Communication from the Commission to the European Parliament and the Council - Preparing for the "Health Check" of the CAP reform
Date: 2007-11-20
Institutions: European Commission
Subjects: aid to agriculture, common agricultural policy, environmental policy, market intervention, production aid, reform of the CAP, regulation of agricultural production

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 20.11.2007 
COM(2007) 722 final 

COMMUNICATION FROM THE COMMISSION  
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

Preparing for the "Health Check" of the CAP reform 

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COMMUNICATION FROM THE COMMISSION  
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

Preparing for the "Health Check" of the CAP reform 

1. 

THE COMMON AGRICULTURAL POLICY TODAY 

1.1. 

A radically reformed and better performing policy 

During the last 15 years, the common agricultural policy (CAP) changed radically in 
response  to  pressures  from  European  society  and  its  evolving  economy.  The 
2003/2004 reforms marked a new phase in this process, introducing decoupled direct 
payments via the Single Payment Scheme (SPS) in most sectors of the first pillar of 
the CAP and strengthening Rural Development (RD) policy as its second pillar. This 
process continued with reforms in sugar (2006) and fruit and vegetables (2007), and 
is ongoing with the recent legal proposals for reform in the wine sector. 

Producer  support  is  now  to  a  large  extent  decoupled  from  production  decisions, 
allowing EU farmers to make their choices in response to market signals, to rely on 
their farm potential and their preferences when adapting to changes in their economic 
environment, and to contribute to improving the competitiveness of the agricultural 
sector. 

As a result, CAP reform delivered what was expected from it by shifting away from 
product support, widely viewed as an origin of the surplus problems of the past. EU 
support  prices,  reduced  everywhere,  are  by  now  close  to  world  markets.  The 
competitiveness of EU agriculture is increasing in key sectors, despite the decline of 
the  EU  share  in  most  commodity  markets,  and  the  EU  is  already  the  largest 
agricultural exporter, of mainly high value products. It is also the biggest agricultural 
importer in the world, remaining by far the largest market for developing countries. 

Furthermore,  the  CAP  increasingly  contributes  to  heading  off  the  risks  of 
environmental  degradation  and  to  delivering  many  of  the  public  goods  that  our 
societies  expect.  Producer  support  is  now  dependent  on  the  respect  of  standards 
relating to the environment, food safety and quality and animal welfare. 

Finally,  the  strengthened  rural  development  policy  supports  the  protection  of  the 
environment  and  rural  landscapes  and  creates  growth,  jobs  and  innovation  in  rural 
areas.  Although  a  growing  number  of  EU  rural  areas  will  be  influenced  by  factors 
outside  agriculture,  areas  which  are  remote,  depopulated  or  heavily  dependent  on 
farming will face particular challenges as regards economic and social sustainability. 
Thus  the  role  of  the  agri-food  sector,  which  still  represents  more  than  4%  of  total 
GDP and 8% of total employment, remains critical in many rural areas. 

1.2. 

Further improvements to be addressed in the "Health Check" 

The above developments indicate that the CAP today is fundamentally different from 
the one of the past, notwithstanding the often paradoxical gap between the results of 

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its  reform  process  and  some  perceptions  about  it  (most  of  them  relevant  to  its  pre-
reform period). But for the CAP to continue to be a policy of the present and of the 
future, it needs to be able to evaluate its instruments, to test whether they function as 
they should, to identify any adjustments needed to meet its stated objectives, and to 
be able to adapt to new challenges. 

That more steps need to follow is inevitable – any policy cast in stone in a rapidly 
changing  environment  is  bound  to  become  obsolete.  The  CAP  has  proven  that  EU 
agriculture can take such steps successfully and change, but needs to allow farmers 
to adjust in the context of a predictable policy path. 

The  2003  Reform  was  the  first  step  to  make  the  CAP  fit  for  the  21st  century. 
Consensus on all the elements of the 2003 Reform could not be reached in one go. 
Indeed,  this  is  why  a  number  of  review  clauses  were  already  foreseen  in  the  final 
agreement, as were in other subsequent reforms since 2003. 

