Opinion of the European Economic and Social Committee on:the Proposal for a Council Regulation establishing common rules for direct support schemes under the Common Agricultural Policy and support schemes for producers of certain crops (2003/0006 (CNS)), andthe Proposal for a Council Regulation amending Regulation (EC) No 1257/1999 on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF) and repealing Regulation (EC) No 2826/2000 (2003/0007 (CNS))(COM(2003) 23 final — 2003/0006 + 0007 (CNS))
Date: 2003-05-14
Institutions: European Economic and Social Committee
Subjects: agricultural production, aid to agriculture, reform of the CAP, rural development, support policy

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Opinion of the European Economic and Social Committee on:

— the ‘Proposal for a Council Regulation establishing common rules for direct support schemes
under the Common Agricultural Policy and support schemes for producers of certain crops’
(2003/0006 (CNS)), and

— the ‘Proposal for a Council Regulation amending Regulation (EC) No 1257/1999 on support
for rural development from the European Agricultural Guidance and Guarantee Fund
(EAGGF) and repealing Regulation (EC) No 2826/2000’ (2003/0007 (CNS))

(COM(2003) 23 final — 2003/0006 + 0007 (CNS))

(2003/C 208/17)

On 10 February 2003 the Council decided to consult the European Economic and Social Committee,
under Article 37 of the Treaty establishing the European Community, on the above-mentioned proposals.

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 25 April 2003. The rapporteur
was Mr Strasser; the co-rapporteur was Mr Kienle.

At its 399th plenary session on 14 and 15 May 2003 (meeting of 14 May), the European Economic and
Social Committee adopted the following opinion by 82 votes to 27 with 15 abstentions.

1.

Introduction

The agricultural policy decisions taken by the Berlin
1.1.
European Council (March 1999) in the context of Agenda
2000 continued the reform process begun in 1992 and laid
down the framework conditions for the CAP in the 2000-
2006 period. The decisions envisaged a CAP more oriented
towards the markets through a reduction in institutional
prices, a shift in financial expenditure towards direct payments,
and consideration of environmental requirements. In addition
the European Commission was instructed to undertake a
mid-term review (MTR) (1) involving various time-limits and
mandates, should market developments make this necessary.

In its Communication of 10 July 2002 on the MTR the
1.2.
Commission stated among other things that much had been
achieved since the beginning of the reform process in 1992,
the market balance had improved, and a sound basis had been
established for enlargement and the then current WTO
negotiations.

2. Content of the reform proposals

2.1.
On 22 January 2003 the European Commission pre-
sented the legislative proposals for a fresh reform of the CAP,
taking account of the conclusions of the Brussels European

Council of October 2002 and of the lively debate which
followed the publication of its Communication on the MTR,
e.g. in the Council, the European Parliament and the EESC. The
reform is intended ‘to give farmers a long-term perspective for
sustainable agriculture’. The Commission groups its reform
proposals under the following headings:

— stabilising markets and improving common market

organisations;

— decoupling of direct aids — establishment of a ‘single

farm payment’, cross-compliance;

— modulation and degression of direct payments;

— consolidating and strengthening rural development.

2.2.
The rules on compensatory payments are to be consoli-
dated in a new regulation. A large number of existing
regulations would be withdrawn. The new rules should
come into force from 1 January 2004. Only the system of
modulation is to come into force later, in 2006.

2.3.
As regards the planned changes to the common
organisation of the markets in cereals, rice, dried fodder and
the milk and milk products sector, the Commission has
presented specific legislative proposals which will be discussed
by the Committee in separate opinions (2).

( 1) See the EESC opinion on the Mid-term review of the Common

Agricultural Policy, OJ C 85, 8.4.2003.

(2) OJ C 85, 8.4.2003.

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2.4.
Farmers receiving the single farm payment must set
aside 10 % of arable areas for 10 years (without the possibility
of rotation and without the possibility of growing energy
crops as hitherto). Holdings of up to 20 hectares and holdings
with ecological crops are to remain exempt from this. To
promote the cultivation of energy crops a payment of EUR 45
per hectare (up to a maximum of 1,5 million hectares) is
planned.

