COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on information provision and promotion measures for agricultural products on the internal market and in third countries
Date: 2013-11-21
Institutions: European Commission
Subjects: agricultural product, common agricultural policy, competitiveness, consumer information, foreign market, quality control of agricultural products, single market, third country














EUR-Lex - 52013SC0469 - EN











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52013SC0469

COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on information provision and promotion measures for agricultural products on the internal market and in third countries /* SWD/2013/0469 final */









COMMISSION STAFF WORKING DOCUMENT
EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT
Accompanying the document
Proposal for a
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
on information provision and
promotion measures for agricultural products on the internal market and in
third countries

The Common Agricultural Policy (CAP)
supports information and promotion actions for agricultural products on the
internal market and in third countries. Since 1999, this support has been
through a horizontal information and promotion regime for a wide range of
products. It was last revised in 2008 with a view to simplification.
The on-going CAP reform[1] covers such issues as better
targeting of support, improved convergence of support levels between and within
  Member States, and sustainability through greening measures. It is therefore now
appropriate to review the information and promotion measures given their links
to the CAP reform. This reform will also address various shortcomings, improve policy
effectiveness and efficiency and help to provide better information to citizens
of the added value of the CAP. Its expected impact on the competitiveness,
value added and sustainability of EU agriculture would also enhance the CAP’s contribution
to the Europe 2020 strategy.
The reform process was initiated during
2011 on the basis of an external evaluation of current policy and a green paper
on promotion measures and information provisions for agricultural products.[2] This led in March 2012 to the Commission’s
Communication setting out guidelines for the reform.[3]
The European Parliament welcomed the
initiative. It considered that reform of the promotion policy is a first step
towards enhancing the value Europeans and others attach to European
agricultural production and so would have positive impacts on its
profitability.
1.           Problem definition and EU
added value
1.1.        Increased pressure on agricultural
sector competitiveness 
The major issue to address is the increased
pressure on the competitiveness of the agricultural sector, resulting from three
different sources:
·                        
Fierce competition against European
agricultural products
While the EU has significantly reduced public support
for exports (50 % of CAP expenditure in 1980 to less than 0.5 % today)
and continues on that path, most of its competitors have policies to finance
promotion measures or grant export support to increase their competitiveness.
This is particularly the case for the United States, the world’s number one
exporter of agricultural products (together with the European Union in 2011). In
2012 at federal level alone, the US spent $ 280 million of public funds to
promote its agricultural exports.
Initiatives to counteract EU policy on
geographical indications are also occurring more and more frequently.[4] In response to Europe’s success in protecting its geographical indications (GIs) internationally, there have
emerged a number of associations seeking to defend the principle of generic
names for agricultural products, so creating a platform for third countries to
challenge the protection of GIs.
Additionally, European agriculture is today facing
a much more competitive environment brought about by increasing globalisation
of the world economy and increasing liberalisation of trade. Consequently, European
agricultural exports to the rest of the world are on a declining trend, in favour
of emerging economies that have significant potential to increase their
agricultural production. For instance, over the past 10 years, Brazil almost doubled from 5 % to nearly 10 % its share of world exports in value.
This fierce competition occurs not only in third countries but also on the
internal market, where European agricultural products have to compete with imported
products.
·                        
Increased cost pressures on EU farming
During the 2000-2012 period, world agricultural
prices increased by 82 % while energy and fertiliser prices jumped by 261 %
and 286 % respectively, experiencing the highest degree of volatility of
the past 30 years. The upward trend in energy and feed costs is expected to continue
leading to inevitably higher costs for the production process.
Farmers also have to respect stricter
production standards to ensure safe, high-quality and sustainable production.
This is to comply with CAP, animal health and welfare, and phytosanitary
requirements, and these will all be further strengthened in the CAP reform by
specific requirements on environment and climate change.