These  review  clauses,  without  implying  a  fundamental  reform  of  the  existing 
policies,  allow  the  possibility  of  further  adjustments  in  line  with  market  and  other 
developments.  The  topics  they  cover  have  been  grouped  together  under  the  term 
"Health Check" (HC) in the present communication. The aim is to address three main 
questions: 

•  how to make the Single Payment Scheme more effective, efficient and simple? 

•  how to render market support instruments, originally conceived for a Community 
of six Member States, still relevant in a more and more globalised world and an 
EU of twenty-seven? 

•  how  to  master  new  challenges,  from  climate  change  to  growth  in  biofuels  and 
water management and ongoing ones such as biodiversity by adapting to the new 
risks and opportunities? 

2. 

TAKING STOCK OF THE IMPLEMENTATION AND SIMPLIFYING THE SINGLE PAYMENT 
SCHEME 

2.1. 

Simplifying the Single Payment Scheme 

While new Member States (MS) can make use of the simplified Single Area Payment 
Scheme (SAPS) until end of 2010 (for Bulgaria and Romania end of 2011), EU-15 
MS had to implement the SPS by 2007. 

They  could  apply  a  historic  SPS  model  (payment  entitlements  based  on  individual 
reference  amounts),  a  regional  model  (entitlements  based  on  regional  reference 
amounts) or a mix of the two approaches.  

MS  had  the  possibility  to  maintain  some  specific  production-related  direct  aid 
(partially coupled support) where this was considered necessary in order to ensure a 
minimum level of productive activity and to generate environmental benefits. They 
could also retain up to 10% of the national ceilings to support agricultural activities 
that are important for the environment or for improving the quality and marketing of 
agricultural products (Article 69 of Council Regulation (EC) No 1782/2003).  

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Both historic and regional approaches of decoupling fulfil the objective of allowing 
farmers  the  choice of what to produce, instead of guiding such choice via product-
related support. However, the individual level of support in both approaches, albeit to 
different extents, is currently based on past levels of production and as time goes by 
it will become more difficult to justify differences in this support, especially in the 
historic  model.  It  seems  therefore  appropriate  to  allow  MS  to  adjust  their  chosen 
model  towards  a  flatter  rate  during  the  period  from  2009  to  2013.  Against  this 
background it should also be considered whether Member States which are applying 
now the SAPS, should be allowed to continue so until 2013. 

Furthermore,  as  more  sectors  have  in  the  meantime  entered  into  the  SPS  and  as 
experience  has  been  gained  with  operating  the  system,  certain  implementing 
decisions and rules seem unnecessarily rigid and complex. 

The  HC  is  the  right  opportunity  to  propose  changes  that,  without  altering  the 
fundamental structure of the system, adjust and simplify its implementation. 

2.2. 

Qualifying the scope of cross-compliance 

The  system  of  cross-compliance,  which  reduces  payments  to  farmers  who  do  not 
respect  EU-standards  associated  with  agricultural  activity,  is  and  will  remain  an 
essential  element  of  the  CAP.  But  experience  has  shown  a  clear  need  for 
simplification. 

This  process  has  already  started  based  on  the  Council  conclusions  which  recently 
backed  the  March  2007  Commission  report  on  cross-compliance.  Proposals  aiming 
to  improve  the  control  and  sanctions  aspects  of  the  scheme  are  already  in  the 
respective  legislative  procedure  and  are  foreseen  to  enter  into  force  2008/2009.  In 
addition, the work currently under way on further elements for simplifying the cross-
compliance scheme will feed into the HC. 