2.5.
The core of the reform proposals presented by the
Commission is the decoupling of nearly all direct payments
from their current assessment criteria (e.g. by head of livestock
or by hectare of cultivated land). The payments for arable
crops (with a range of exceptions), for cattle and sheep, and
for milk from 2004/2005, are to be consolidated into a single
payment largely based on past reference values (average of the
years 2000, 2001 and 2002). In contrast to the summer 2002
proposal, the Commission is recommending only a 50 %
partial decoupling for starch potatoes.

2.6.
For nuts, the Commission proposes to replace the
existing system with an annual flat rate payment of EUR 100/
ha, which may be topped up by the Member States.

2.7.
The decoupled single farm payment is to be broken
down into ‘payment entitlements’ in order to facilitate their
transfer. Each entitlement will be calculated by dividing the
appropriate reference amount by the number of hectares
(including forage area) which gave rise to this amount in the
reference used. The entitlements (tantamount to surface area
premiums) could be transferred to another farmer in the same
Member State with or without land, and would therefore be
negotiable.

The granting of the farm payment related to surface
2.8.
area and other direct payments is to be made dependent on
compliance with a set of legal standards for environmental
protection and animal welfare as well as for food safety and
occupational safety (Annex III) and the maintenance of ‘good
agricultural conditions’, to be determined individually by the
Member States (Annex IV) (cross-compliance).

2.9.
Instead a farm advisory system is to be introduced
which would initially be obligatory for those farms which
receive more than EUR 15 000 per year in the form of
direct payments or which have a turnover of more than
EUR 100 000 per year. This advisory system should help
farmers to meet the standards of a modern, quality-oriented
agriculture.

the decisions of

Taking account of

2.10.
the Brussels
European Council, the Commission proposes an obligatory
degression and modulation — changed in relation to the July
2002 version — to apply from 2007 (start of the next financial
perspective). However, this should make it possible not only
to transfer resources to the second pillar (rural development),
but also to cover the further funding needs of new agricultural

market reforms. A progressive and differentiated reduction in
direct payments (see table below) is now planned. The proposal
for capping direct payments at EUR 300 000 per farm has
been dropped. Under the draft regulation all direct payments
are first to be reduced by the general reduction rate, with part
of the amount being refunded to smaller farms.

(%)

Budget year

2007 2008 2009 2010 2011 2012 2013

EUR 1 — EUR 5 000

EUR 5 001 — EUR 50 000

Above EUR 50 000

General reduction rate

0

1

1

1

0

3

0

0

0

0

0

7,5

9 10,5 12 12,5

4 12

14 16

18 19

4 12

14 16

18 19

2.11.
In the context of the planned degression, a percentage
of the resources saved through the reduction (which will rise
from 1 % in 2007 to 6 % in 2011) will be available for
measures to develop rural areas; by far the major part,
however, would be used for new agricultural market reforms
and to provide funds for exceptional situations.

The Commission proposes to raise the amount of
2.12.
funds for assisting the development of rural areas, and to
broaden the scope of this Community policy by introducing
new measures for farmers.

2.13.
The Commission suggests that funds be made avail-
able to promote quality production and in the form of financial
support for producer organisations for consumer information
and advertising of products which are produced under quality
programmes.

The Commission also proposes to support farmers
2.14.
through a degressive subsidy over a fixed period, to make it
easier for them to adapt their farms to the standards laid down
in the EU legal provisions on environmental protection, food
safety, animal welfare and occupational safety (maximum of
EUR 10 000 per farm and per year, for a maximum of five
years degressively). In addition, there is to be support for the
consultation of farm advisory services (maximum EUR 1 500)
and for improved animal welfare (maximum EUR 500 per
head of stock per year, for a maximum of five years).

3. General comments

3.1.
This opinion will deal with questions of principle
concerning the reform proposals (the horizontal regulation)
and with the proposals for new measures to promote the
development of rural areas.

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3.2.
A number of critical comments on the Mid-term
review of the CAP can be found in the EESC opinion of
11 December 2002. The Commission proposals clearly go
beyond the mandates of the Berlin European Council, and the
expected market development for most products do not
appear to justify a far-reaching reform of the CAP.