·                        
Lack of awareness of the quality of EU
agricultural products, in particular on the internal market
Product quality can boost competitiveness as
long as this quality is known and recognised. The majority of European citizens
already believe that the European Union, through the CAP, should ensure that
agricultural products are of good quality, healthy and safe. However, statistics
show that consumers are not sufficiently informed about the actual quality of
European agricultural products, with only 14 % of consumers able to recognise
the PDO/PGI[5]
logos, the leading European quality systems established by the CAP.
1.2.        The EU added value of the
information and promotion policy within the CAP
Unlike other economic sectors, agriculture
is the only sector governed by a common EU policy with common rules, including
those concerning promotion, provided for in the Treaty.
The CAP enables farmers not only to supply safe,
high-quality food through sustainable agricultural methods but also to provide
public goods. The CAP, therefore, is of interest not only to farmers or
agricultural communities but also to society at large. Consequently, it is
important to raise awareness amongst citizens of the objectives and added value
of the CAP in order to increase the general public’s understanding and support
for it. For third country markets, it is important to address increased competitiveness
challenges by promoting the advantages of European production methods, in
particular when trade barriers are gradually being dismantled, and the quality of
European products. Action at EU level will ensure coherent information and
promotion activities are carried out, in line with what is normally to be
expected from a common EU policy such as the CAP. In short, the promotion
policy contributes to raising consumer awareness of the intrinsic qualities of
European agricultural products and the way they are produced, facilitates trading
of such products and reinforces the exchange of good practices among Member
States. Nevertheless, considering the upcoming changes the reform of the CAP,
the European promotion policy needs to be updated too.
In light of the above and given the lack of
resources in national budgets in the wake of the economic crisis — so Member
States or producer organisations implement very few promotion campaigns — an EU
scheme has an important leverage effect on generic information programmes and
also for the implementation of multi-country programmes, generating exchange of
experience among Member States and achieving economies of scales.
2.           The current European
information and promotion policy for agricultural products
The European Commission supports generic
promotion programmes under the information and promotion policy for
agricultural products and their method of production. It excludes actions based
on commercial brands and those that encourage the consumption of a product
because of its specific origin. The programmes are submitted by sectoral professional
organisations and are co-financed by the EU up to a maximum contribution of 50 %.
The professional organisation must make a minimum contribution of 20 % and
the balance is borne by the Member State in which the organisation has
submitted its programme. In addition, the Commission carries out specific
initiatives in third countries, such as exhibiting at international fairs or carrying
out high-level trade missions involving the Commissioner for Agriculture and
Rural Development.
The annual budget for the agriculture information
and promotion policy amounts to EUR 50 million.
The information and promotion policy has
shown positive results in raising awareness on quality products and on the
image of the European Union, both on the internal market and in third countries.
It has also promoted consumption of European agricultural products.
Nevertheless, lessons can be learned from the experience gained from
implementing this policy, and from stakeholder contributions to the green paper
and external evaluations of the scheme. They reveal difficulties and bottlenecks
in implementation: the perception of generic promotion as inappropriate in
third countries; the absence of a strategy with clear priorities; the limited
attractiveness of multi-country programmes; the complex management of the
scheme; and the absence of common indicators to measure the effectiveness of the
promotion policy. These problems need to be addressed.
3.           Objectives
European agriculture is facing many
challenges of various natures: economic (price volatility, slow-down in factor
productivity growth, declining share of agriculture in the food chain);
environmental and climate-related (maintenance and promotion of sustainable
agriculture, reduction of greenhouse gas emissions); and social (participation
in rural economy and territorial balance). The reform of the CAP will take a comprehensive
approach to address all these challenges.
As an instrument of the CAP, the promotion
policy for agricultural products must also pursue the objectives of ‘The CAP
towards 2020’, and specifically the objective of increasing the sector’s competitiveness,
both on the internal market and in third countries. This is to be achieved by:
–              
Developing and opening up new markets for
European agricultural products on the internal market and in third countries;
–              
Increasing consumer awareness of the quality of
European agricultural products;
–              
Improving the efficiency and effectiveness of
the promotion policy.