The  Commission's  report,  however,  did  not  address  directly  the  scope  of  cross-
compliance. In order to remain an appropriate tool, cross-compliance needs to reflect 
society's demands and must strike the right balance between the costs and benefits of 
any  requirements.  It  is  the  appropriate  targeting  of  Statutory  Management 
Requirements (SMR) and Good Agricultural and Environmental Conditions (GAEC) 
that  enhances  the  contribution  of  cross-compliance  as  an  effective  mechanism  to 
promote sustainable agriculture. 

Following the Council mandate and considering the need for simplification the HC 
will address the scope of cross compliance in the following areas: 

•  qualify  the  SMR  by  excluding  provisions  which  are  not  directly  relevant  to  the 

stated objectives of cross-compliance; 

•  examine,  and  where  appropriate  amend,  the  present  list  of  SMR  and  GAEC  in 

order to improve the achievement of the objectives of cross-compliance. 

2.3. 

Partially coupled support 

The extent of recent reforms renders partially coupled support less and less relevant 
from the point of view of producers, as more sectors are integrated into the SPS. Full 

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decoupling leaves producers at least as well off as before, and most likely better off 
as  a  result  of  production  flexibility,  and  it  eliminates  the  complexity  and 
administrative costs of running two systems in parallel. This is clearly the case in the 
arable crop sector. 

However, partially coupled support may retain some relevance, at least for the time 
being, in certain regions where the level of production is small overall, but important 
economically or environmentally (such as suckler cows in extensive beef producing 
regions). 

Whether,  to  which  extent,  and  until  when  partially  coupled  support  should  remain 
should  be  seen  in  a  clearly  regional  context.  The  Commission  proposes  a  case-by-
case analysis to identify the potential risks from a move into full decoupling and the 
possible alternatives. 

2.4. 

Upper and lower limits in support levels 

The  issue  of  distribution  of  support  is  not  new  for  the  CAP,  but  has  recently  been 
highlighted by the transparency initiative for the publication of beneficiaries of EU-
funds.  The  introduction  of  the  SPS  has  made  the  distribution  of  payments  more 
visible  than  before,  thus  raising  new  calls  for  limitations  to  the  level  of  support 
received  by  the  small  number  of  large  farmers.  In  addition,  the  implementation  of 
SPS  made  evident  that,  among  the  large  number  of  farmers  that  receive  small 
amounts  of  payments,  often  below  the  administrative  cost  of  managing  them,  are 
recipients who are not genuine farmers.  

In  the  context  of  the  HC  it  would  be  appropriate  to  look  into  the  possibility  of 
introducing some form of limitation in payments, both at the higher and at the lower 
level: 

•  for the higher level of payments the Commission considers that if a solution is to 
be found it would be in a model where the support level is gradually reduced as 
overall payments to the individual farmer increase, while retaining some support 
even at high overall payment levels1. Limitations will take into account the need 
to ensure that the economic sustainability of large farms is respected and to avoid 
circumventing such measures by splitting farms; 

•  for  small  amounts  of  payments  a  minimum  level  of  annual  payments  can  be 
introduced  and/or  the  minimum  area  requirement  can  be  set  at  a  higher  level  in 
such a way that would not affect real farmers. 

The  savings  thus  made  should  stay  in  the  same  MS  and  could  be  used  for  new 
challenges,  notably  in  the  framework  of  a  revised  Article 69  of  Regulation  (EC) 
No 1782/2003. 

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By way of example: payments above € 100 000 reduced by 10%, payments above € 200 000 reduced by 
25%, and above € 300 000 by 45%. 

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3. 

GRASPING NEW OPPORTUNITIES AND IMPROVING MARKET ORIENTATION 

3.1. 

The role of market intervention and supply controls 

In  the  past,  the  need  for  reform  in  EU  intervention  mechanisms  was  linked  to 
developments  in  world  markets,  and  any  eventual  stocks  had  to  find  a  way  out,  at 
least  partly,  via  exports.  The  reality  of  globalisation  and  of  an  EU  with  27  MS 
requires  a  reflection  on  the  future  of  the  remaining  "old  CAP"  instruments  (e.g. 
quotas, public intervention, price support and refunds), in particular given the current 
medium-term outlook for markets, especially favourable in cereals and dairy. 