March 2003 these were supplemented by two further internal
studies which considered the changes necessitated by the
legislative proposals. However, these studies are based on an
unascertainable assumption of market stability, and no region-
specific analyses were carried out, for instance on the possible
repercussions in disadvantaged areas.

The Commission is now also basing its proposal for
3.3.
far-reaching reform on the decisions of the Göteborg European
Council of 16 June 2001 (EU strategy for sustainable develop-
ment) and the Brussels European Council of 24 and 25 October
2002 (agreement on the introduction of direct subsidies in the
new Member States).

The Commission deduced from the studies submitted
3.8.
in January that the reform proposals would clearly improve
market balance, have a positive effect on farm incomes, make
it possible to simplify the settlement of premiums and improve
market profits for beef and veal.

3.4.
For the Committee, it is crucial that the multifunctional
role of European agriculture be supported in any further
reforms. Sustainable farming must be safeguarded in disadvan-
taged regions too, to avoid a loss of function with far-reaching
consequences for the regional economy, employment and
population levels.

The most recent studies also confirm the frequently
3.9.
expressed fear that the proposed increase in quotas will result
in corresponding falls in prices for farmers or that the
production of oilseeds may further decline. It is also interesting
increase in income up to 2009 per
that the forecast real
labour unit would be smaller if the reform proposals were
implemented than without reform. Here it should be noted
that the accepted rises in incomes are mainly due to the fall in
employment.

3.5.
The Brussels European Council decision on the one
hand offers greater certainty for planning up to and including
2013 by laying down the financial framework for measures
under heading 1a (market organisation measures). However,
the agricultural budget is strictly limited and this seriously
restricts the scope for further steps to reform the CAP; this
requires efficient handling of the funds. These restrictions were
adopted not for agricultural policy reasons but on purely fiscal
grounds. The EESC considers that they neither reflect nor are
based on the budget ceiling of 1,27 % of GNP. Rather, they are
linked to enlargement, further steps to reform the market
organisation system in the framework of the WTO, and the
need to strengthen rural development policy and should be
considered in that light.

3.10.
The Commission also justifies the need for a fresh
reform of the CAP by the fact that the existing payment system
often dissuades farmers from producing farm produce for
which market demand exists, does not provide adequate
incentives for quality production and tempts farmers into
producing surpluses. However, these arguments contradict the
Commission’s statement that great progress has been made
through the reforms hitherto and that the market balance has
it should not be forgotten that the
improved. Moreover,
overwhelming majority of farmers have made great efforts in
recent years to hold their own amid fiercer competition and to
meet the high quality and food safety requirements on the part
of consumers.

3.6.
The EESC acknowledges that improvements have been
made to specific points in comparison with the proposals
contained in the Communication of 10 July 2002 (for example
on modulation or on the farm advisory system).

3.7.
The EESC notes that the Commission has presented
analyses of the effects of the reform proposals alongside the
legislative proposals themselves. These analyses comprise six
impact studies, which still focus, however, on the proposals
made in connection with the Communication on the MTR. In

Simplifying the administration of

the CAP, and
3.11.
particularly the management of premiums, is mentioned as an
important objective. The EESC does indeed regard this objec-
tive as correct, but has serious doubts and foresees considerably
more red tape for farms and the agricultural administrations.
This applies above all to the new farm payment, the rules
on transferability and the requirements of cross-compliance.
Farmers would thus face considerable extra work and expendi-
ture, which could lead to a fall in profitability and in specific
cases also to smaller farms being given up. The EESC also calls
for care to be taken to ensure that the practical application of
new measures does not lead to excessive red tape.

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In a number of opinions the Committee has come
3.12.
out
in favour of ensuring multi-functionality and of the
principle of function-oriented direct payments. This calls for
reconsideration of the various CAP instruments from time to
time, and if necessary their adaptation to changed require-
ments. The EESC takes the view, however, that important
elements of the reform proposals, such as the proposed farm
payment or the additional reduction in milk prices are not
helpful
for ensuring the multi-functionality of European
agriculture.