4.           Policy scenarios
Three policy scenarios have been developed
as alternatives to the existing policy. These arise from distinctive features that
emerged from the public debate and the positions taken by various stakeholders:
the targeted market(s); the existence or not of a European strategy for
promotion; and rules regarding the visibility of private brands and the mention
of product origins.
The following scenarios have been
formulated for the purpose of the impact assessment and to feed into the
decision-making process:
–              
The ‘enhanced status quo’ scenario
is a limited adaptation of the current promotion policy. It recognises the
value of the promotion policy and addresses shortcomings to make the policy
simpler and more accessible, to enable more beneficiaries to participate (notably
producer organisations) and to help them with adequate technical support.
–              
The ‘targeted’ scenario goes beyond
the ‘enhanced status quo’ scenario. It would implement targeted promotional
activities on the internal market and in third countries. The strategy would be
based on close monitoring of market trends and negotiations of free trade
agreements, and allow for targeting promotion programmes to specific markets,
populations, products or sectors. This scenario also aims to increase collaboration
between operators from different Member States thereby facilitating the management
of multi-country programmes directly by the Commission. The list of eligible
products and themes will be more extensive in this scenario. Finally, this
scenario, under specific conditions, proposes to allow references to the origin
of products and to private brands as part of illustrating a generic message.
–              
The ‘exclusive third countries’
scenario shares the same level of ambition as the ‘targeted’
scenario but restricts it to third country markets only. Management in this
scenario will be centralised in the Commission and actions will be implemented
in accordance with a selection strategy. The changes set out under the ‘enhanced
status quo’ scenario will be included in this scenario. In addition, beyond
generic promotion, commercial activities for individual private brands will
also be eligible under the promotion policy and may feature an extended list of
eligible products and themes.
5.           Assessing the impacts of
the policy scenarios
5.1.        ‘No policy’
scenario
Studies and evaluation reports, including a
2009 report of the Court of Auditors, show that the European promotion policy
plays a positive role, although difficult to measure, and ultimately rewards European
farmers for their efforts to produce in accordance with the high standards of
the CAP. Abandoning this policy would diminish the prospects for increased
value of European agricultural products and therefore to a loss of added value
for the EU, both in terms of market share and image. It could also lead to a
concentration or intensification of production, and homogenisation of agricultural
products.
5.2.        ‘Enhanced status quo’
scenario
From an economic point of view, widening
access to the scheme to producer organisations should allow producers to make
better use of the information and promotion programmes. As a consequence, this
scenario encourages an efficient operation of the agricultural sector, boosts competitiveness,
and achieves both economies of scale and growth.
The increasing number of initiatives will raise
the profile of the Commission at international fairs, which will mainly benefit
the small and medium-sized enterprises (SMEs) taking part in them. Technical
support should improve the design of promotion programmes, including
multi-country, which should make the internal market more dynamic.
From a social point of view, encouraging
the setting up of producer organisations should strengthen the agricultural
sector and improve social conditions in rural areas.
5.3.        ‘Targeted’ scenario
From an economic point of view, the
European strategy for promotion will make it possible to target actions on
specific products, themes and markets, thereby maximising the return on
investment of the information and promotion policy. Communication activities
accompanying any promotional action will increase the visibility of the
European Union and should encourage demand for European agricultural products
because of their high standards and production methods. The visibility of
private brands, an important asset to trigger the actual purchase, should
improve the competitiveness of European agricultural products and benefit SMEs,
especially as these will benefit from a prioritised access to the scheme. Competitiveness
gains will also be facilitated by widening the list of eligible products. This
scenario's activities would boost EU exports of agricultural products. Changes
in the management of multi-country programmes should increase their number and lead
to significant economies of scale and sharing of experiences.