Therefore,  the  question  arises  of  how  to  create  the  right  intervention  system  –  one 
which works as a safety net, and which can be used without reliance upon subsidised 
sales  (whether  externally  or  internally).  Given  that  effective  competition  in  the 
agricultural  markets  remains  one  of  the  objectives  of  the  CAP,  the  Commission 
intends  to  examine  whether  the  existing  supply  management  tools  serve  any  valid 
purpose  now,  or  whether  they  simply  slow  down  the  ability  of  EU  agriculture  to 
respond to market signals. 

Moreover,  the  Commission  intends  to  monitor  closely  the  present  market  situation 
and to analyse whether this is a reflection of a short-term response to poor 2006/07 
harvests or indicative of longer-term trends which could put pressure on agricultural 
markets and the supply situation. On the basis of this analysis, the Commission will 
conclude whether it is appropriate to propose new measures. 

3.2. 

Cereal intervention 

As  mandated  by  the  recent  Council  decision,  a  full  examination  of  the  cereal 
intervention  system  is  underway,  taking  into  account  the  growing  markets  for 
biofuels and the potential impact from increased demand for cereals.  

The 2007 decision to reduce maize intervention was necessary because intervention 
was used contrary to its primary safety net goal. This may lead to a relative loss of 
competitiveness  for  barley  and  possibly  soft  wheat,  and  may  trigger  the  risk  of 
increasing public stocks for these cereals. 

Therefore,  extending  the  model  of  maize  intervention  reform  to  other  feed  grains 
seems the best solution in the present context. This would allow the Commission to 
react in crisis situations, but it also would allow farmers to receive their production 
signals  from  markets  prices.  The  maintenance  of  intervention  for  a  single  cereal 
(bread  wheat)  could  provide  a  safety-net  support,  whilst  allowing  other  cereals  to 
find their natural price level. 

3.3. 

Set aside: abolish supply-management, strengthen environmental benefits 

Set aside was introduced in order to reduce EU cereals production at a time of high 
stocks, and to let EU cereals adjust to world market conditions. This role has become 
much  less  relevant  as  a  result  of  market  developments  and  the  introduction  of  the 
SPS. 

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The  foreseeable  demand  and  supply  situation  for  cereals,  including  the  demand 
linked to the fulfilment of the biofuel target set by the EU, argues for mobilising land 
which is presently kept out of production through the compulsory set aside scheme. 

However,  the  permanent  abolition  of  set  aside  will  require  steps  to  preserve  the 
environmental benefits accrued from the present scheme. One possibility would be to 
replace  it  by  locally  targeted  RD  measures,  taking  into  account  that  agri-
environmental conditions are heterogeneous in space. 

In order to keep and further enhance such benefits, the aim would be to strengthen 
RD support to environmental forms of land, water and ecosystem management, such 
as environmentally managed set aside, the protection of riparian strips, afforestation 
and measures linked to climate change adaptation and renewable energy policy like 
biodiversity corridors. 

3.4. 

Preparing the "soft landing" of the dairy quota expiry 

Before  the  end  of  2007  the  Commission  will  present  a  report  which  will  cover  in 
detail the developments of the dairy markets, but one general conclusion is already 
evident from market developments since 2003. The reasons for which the EU dairy 
quotas were introduced are no longer valid. 

Instead of coping with a growing supply in the face of a stagnating demand for bulk 
commodities,  we  are  now  faced  with  a  growing  demand  for  high  value  products 
(especially for cheese and fresh dairy products) internally and externally, high prices 
and  a  subsequent  decrease  in  the  role  of  intervention  as  an  outlet  for  butter  and 
skimmed milk powder. 