The EESC would point out

3.13.
that further falls in
agricultural production, or possibly even the abandonment of
cultivation in individual regions, would have major long-term
consequences for upstream and downstream economic sectors.
It would also have a knock-on effect on regional economies
and employment as a whole, which could seriously exacerbate
the problem of high unemployment in many rural areas.
These adverse repercussions would not merely undermine the
development potential of many rural regions, but also the
important objective of social cohesion; they could also affect
the protection of the natural environment and the landscape.

3.14.
The EESC must point out that the instruments used
to achieve the objectives of the review would not be not suited
to the particular situation of agriculture and livestock farming
in the outermost regions. There must therefore be a specific
study in which appropriate measures are put forward for these
areas.

The Commission expects the implementation of its
3.15.
proposed reforms to have positive effects on the quality and
safety of foodstuffs. In a number of opinions the EESC has
emphasised the need for society’s expectations in foodstuffs
production to be met. It has made it clear that there is
an undivided responsibility running right through the food
production chain.

The EESC considers that the Commission should take
3.16.
account of the conclusions of the EU Summit of 24 and
25 October 2002 which state that the needs of producers
living in the disadvantaged regions of the present EU-15
should be safeguarded and that multifunctional agriculture
must be maintained in all areas of Europe in accordance with
the conclusions of the 1997 Luxembourg and 1999 Berlin
European Councils.

3.17.
The EESC perceives the conflict of goals as difficult to
resolve, in that on the one hand producer prices are to be
increasingly brought into line with the world market price,
while on the other production standards are being continu-
ously raised. It has already (1) pointed out that, given the

( 1) EESC own-initiative opinion on ‘A policy to consolidate the
European agricultural model’, OJ C 368, 20.12.1999, pp. 76-86.

production situation in the EU Member States, it is always
more difficult for agriculture to meet its multi-functional
remit under world market conditions. Higher standards/
requirements for multi-functional agricultural production must
also be properly safeguarded against imports that fail to meet
these European standards and requirements and thus distort
competition. The EESC sees this as a basis for the long-term
justification for a ‘recoupled’ rather than decoupled
social
financial transfer under the CAP to multifunctional European
farmers. The EESC further stresses the importance of effective
international protection of designations of origin and geo-
indications (PDO, PGI) against imitations which
graphical
harm European agriculture.

3.18.
The EESC, referring to the WTO trade talks round,
came out inter alia in favour of defending important measures
in the ‘Blue Box’ (2). There is a contradiction if the Commission
declares that measures in the framework of the ‘Blue Box’ are
to be defended, yet advocates decoupling on the grounds of
WTO constraints.

3.19.
The EESC stresses the importance of defending the
essential instruments of the CAP, such as adequate external
protection, thus helping to safeguard the multi-functionality
of European agriculture.

4. Specific comments

4.1. Decoupling

4.1.1.
Decoupling, as the core of the reform proposals, is
also at the centre of the political debate. In its opinion of
11 December 2002, the EESC fully explained its scepticism
and criticism. In several opinions it has examined in depth the
future development of direct payments and has not yet had
any satisfactory response to its proposals. It regrets that the
Commission has not come up with any genuinely European
alternative to the farm payment proposal (3). The Article 58
option would apply only at regional level.

(2) See the EESC opinion on the Mid-term review of the Common

Agricultural Policy, OJ C 85, 8.4.2003.

(3) The term used by the Commission — ‘single farm payment’ — is
misleading, since the amount paid per farm would not be uniform,
but would vary considerably on the basis of the reference to
earlier years.

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4.1.2.
The proposed decoupling can undoubtedly give
farmers greater decision-making freedom (not totally geared
to the payments), more flexibility and greater simplicity. In the
EESC’s view, however, there would be considerable disadvan-
tages which must be looked at critically:

these services are automatically linked with production and
are its by-products (such as keeping the landscape accessible
through cultivation, high standards in production, etc.); the
national solutions set out in Article 5 of the draft regulation
and the frameworks set out in Annex IV do not add up to a
European solution.

— The planned farm payment focuses on a retrospective
period which, instead of removing existing disadvantages
and imbalances, would in fact exacerbate them.

