues to take the view that, at the
present time, neither the review mandate laid down at the
Berlin European Summit nor the expected market trends in
respect of most products provide grounds for an extensive
reform of the CAP. Also worth recalling are various remarks
made in the past by the Commissioner for Agriculture to the
effect that the mid-term review was a ‘review’, not a ‘reform’.

3.3.
Under the decisions taken at the Berlin European
Council in March 1999 on Agenda 2000, there is to be a
review of cereals, oilseeds, milk and, if appropriate, beef in
2000-2003. This review will focus on market trends and the
trend in EU expenditure on agriculture. Agenda 2000 did not
make provision for any changes in EU agricultural funding
under the mid-term review. An appraisal of the rural develop-
ment programmes is to be made in 2003.

3.3.1.
The Agriculture Council has also called for reviews
to be carried out with regard to sugar, hops, olives, tobacco
and the provisions governing small producers.

3.4.
The Göteborg European Summit in June 2001 obliged
the CAP to pursue the goal of sustainable development.
Increased emphasis is to be placed on ‘encouraging healthy,
high-quality products, environmentally sustainable production
methods,
raw
materials and the protection of biodiversity’. The Göteborg
European Council did not, however, issue any specific man-
dates for the mid-term review of Agenda 2000.

including organic production,

renewable

3.5.
The EESC thinks that the reactions from political
parties, associations and the media to the communication on
the mid-term review — irrespective of whether they endorse
or reject the document or have mixed feelings — are reflected
in the remark from the Schuman Institute that the reforms
constitute the biggest change in the CAP’s 45-year history. The
proposals set out in the mid-term review thus go far beyond
Agenda 2000. The EESC interprets this as meaning that the
proposals will provide an impetus, in particular, for reforms
after 2007.

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3.6.
In the EESC’s view, it is thus necessary for a thorough
and open debate to be held, before the legislative proposals are
formulated, in order to assess both the priority attached by EU
farmers to having a stable and reliable CAP and the extent to
which such a far-reaching reform of agricultural policy needs
to be introduced — earlier than anticipated — at the present
time. The EESC believes that there is an urgent need for the
discussions and reform proposals to take account also of the
possible impact on the agri-food industry and cooperatives.
Such a debate is also necessary because Agenda 2000 not only
defines the framework for action for EU farmers, but also
provides the basis for the forthcoming enlargement of the
Community and the WTO negotiations.

The EESC does, however, firmly believe that it will not
3.7.
be possible to hold a full debate until the Commission has
its
presented comprehensive appraisals of
proposals. There is a problem,
if the
Commission has been pressing ahead with its work on the
legislative texts before the opinions of the European Parlia-
ment, the European Economic and Social Committee and the
Committee of the Regions are ready.

in the EESC’s view,

the impact of

4. The proposals put forward in the mid-term review

It approves,

in particular,

The EESC generally endorses the objectives set out by
4.1.
the goal of
the Commission.
enshrining in the CAP as a whole, the concept of a multifunc-
tionality. It is, however,
important, above all, to examine
whether, and to what extent, the measures proposed by the
Commission will really help to achieve these objectives and
will lead towards a multifunctional, competitive agricultural
sector. Such an examination is all the more important in
view of the fact that the changes to the agricultural policy
instruments put forward in the mid-term review would lead to
far-reaching changes in agriculture in the EU.

4.1.1.
The EESC would point out that when it drew up its
own-initiative opinion on the Future of the CAP it engaged in
a close dialogue with the Commission and the European
Parliament.
In this opinion the EESC raised a number of
questions which are of considerable importance for the debate
on the mid-term review but which regrettably have not been
adequately answered so far. For this reason the EESC is all the
more convinced of the continuing need for thorough analyses
and studies.