In  this  situation  the  question  has  to  be  asked  whether  and,  if  so,  what  measures 
should  be  taken  to  ensure  a  smoother  transition  to  a  more  market-oriented  dairy 
policy before the milk quota system runs out on 31 March 2015. 

Phasing-out 

In market terms, the decision in 2003 not to further increase quotas has limited the 
capacity  of  the  sector  to  achieve  greater  market  orientation  and  increase  its 
competitiveness. In policy terms, the quota regime has widened the gap between the 
milk sector and other reformed agricultural sectors. 

If nothing is done until the quota regime expires in 2014/15 high quota values would 
prevent the more efficient farmers from benefiting from new opportunities while the 
least  efficient  in  disadvantaged,  especially  mountainous,  areas  would  face  great 
difficulties due to significant price falls after the abrupt expiry of the quotas. 

This  leads  to  the  conclusion  that  a  gradual  quota  increase  could  best  prepare  the 
ground for a "soft landing" of the sector by the time quotas expire. The appropriate 
level  of  the  quota  increase  will  be  proposed  on  the  basis  of  an  on-going  analysis, 
which  aims  at  identifying  both  the  impact  of  the  expiry  of  the  quota  per  MS  and 
region  and  the  necessary  accompanying  measures  (such  as  adjustments  to 
intervention or the super levy) that would render this path as smooth as possible. 

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Measures for mountainous regions 

In  general  terms,  it  is  expected  that  the  phasing-out  of  milk  quotas  will  expand 
production, lower prices and increase the competitiveness of the sector. At the same 
time,  certain  regions,  especially  but  not  exclusively  mountainous  regions,  are 
expected to face difficulties in keeping a minimum level of production. 

Some of these problems could be addressed with RD measures aiming at developing 
added value for dairy products. However, since RD policies are not designed to keep 
production  in  place,  another  solution  for  mountainous  areas  to  accommodate  the 
"soft  landing"  of  quota  expiry  is  needed.  One  possibility  would  be  to  establish 
specific  support  measures  under  a  revised  Article 69  of  Regulation  (EC) 
No 1782/2003. This would require a relaxation of the present rule that such measures 
can only apply at the sector level. 

In summary, the HC orientation for the expiry of the dairy quotas should be to: 

•  propose the necessary quota increases to prepare the "soft landing" for the expiry 

of quotas by 2014/15; 

•  identify  any  required  changes  in  other  dairy  policy  instruments  that  would 

facilitate this transition; 

•  propose  measures  that  would  mitigate  the  expected  negative  impact  in  specific 

regions. 

3.5. 

Other measures of supply control 

In  a  series  of  other,  generally  small,  sectors  (dried  fodder,  starch,  flax  and  hemp) 
measures of supply control and production linked payments are also present. The HC 
will include a thorough evaluation of the performance of such measures, and of their 
long-term utility. 

This  will  identify  the  list  of  measures  and  the  appropriate  timing  for  shifting  the 
remaining production-linked payments to the SPS. It will also examine whether there 
may  be  cases  where  continuing  some  support  may  be  necessary  to  retain  benefits 
from production to the regional economy that cannot otherwise be obtained. 

4. 

RESPONDING TO NEW CHALLENGES 

4.1.  Managing risk 

Decoupled  producer  support,  by  de-linking  the  level  of  farm  payments  from  the 
quantity produced, allows farmers to adjust better to expected risks, for example by 
redirecting  their  production  from  low-price  markets  towards  those  with  a  better 
return. Decoupling also allows producers to mitigate unexpected risks. 

However,  changes  in  traditional  market  instruments  and  the  shift  towards  direct 
producer support have prompted discussion on different ways of managing risk, with 
price risk and production risk (e.g. weather-related or sanitary) identified as the two 
main sources of variation affecting income. 

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Following the 2005 Council debate the Commission has continued its reflections on 
risk  management  based  on  internal  and  external  analysis,  while  in  the  meantime 
Community  support  for  risk  management was introduced in the fruit and vegetable 
reform by authorising producer organisations to decide to include such measures in 
their  programmes.  Furthermore  the  Commission's  proposal  on  the  wine  reform 
foresees risk management measures via the national envelopes. 