— The Commission proposal would disadvantage those
farms which have to expand — it could be especially
harmful to many young farmers just taking over a farm.

— The planned decoupling would have negative effects due
to increased speculation in production rights and on the
land market, also leading to new property-type rights,
which would lead to social tensions within agriculture.

— There would be a threat to maintaining production in
certain production branches and/or regions (for example,
cattle farming in pasture areas and disadvantaged regions);
this would endanger the objective of sustainable farming
throughout the EU.

— Within agriculture, distortions of competition could be
expected if farmers with high farm payments switch to
sectors not hitherto eligible for payments, e.g. from cattle-
rearing to pig-rearing or from cereals to vegetables.

— The CMOs, and quantity regulations in particular, would
lose their ability to guide the markets since the planned
farm payment would,
inter alia, no longer relate to
reference quantities, with the risk of large fluctuations in
production and prices.

— The agrifood industry and in particular SMEs are con-
cerned about the security of supply of raw materials at
level, which could diminish or even disappear
local
altogether as a result of decoupling.

In its opinion on the future of the CAP (1), the EESC
4.1.4.
demonstrated the causal link between production and multi-
functionality, and concluded that this link should be regarded
as a decisive argument for further developing direct payments.
The EESC agrees with the Commission that direct payments
must be duly justified and accepted by society. Accordingly it
has repeatedly argued for function-oriented direct payments
and for adjustments to be made to the organisation of this
important instrument if conditions and requirements change
fundamentally.

4.1.5.
The proposed farm payment would in practice lead
in many cases to a situation where the same services for society
were rewarded in very different ways. It should be borne in
mind here that farmers who maintain production have to
observe all the rules of cross-compliance in order to ensure
their claim to a farm payment, which can still be low because
of the retrospective reference. On the other hand, a farmer
who withdraws from production would have only a few non-
specific obligations, which might vary by region, in order to
keep his land in a ‘good agricultural condition’, but can still
claim a high farm payment under the new system. It is feared
that farming as an activity, and hence also production, are
being increasingly devalued.

Under Article 58 of the draft regulation the Member
4.1.6.
States are to be given the option to define a certain balance
between individual payment entitlements and regional or
national averages. This could lead to a significant simplification
in calculating and administrating aid, and could help to
mitigate problems arising with the farm payment for the land
market. Clearly, however, the Commission saw no chance of
getting such a rule through politically at European level, since
it would bring about enormous changes in financial flows
between Member States and in income ratios between holdings
and between regions.

— Social acceptability of the financial transfer to agriculture
would not be strengthened as hoped, since people would
not be able to identify the services for which the future
farm payments are granted, as they would take the form
of ‘money vouchers’ without sufficient reference to the
farming activity actually carried out on each farm.

4.1.7.
The EESC would point to the danger that, despite the
proposed partial decoupling, many farms will stop producing
starch potatoes and opt for crops with less risk and capital
investment, which could have serious adverse repercussions in
some regions. The Committee is opposed to the reduction in

Direct payments also have the function of rewarding
4.1.3.
services which society expects of farmers, but which are not
compensated, or only partly so, by market profits. A range of

(1) OJ C 125, 27.5.2002.

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the support for durum wheat, as such support is essential for
maintaining production in areas where it is traditionally grown
and where there are few production alternatives. It is in favour
of a new instrument to support the production of nuts, but
regards the proposed level of support as not enough to make
this produce competitive with imports from non-EU countries.

4.1.8.
These problems have been at the root of the EESC’s
repeated proposal to make a precise assessment of other
possibilities for further development of direct payments. The
EESC asks yet again why the Commission has not examined a
support system combining basic aid with product-related
elements. This could on the one hand involve compensation
for multi-functional services in a sustainable form, and on
the other ensure the economic and productive function of
agricultural holdings, which is of particular importance for
disadvantaged regions. Many of the problems associated with
the Commission proposal could be avoided with such a
system.

4.2. Cross-compliance (CC)

4.2.1.
The EESC has repeatedly called for uniform and better
implemented EU-wide provisions on food safety, occupational
safety, environmental protection and animal welfare. This
must also apply to the legal provisions on health and safety in
the workplace, the protection of young people at work and
protection from risks. The CC regulation proposed by the
Commission could be a useful instrument in getting closer to
this goal.