The EESC also regrets that the Commission has not
4.1.2.
taken advantage of
the Mid-term Review to analyse the
problem of increasing ageing in European farming. In this
context attention is drawn to the joint declaration of 6 Decem-
ber 2001 by the EP, EESC and CoR which highlighted the
‘need to make young farmers a priority in any future planning

[and] to take effective and urgent measures to promote and
support young farmers in the context of the Mid-term Review
... without delay’. The EESC hopes that when legislative
proposals are presented they will include concrete measures to
this effect.

4.2.
The Commission’s particular goal in the marketing
sector of reducing the role of intervention — particularly in
the case of cereals — to the level of a safety net has already
been achieved as a result of the price cuts under Agenda 2000.
The public storage of cereals has been dramatically reduced in
recent years. The EESC therefore doubts whether the trend in
world-market prices can be used to justify the proposed further
5 % reduction in the intervention price for cereals, particularly
as the Commission itself bases its forecasts on stable world
markets. The EESC expresses its concern over the fact that the
proposed reduction will weaken and undermine Community
preference.

4.2.1.
The EESC believes that, rather than simply abolishing
intervention for rye, as proposed by the Commission, it is
absolutely necessary to lay down transitional and follow-up
provisions. For example, new possible applications for rye
could be exploited, such as its increased use in animal feed.

4.2.2.
As regards durum wheat, the EESC fears that the
Commission’s proposals will not achieve its goal of improving
quality but will rather lead to a major shift in production away
from lower-yield regions. The EESC therefore recommends
that the current premium paid to producers of durum wheat
in traditional areas be tied more closely to stricter quality
criteria.

4.2.3.
The EESC shares the Commission’s view that a new
support instrument is needed for nut producers, although it
regards the proposed compensatory payment as insufficient to
enable them to compete with third country imports.

4.2.4.
The EESC also highlights the lack of proposals for
boosting the production of protein crops, of which there is a
shortfall in the EU, in order to bring it more into line with
demand. In an own-initiative opinion which has been well
received, the EESC has urged that a new impetus be given to a
plan for plant protein crops in the Community (1). As a result
of the US Government’s recent massive increase in price-
support for soya bean production (the ‘anti-cyclical payment’),
there is a risk that EU protein and oilseed production will be
placed even more on the defensive.

(1) OJ C 80, 3.4.2002, pp. 26-34.

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4.3.
The EESC has repeatedly expressed its support for the
strengthening of rural development under the second pillar of
the CAP. The measures concerned here include, in particular,
investment promotion measures for individual
farms and
groups of farms, agri-environmental measures and compensa-
tory payments for areas suffering from natural disadvantages.
In its communication, the Commission points out that rural
development currently uses up 16 % of total EAGGF (Guidance
and Guarantee Sections) expenditure on agricultural policy —
a figure which appears to the Commission to be still too low.
For any appraisal, however, to be balanced, however, it is
necessary also to include national funding under co-financing
schemes and national measures not linked to EU aid. There is
no doubting the fact that first pillar measures are of consider-
able importance to farm incomes, even though, in this area
too, there are considerable differences between individual
farms and individual regions.

4.3.1.
The EESC notes, with concern, that, in addition to
the shortage of funding under the second pillar, the extremely
uneven distribution of funding between regions is also becom-
ing a problem. This has already led to distortions in compe-
tition between farmers in different Member States and regions.
If the second pillar of the CAP is further extended (under the
modulation scheme), steps must be taken to ensure that the
EU Member States provide a minimum level of national co-
funding. Failure to ensure that this happens would mean that
the claim that the second pillar is part of a common European
agricultural policy would no longer hold water.

4.3.2.
The EESC fails to understand why in the particularly
needy Objective 1 areas of all places only limited flexibility is
apparently to continue to be applied to the use of modulation
money. Up to now, most rural development measures in these
areas were funded under the Guidance Section of the EAGGF.
The Commission should indicate ways of considerably simpli-
fying and resolving this funding issue.