But Commission analysis and expert opinion indicate that the list of risks and their 
extent vary, and include so many uncertainties that at this stage, at least as long as 
intervention  as  a  safety  net  continues,  an  EU-wide  solution  (based  on  a  “one-size-
fits-all” approach) would not be appropriate. 

In  addition,  MS  should  be  encouraged  to  use  RD  tools  because  it  is  exactly  the 
second  pillar  that  is  more  apt  to  provide  targeted  solutions.  Not  all  MS,  not  all 
sectors, and more importantly not all regions and sectors even within the same MS, 
face the same market risks or weather risks. It is preferable to allow MS, regions, or 
producer groupings, via second pillar measures, to assess better their own risks and 
their preferred solution. 

Therefore, the Commission considers that in the HC it would be appropriate to: 

•  extend the use of part of modulation savings to allow risk management measures 

in the framework of RD policy, provided that they meet "green box" criteria; 

•  examine on a case-by-case basis the need for additional measures in the context of 
future  adjustments  in  market  mechanisms  and  carry  out,  at  a  later  stage,  a  more 
general examination of risk management for the period after 2013. 

4.2. 

Climate change, bio-energy, water management and biodiversity 

Three crucial  new  challenges for EU  agriculture lie in the areas of climate change, 
bio-energy  and  water  management.  Climate  change  is  the  pivotal  challenge  of  the 
three, influencing developments in the other two areas.  

In  mitigating  the  effects  of  climate  change,  EU  agriculture  has  contributed  more 
than  other  sectors  to  curbing  green  house  gas  emissions.  This  is  mainly  due  to  the 
improvement  of  production  methods  (i.e.  more  efficient  use  of  fertilisers)  and 
diminishing  cattle  numbers.  But  the  agriculture  sector  will  be  called  to  contribute 
more in the future as part of the EU global strategy for curbing emissions. 

But  EU  agriculture  is  also  highly  exposed  to  climate  change.  A  wide  range  of 
concerns relates to uncertainties about precipitation patterns, extreme weather events, 
temperature levels, water availability, and soil conditions. Consequently, there is also 
the need for adjustments to improve adaptation practices. The recent Green Paper on 
the  adaptation  to  climate  change  calls  upon  EU  agriculture  to  contribute  further  to 
mitigating the effects of climate change. 

The EU renewable energy roadmap has set binding targets for the share of biofuels 
(10%) and renewable energies (20%) in total fuel and energy consumption by 2020. 
These  targets  are  closely  linked  to  climate  change  mitigation  objectives  and  are 
likely to have a significant impact on EU agriculture. At the same time the primary 
vocation of European agriculture will continue to be the production of food and feed. 

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As  already  stated  in  the  Commission's  Communication  on  water  scarcity  and 
droughts of June 2007, the HC provides an opportunity to examine how to integrate 
further water management issues into the relevant CAP instruments. It is essential for 
EU  agriculture  to  have  sustainable  water  management,  otherwise  the  pressure  on 
the quantity and quality of water for agriculture will increase considerably. 

Furthermore,  halting  biodiversity  decline  remains  a  major  challenge,  and  climate 
change and water demand increase that challenge. Member States are committed to 
stopping  biodiversity  decline  by  2010,  but  this  target  is  unlikely  to  be  met,  and 
agriculture has a key role to play in protecting biodiversity. 

There is a range of possibilities to deal with these challenges in the HC: 

•  incentives  for  mitigation  and  adaptation  to  climate  change,  for  better  water 
management and for providing environmental services in the area of bio-energy, 
and  for  biodiversity  protection  could  be  provided  through  the  strengthening  of 
existing RD measures; 

•  climate  change  and  better  water  management  objectives  could  be  achieved  also 

through cross-compliance, either under SMR or under GAEC; 

•  research and innovation are crucial to address new environmental and productivity 
challenges,  including  second  generation  biofuels.  Furthermore,  incentives  for 
developing second generation biofuels should be reinforced within RD measures; 

•  it should be examined whether the present support scheme for energy crops is still 
cost effective in the light of new incentives for biomass production (compulsory 
energy targets and high prices). 