The EESC reiterates its call for the standards to be
4.2.2.
clear and unambiguous and to be applied effectively and
uniformly throughout the EU. It is also necessary for the CC
rules to be practicable, red tape to be kept under control and
duplication of checks to be avoided.

health. A question of equal treatment and legal certainty for
agriculture thus arises, especially since only some of the
regulations can be monitored through checks on farms.

4.2.5.
The EESC would point out that proving compliance
with the CC standard will place a considerable burden on
farmers. At all events, farms’ own expenditure, including on
documentation, will rise sharply. The EESC therefore considers
that a reasonable transitional period to allow farms to adjust
to the CC system is both necessary and justified.

4.2.6.
One aim of the Commission’s proposal is adminis-
trative simplification, bringing the current Integrated Adminis-
tration and Control System into line with the new provisions
on direct aid and with checks on cross-compliance and good
farming practice. However, the EESC would point out that the
administration and control burden could actually increase red
tape. To reduce bureaucracy,
the legal provisions to be
complied with should be restricted to those which are strictly
necessary for achieving the aims of the CC standards.

4.2.7.
The same applies to the requirements in the field of
‘good agricultural condition’. Here too, those provisions that
are necessary to maintain multi-functional agriculture and are
also objectively checkable in practice should be defined as
requirements. Some of the proposed requirements seem more
difficult to implement (e.g. maintaining soil fertility or soil
structures).

4.2.8.
For the purposes of simplification it is therefore
essential to set priorities for controls and to involve farmers’
and other professional organisations in developing farm
support and advisory services that will work in conjunction
with the authorities and encourage voluntary forms of certifi-
cation.

4.2.9.
In this connection the EESC would reiterate that
high standards in EU agricultural production must not be
undermined by competition-distorting imports, i.e. products
from third countries must also consistently fulfil the objectives
of cross-compliance, animal welfare and food safety.

The Commission proposes that the granting of direct
4.2.3.
payments be subject to compliance with 38 EU regulations
and to keeping the land in ‘good agricultural condition’. Failure
to comply with these conditions would result in a reduction
of
the direct payments by 10-100 % depending on the
seriousness of the infringement.

4.3.

‘Farm advisory system’ (FAS)

The EESC would point out that individual provisions
4.2.4.
would not apply to all farms equally, for example in connection
with the habitat or bird protection directives or in the field of

4.3.1.
The Commission has further developed its proposal
from the MTR Communication for a Farm Audit and is
now proposing that an obligatory farm advisory system be
introduced.

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4.3.2.
The EESC understands that the Member States will
be allowed some leeway in organising the introduction of the
proposed. The EESC has argued that such systems should be
offered on a voluntary basis and an incentive system should
be created to that end. Advice should cover not only com-
pliance with the statutory standards, but also continuous
improvement of the economic, environmental and social
situation of farms.

4.4.4.
The EESC would point out that the proposals on
degression should be seen in direct relation to the planned
price reductions. Both measures taken together would lead in
many cases to serious income losses for individual farms.
Particularly affected would be farmers whose income is derived
exclusively from farming.

The EESC would point out that participation in such
4.3.3.
a farm advisory system would entail additional costs for
farmers. It is therefore important to offer farmers the possibility
of support, as envisaged in the Commission’s proposal for
rural development. In the context of farm advisory services,
the Committee calls for special attention to be paid to training
and certification instruments for self-employed and employed
work. The EESC would stress the vital role of agricultural
organisations and trade unions in helping farmers and farm
workers to undertake training and refresher courses, and in
advising them.

4.4. Degression and modulation

4.4.1.
Some marked changes have been made compared
with the July 2002 proposals. Besides the shift of funds to the
second pillar of agricultural policy (modulation), a shift within
the first pillar (degression) is now also planned. The EESC
regrets the Council’s failure to make a decision on the financial
statement for the second pillar of the CAP; under these
conditions there is no point in discussing a specific percentage
figure for an agricultural budget transfer to the second pillar.
The reduction in direct payments is more differentiated
depending on the amount of the payment. On the other hand,
the original proposal lacks an upper limit, and this is an
advantage for larger farms. This means, as the EESC proposed,
that effects related to farm size, e.g. cost degression, would at
least begin to be taken into account. However, no account was
taken of the farm employment criterion.