4.3.3.
The EESC underlines the need for future rural
development policy to take account of (a) all economic
activities in the agricultural sector and in the service and
commercial sectors, which create many jobs and (b) the
essential requirements of the environment and spatial develop-
ment. With these aims in view, it is necessary, on the one
hand, to strengthen the second pillar of the CAP and, on the
other hand, to develop the European Structural Funds and the
European Social Fund more strongly in the direction of
establishing an integrated policy for promoting rural areas,
embracing the full spectrum of economic and social activities
and public and private services.

4.4.1.
The EESC would point out that cuts in direct
payments and the shifting of funding to second pillar measures
will place farm incomes under considerable pressure and make
it necessary for farms to adjust. The modulation proposals
should be examined in the light of the decisions taken at the
Brussels Summit on 24 and 25 October 2002. As there is no
meaningful
link between, on the one hand, the proposed
franchises and ceilings applicable to farms — in their present
form — and, on the other hand, effects related to farm size,
such as economies of scale and labour productivity, alternative
solutions should be worked out.

4.5.
It is still difficult to get a clear picture of the economic
impact and the impact on agricultural structures of a complete
decoupling of compensatory payments from production.
Decoupling can undoubtedly provide farmers with greater
freedom of decision as regards crop-planning, and this is to be
welcomed. However, the proposed restrictions on the use of
set-aside would clearly restrict this freedom of decision once
again. Furthermore, under the Commission’s proposals, a
number of premiums are to be retained for specific products
(e.g. per-hectare premiums for rice, durum wheat and renew-
able raw materials). Beef cattle and suckler cows are to be
treated in similar fashion.

The EESC fears that decoupling will also have a far-
4.5.1.
reaching impact on supply-side management policy (e.g.
production quotas and ceilings for premiums). The EESC has
recently pointed out that quantity provisions may have an
important role to play in safeguarding sustainable farming,
particularly in disadvantaged areas and grassland areas. It is
therefore all the more regrettable that here, too, the Com-
mission has so far failed to submit any projections.

4.5.2.
No clear picture has been presented of the impact of
the decoupling of payments on crop-production. It might well
happen in future that areas where variable costs exceeded
income from marketing could be taken out of production.
Such a development would undoubtedly conflict with the aim
of maintaining a comprehensive system of land-cultivation. In
the field of stockbreeding too, it may well be asked whether,
following complete decoupling of payments, there would still
be an adequate economic incentive to fatten bulls or keep
suckling cows. Regrettably, the Commission gives no indi-
cation in its proposals of how it wishes to tackle these issues.

4.4.
The Commission wishes to redistribute to the Member
States on the basis of objective criteria (agricultural area,
number of farm employees, levels of prosperity) the revenue
accruing from dynamic modulation, i.e. the proceeds from the
reductions in direct payments, which will ultimately amount
to a 20 % reduction. It is not yet clear what concrete form
these criteria will take and what the financial impact will be.
The same applies to shifts in the pattern of distribution
between regions and the current EU Member States.

4.5.3.
The EESC draws attention to the fact that the impact
of the decoupling of payments on the sale and leasing of
farmland is difficult to foresee. 41 % of farmed land in the EU
is leased — although there are considerable differences from
region to region. The question arises as to whether, in the case
of leased land, there is likely to be increased spin-off benefits
for lessors. The splitting of direct payments to farms into
payments in respect of parts of
the land may produce
extremely widely differing payments per hectare, depending

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on farm structure. This could have undesirable side effects on
the determination of individual land purchase prices and rents,
even resulting in land being left fallow. It is also likely that
decoupling will hinder the transfer of farms to young farmers.

make a real appraisal of the situation until such time as the
Commission has presented its views in greater detail on the
scope of the cross-compliance provisions and the attendant
monitoring procedures.