4.3. 

Strengthening the second pillar 

The  new  challenges  stemming  from  the  issues  identified  in  this  Communication 
make a further strengthening of the second pillar necessary, in particular in the light 
of  the  current  constraints  that  MS  are  facing  due  to  the  cut  in  their  expected  RD 
support after the 2005 decision on the Financial Perspectives. Such reinforcement is 
also necessary in order to respond to the need for increased efforts in innovation to 
address  those  new  productivity  and  environmental  challenges,  including  second 
generation biofuels. 

With  the  CAP  budget  now  fixed  until  2013,  strengthening  RD  funds  can  only  be 
achieved  through  increased  co-financed  compulsory  modulation.  Such  a  decision, 
which will in time affect all MS, once they reach the 100% EU support level, needs 
to  respect  the  current  distribution  of  modulation  funds  among  MS  and  take  into 
account existing rules. To achieve this, it could be envisaged to: 

•  increase  by  2%  annually  in  budget  years  2010–2013  existing  compulsory 

modulation; 

•  analyse appropriate ways to take account  of the  implied  compulsory modulation 
in EU-10, whilst respecting the current distribution of RD funds between MS. 

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5. 

FINANCIAL FRAMEWORK 

The underlying financial principle for this Communication is that no additional EU-
funding  will  be  available  for  the  first  and  second  pillar  of  the  CAP  in  the  period 
2007–2013. 

Within  this  framework,  the  ceiling  for  expenditure  will  be  decreasing  in  constant 
prices.  This  implies  that  the  financial  discipline  could  be  applicable  for  farmers 
during  the  period,  albeit  to  a  lesser  extent  than  previously  foreseen  if  the  current 
market prices will stay at their high level. 

As  illustrated  in  the  graph  below,  the  net  ceiling  for  the  first  pillar  spending  is 
decreasing in constant 2004 prices and at the same time EU-12 will require steadily 
increasing amounts for direct aids in accordance with the Accession Treaties. 

Margin f inancial discipline

Direct Aids EU-2

EAGF Net Ceiling

Other Market

Direct Aids EU-10

Direct Aids EU-15

42000

39000

36000

33000

30000

27000

24000

21000

s
e
c
i
r
p

4
0
0
2

€

n
o

i
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i

M

0
2007

2008

2009

2010

2011

2012

2013

6. 

CONCLUSIONS 

During  2007  and  2008  the  Commission  will  develop  its  approach  to  the  budgetary 
review  2008/2009  as  set  in  the  communication  "Reforming  the  budget,  changing 
Europe". The Health Check constitutes a preparatory action within this framework, 
without  prejudging  the  outcome  of  this  review.  It  fine-tunes  the  2003  reforms  and 
contributes to the discussion on future priorities in the field of agriculture. 

The Commission suggests in this communication "Preparing for the Health Check of 
the  CAP"  a  broad  outline  of  adjustments  to  several  elements  of  the  CAP.  These 
adjustments  do  not  constitute  a  fundamental  reform,  but  prepare  EU  agriculture  to 
adapt better to a rapidly changing environment. Based on the conclusions of public 
dialogue  with  stakeholders  and  on-going  impact  analysis,  the  Commission  will 
submit appropriate proposals in the spring of 2008. 

EN 

11 

   EN 

 
 
 
 
 
To  promote  this  dialogue,  the  Commission  plans  to  organise  two  seminars  with 
stakeholders2 which will provide the opportunity to launch public consultation on the 
communication. 

2 

6 December 2007 and 11 January 2008. 

EN 

12 

   EN