4.5.

Set-aside and carbon credit

4.5.1.
The existing system of set-aside, with the element of
rotation and the possibility of using set-aside land for renew-
able raw materials, has markedly eased the ‘traditional’ agricul-
tural markets. The Commission’s reform proposal means a
long-term set-aside for ten years, without the possibility of
rotation or use for renewable raw materials.

4.5.2.
The EESC is in favour of retaining the possibility of
rotational set-aside. As hitherto the alternative should be
allowed of growing energy crops instead of set-aside. If land
needs to lie fallow for many years for nature conservation
reasons, appropriate offers should be made through the agri-
environmental measures.

4.5.3.
In the EESC’s view, the planned subsidy for energy
crop cultivation amounting to EUR 45 per hectare is a first
positive sign. However, in view of the still excessively low
subsidy and without the use of set-aside land, it is doubtful
whether the stated objective of 1,5 million hectares can be
achieved.

The EESC endorses the idea that farms with up to
4.5.4.
20 hectares of arable land and farms engaged in organic
production should be exempted from the set-aside obligation
as hitherto.

4.6. New measures for rural development

4.4.2. Modulation and degression is not to apply to the
new Member States until 2012. The EESC assumes, therefore,
that the resources generated by modulation for the second
pillar will be spent only in the existing 15 Member States.

4.6.1.
The EESC has repeatedly called for measures in
favour of rural development to be strengthened. It regards it
as essential for the possibilities of all the Structural Funds also
to be used for this. It is also important because a comprehensive
approach to rural policy is needed to achieve positive develop-
ment overall.

4.4.3.
According to Article 10, the Management Committee
for Direct Payments would be entitled, under the procedure
referred to in Article 82(2), to modify the degression percent-
ages. Since each change would have far-reaching consequences,
the EESC has reservations about such authorisation.

4.6.2.
The Committee is in favour of a substantial follow-
up regulation to Regulation (EC) No 2826/2000 on infor-
mation and promotion actions for agricultural products on
the internal market. The marketing promotion planned in the
context of rural development would be too restrictive and
would essentially confine promotion to microprojects.

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4.6.3.
The Brussels European Council (October 2002) laid
down the financial framework for agricultural expenditure up
to 2013. Whereas a ceiling was agreed for heading 1a
(market organisation expenditure), no such ceiling exists for
headings 1b and 2 (rural development).

5. Summary

4.6.4.
The EESC regrets that, in the planned redistribution
from the first to the second pillar, even in the 6th year after
the start of modulation only EUR 1,5 billion more will be
available for rural development measures. Assuming that the
political will is there, additional funds for rural development
could be mobilised by using the generally available financial
framework (never fully exhausted in earlier years), thereby
achieving a better balance.

4.6.5.
The new rural development measures proposed by
the Commission are mainly intended to support farmers in
their efforts to meet standards and aim increasingly at quality
production. This is an important function. However, the
Committee points out that no adequate budgetary commit-
ment has been made for the measures concerned.

4.6.6.
The EESC welcomes in principle the proposal for
new accompanying measures to promote food quality, to
provide support for fulfilment of production conditions and
to promote animal welfare measures in accordance with the
tried-and-tested agri-environmental measures.

Should

farmers

4.6.7.
to the new
have
accompanying measures in accordance with their objectives,
the additional funds of maximum EUR 1,5 billion will scarcely
be enough. This means that the Commission’s declared aim of
improved rural development will not be achieved.

recourse

In its own-initiative opinions

5.1.
The EESC accepts the need to adjust the CAP to
it
changed requirements.
addressed in detail the further development of direct payments
to farms. It rejects an abrupt system change through the
transfer of the previous area- and animal-related premiums to
the ‘single farm payment’ proposed by the Commission. A
reduction in the link between market regulation and pro-
duction entails the risk of more instability for farming,
especially in disadvantaged regions. The EESC regrets that the
Commission has not followed up its suggestion for a basic aid
payment plus product-related subsidies instead of a farm
payment.