4.5.4.
The EESC also points out that the introduction of the
Commission’s proposed farm income payment could lead to
distortions in competition if farmers use the direct payments
to enable them to turn to other products not covered by price-
support.

farmland arising as a result of

In the EESC’s view, the wide range in payments per
4.5.5.
hectare of
the proposed
decoupling of direct payments will prompt a critical debate
both within farming circles and in society as a whole, with
demands being made for these payments to be redistributed or
levelled out. In any event, the EESC cannot readily go along
with the Commission’s expectation that a decoupling of direct
payments may ultimately secure or increase public acceptance
of these payments. In the EESC’s view, a detailed appraisal is
needed to determine whether the issues raised will not lead to
the system of direct payments being called into question more
by the public. Serious consideration should be given to those
who voice the fear that the proposals to change the system of
support will mark the beginning of the end as regards direct
payments and hence CAP funding.

The EESC believes that complete decoupling, and
4.5.6.
amalgamating the direct payments in a single farm income
payment can neither meet the requirements of a multifunction-
al agricultural sector (European agricultural model) nor satisfy
the need for lasting safeguards in respect of direct payments.
The EESC therefore proposes that detailed consideration be
given to other possibilities for developing direct payments, as
already proposed in its own-initiative opinion on the future of
the CAP. Such an appraisal should also embrace a system of
aid comprising a general basic payment (e.g. an area-related
payment) backed up by product-dedicated payments. This
would take special account of the requirements of a competi-
tive and environmentally-friendly agricultural sector.

4.5.7.
The EESC notes that the Commission’s proposal to
introduce compulsory ten-year set-aside, in place of rotational
set-aside, will in practice run into major difficulties and be met
by a lack of understanding. The proposal should therefore
undergo detailed reexamination.

4.6.
The EESC has already pointed out (see point 2.3 above)
that the Commission’s decoupling proposals do in fact amount
to a new definition or a form of ‘recoupling’ as direct payments
will in future be conditional on compliance with particular
land management, environmental, animal welfare and food
safety criteria (cross-compliance). The EESC will be unable to

4.6.1. Whilst the EESC does, on the one hand, recognise
the need for proper proof of employment of EAGGF funding,
it does, on the other hand, believe that it is absolutely essential
to avoid imposing a further major extension of bureaucratic
monitoring procedures on farmers and the authorities in the
Member States.

4.6.2.
The EESC draws attention to the fact that up to
now, farmers have been eligible for environmental aid (agri-
environmental programmes) only if the standards of good
farming practice are met. The Commission’s proposals for the
establishment of cross-compliance conditions will exacerbate
the existing problems of definition with regard to the remuner-
ation of farmers for measures to help the environment. The
EESC calls for clear and unambiguous environmental criteria
which are applied uniformly throughout the EU. The EESC
draws attention, in particular, to the need to find solutions in
respect of EU standards which go beyond international
standards (once markets are opened up). This will be an
ongoing requirement as long as there is a discrepancy between
the environmental standards applied in the EU and the
standards to be met in the case of imported food products.
The EESC takes the view that restricting the period of payment
(e.g. in the case of animal welfare measures) to five years is
inadequate on competition grounds.

4.7. Whilst the proposed EU-wide farm audit is a very far-
far too little specific detail has been
reaching proposal,
provided so far for a serious appraisal. The EESC would,
however, urge even now that such auditing systems are made
available on a voluntary basis and are based on or use existing
documentation as far as possible, thereby enabling them to be
of benefit to farmers in farm management. In the light of the
experience gained with agri-environmental programmes, in
particular, the EESC strongly advocates the development of a
comprehensive system of incentives, rather than the introduc-
tion of monitoring and auditing systems.

5.

Further political efforts to reform the CAP

5.1. Whenever consideration is given to reforming the CAP,
there is, in the EESC’s view, an urgent need to pay careful
attention to the scope for adapting farms to meet changes in
agricultural policy and the limits imposed on this process. In
many regions of the EU the continuing exodus of young
people from farming is being noted with considerable concern.
farms in disadvantaged
The question of
too — is
locations — and particularly grassland farms,
furthermore of cardinal importance in the context of agri-
culture’s multifunctionality. It is impossible to ignore the fact
that farm incomes in these areas are significantly lower, despite
the granting of compensatory allowances in disadvantaged
areas. Instruments for assisting these areas should therefore be
further developed, and the regions’ own interest in safeguard-
ing jobs in farming and creating alternative employment

the viability of

C 85/82

EN

Official Journal of the European Union

8.4.2003

should be given a stimulus. The EESC believes that these views
are echoed in the declaration issued on the occasion of the
European Council of 24 and 25 October 2002, particularly
with reference to the conclusions of the 1997 Luxembourg
Summit, which highlighted the need to maintain a multifunc-
tional agricultural sector throughout the EU.