5.2.
The EESC considers that the present proposals for the
farm payment and cross-compliance will unfortunately not
provide a satisfactory solution to the question of how the
considerable demands made on agriculture by society (through
high European standards) can be met at a time when the
agricultural markets are being liberalised (objective of the
WTO negotiations). There also remains the concern that young
people will continue to drift away from agriculture in many
European regions. It is also sceptical as to whether the present
proposals will meet with lasting public approval.

5.3.
In the EESC’s view, the newly proposed cross-com-
pliance instrument can help to ensure that regulations on food
safety, occupational safety, environmental protection and
animal welfare are put into practice uniformly across the EU.
The cross-compliance rules must, however, be practicable and
not require excessive administrative outlay.

4.6.8.
The EESC supports the idea of allowing as of now
compensatory payments under Article 16 of Regulation (EC)
No 1257/1999 in connection with the application of Natura
2000 measures. However, it would argue for similar handling
of equivalent matters in the future, such as the application of
the framework directive on water resources.

5.4.
The EESC considers that the reform proposals should
place more emphasis on voluntary measures and/or incentives.
Thus use of any farm advisory system should therefore be
voluntary. Nor should the reform target an obligatory 10-year
set-aside, but should retain the principle of rotational set-aside
on a voluntary basis, especially as this has gained general
acceptance by both farmers and society as a whole.

4.6.9.
The introduction of a new support for farmers opting
for quality systems must not be incompatible with receipt of
other existing types of support within programmes under
accompanying measures.

5.5.
The EESC firmly supports an expansion of the second
pillar of the CAP, namely the development of rural areas.
Measured against the Communication of July 2002 on the
mid-term review, the legislative proposals for reforming the

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CAP are clearly a backwards step in this respect. Moreover,
supplementing the second pillar by modulation alone would
weaken the complementarity between the two pillars of the
CAP. With regard to improving product quality, food safety

and environmental protection the proposals are a step in the
right direction. Although adequate resources are not provided
for this, the Committee believes that these could be increased
in the next reform of the Structural Funds.

Brussels, 14 May 2003.

The President

of the European Economic and Social Committee

Roger BRIESCH

Opinion of the European Economic and Social Committee on the ‘Proposal for a Council
Regulation on the common organisation of the market in rice’

(COM(2003) 23 final — 2003/0009 (CNS))

(2003/C 208/18)

On 10 February 2003 the Council decided to consult the European Economic and Social Committee,
under Article 37 of the Treaty establishing the European Community, on the above-mentioned proposal.

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 25 April 2003. The rapporteur
was Mrs Maria Luisa Santiago.

At its 399th plenary session on 14 and 15 May 2003 (meeting of 14 May), the European Economic and
Social Committee adopted the following opinion by 7 votes to 6 with 9 abstentions.

1.

Introduction

As part of the mid-term review of Agenda 2000, the
1.1.
Commission proposes modifying the current regulation on the
common organisation of the market in rice (1), as follows:

— One-step reduction of the intervention price by 50 % to
an effective support price of EUR 150/t in line with world
prices.

— Increase in the current direct aid from EUR 52/t to EUR

177/t, broken down as follows:

— EUR 102/t as part of the single farm payment and
paid on the basis of historical rights limited by the
current maximum guaranteed area.

( 1) Council Regulation (EC) No 3072/95.

— EUR 75/t as a crop-specific aid for rice production,
which will be multiplied by each country’s yield, as
laid down in the 1995 reform.

— Reduction in the maximum guaranteed area from

433 423 ha to 392 801 ha.

— Replacement of the public intervention system by a
private storage scheme, the rules governing which will be
drawn up by the Management Committee, which will be
triggered only when the market price is less than the
support price (EUR 150/t) for a period of two consecutive
weeks.

— Triggering of a special measure when the market price
for paddy rice is below EUR 120/t for a period of two
consecutive weeks and is likely to remain below this
price.