Agenda 2000 limited the funding available under the
5.2.
EU agriculture budget. In recent years expenditure has fallen
well short of the agricultural guideline and the ceiling laid
down in the financial decisions taken at the Berlin European
Council. Considerable unused funds have been paid back to
national budgets from the EU agriculture budget, on a regular
basis. It is a known fact that the Member States carefully
monitor any steps which are taken to reform the CAP to see
how their positions as net contributors or beneficiaries could
be affected. The EESC underlines its conviction that the
maintenance of the European agricultural model (multifunc-
tional agriculture) and its extension to the new Member States
can only be achieved if adequate, reliable funding is available.
All reform measures must therefore be scrutinised to determine
whether they can be funded under the new financial frame-
work.

5.3.
There are a number of external factors which have an
influence on the further reform of the CAP; one factor which
has a special influence is the ongoing WTO negotiations. The
EESC recommends that the Commission maintains its stance
of
linking the standard trade issues (reduction of export
support and internal support and improved market access)
with ‘non-trade issues’, such as preventive action to protect
consumers and international environmental and animal-wel-
fare standards, and that the Commission continues to press for
the development of the requisite international bodies. The
EESC is concerned that the mid-term review proposals could
give the impression that the EU has already given up the
concept of the ‘blue box’. The Commission should certainly
not make any rash concessions.

There is no indication in its communications on the
5.3.1.
mid-term review that
the Commission has acted on its
announcement that it would examine the new US Farm Bill
and its impact on world agricultural markets. This is all the
more regrettable given the fact that US agricultural policy

Brussels, 11 December 2002.

regarded the 1996-2002 Farm Bill, which focused on extensive
decoupling and liberalisation, as the wrong approach and the
new Farm Bill once again focused more on market and price
support.

5.4.
The Commission’s report on the mid-term review
contains only minor proposals for improving the international
competitive position of EU agriculture. Above all, the decoup-
ling of direct payments, described by the Commission as being
green box compatible, will not improve the competitiveness
of EU agricultural products on international markets. In the
it is therefore essential to carry out a more
EESC’s view,
thorough analysis and projection of the Commission’s pro-
posals with a view to safeguarding the position of EU
agriculture on the world market.

In public circles it is often said that a far-reaching
5.5.
reform of the agricultural sector is unavoidable because of the
eastward enlargement of the EU (and, in particular, because of
the additional funding which would be required for direct
payments). The Commission has hitherto opposed this line of
thinking and argued that EU enlargement and internal reform
of the CAP have to be addressed separately. If the Commission
changes tack on this matter, it is, in the EESC’s view, absolutely
vital to involve the candidate states in the consultations on the
mid-term review. An interim reform which excluded the states
which will be joining the EU in just two years time would be
bound to call into question their acceptance of such a reform
and to exacerbate the accession process.

5.6.
The implementation by the Member States of at least
some of the measures proposed by the Commission, and in
particular the decoupling of direct payments, will,
in the
view of the EESC, be very costly and time-consuming. The
Commission’s communications do not indicate specific time-
tables for implementing the various measures. This would,
however, appear to be of particular importance for the further
discussion of
the mid-term review proposals. The EESC
believes that it will not be possible to amend the system
of direct payments without taking account of the market
organisations for beef and milk. Follow-up measures to
Agenda 2000 (i.e. an ‘Agenda 2007’) should be extremely
carefully prepared and discussed in view of their great com-
plexity and far-reaching consequences.

The President

of the European Economic and Social Committee

Roger BRIESCH