From a social point of view, this scenario
will contribute to maintaining — or even increasing — employment in the
agri-food sector, in response to the expected growth in exports resulting from
the strategy. In addition, the strategy will facilitate the promotion of
products recognised by European quality systems and related to regions of
origin and European traditions, thereby contributing to the advertising and preservation
of Europe’s cultural heritage. Promoting the origin of products should have a
positive effect not only for the regions or Member States concerned, but also
for the European Union as a whole, as it will bring its image and traditions to
the campaigns. Finally, themes related to the well-being of consumers and a healthy
diet could be promoted through the strategy.
From an environmental point of view, the sustainable
production characteristics of the CAP will be highlighted by the strategy, and
this will enhance the value of efforts made by European producers and encourage
the development of agriculture that respects the environment.
5.4.        ‘Exclusive third countries’
scenario
Considering the potential for exports
growth, priority is given in this scenario to increased competitiveness of the
agricultural sector. The visibility of commercial brands and the origin of
products will promote exports. However, in order to limit the risk of windfall
profits for private companies and any substitution of private initiative and
investment, specific eligibility criteria should be applied. On the other hand,
the absence of information and promotion actions targeting the internal market
will affect European consumers: any generic information on agricultural
products, production methods or healthy eating will be left to the initiative
of Member States or professional organisations, for whom this is not necessarily
the first priority.
From an environmental point of view,
actions will encourage purchase and consumption in third countries of European
agricultural products whose production methods meet environmentally ambitious
CAP requirements. This encourages sustainable agricultural production. However,
European consumers, who would no longer be targeted by these actions, will be
less informed about the environmental requirements European farmers have to respect,
which could in turn weaken the link between agriculture and the environment.
5.5.        Administrative burden
The greater number of potential
beneficiaries in all scenarios will increase the workload when selecting
information and promotion programmes. Implementation of technical support and
development of initiatives will also increase direct management tasks for the
Commission. However, improving the selection procedure will lead to savings compared
with the current administrative burden.
In addition, in the ‘targeted’ and ‘exclusive
third countries’ scenarios, the greater attractiveness of the scheme and building
on the results of the promotion policy could increase the workload for both
national authorities and Commission services. The Commission could also face a
great increase in the number of actions centrally managed, especially for multi-country
programmes. An on-going study is examining whether some of those tasks could be
delegated to an executive agency.
Finally, improved management of
multi-country programmes, as projected in the ‘targeted’ scenario and
the ‘exclusive third countries’ scenarios, will lead to a significant
decrease in administrative burden for professional organisations compared with the
current situation.
5.6.        International dimension
The European promotion policy promotes the
image and quality of European agricultural products within the EU and in third
countries. It is consistent with the WTO Agreement on Agriculture and
compatible with WTO rules. None of the provisions proposed in the different
scenarios affect the classification of promotion measures in notifications to
the WTO of European agricultural expenditure.
5.7.        Evaluation of the
potential for simplification
The different scenarios provide for greater
simplification in managing the policy; the ‘exclusive third countries’
scenario achieves the most in this respect. It includes one-step selection that
will occur only once a year (common to all scenarios) and simplified management
of multi-country programmes because entities will deal directly with the
Commission (also in the ‘targeted’ scenario). Because this scenario will
focus only on third countries, it will avoid potential difficulties in the scheme’s
interpretation and implementation that might otherwise arise if there were
different rules for the internal market and for third countries.
6.           Comparison of scenarios
against objectives and their impacts
All three scenarios aim at a more
competitive agriculture sector in Europe. To this end it will be essential to raise
awareness of the quality of European agricultural products. Their expected
economic, social and environmental impacts are summarised in the table below.
   ||   || ‘Enhanced status quo’ scenario || ‘Targeted’ scenario || ‘Exclusive third countries’ scenario 
 Economic || Competitiveness of the agricultural sector || + || +++ || ++ 
 SMEs || + || ++ || +++ 
 European consumers || 0 || ++ || -- 
 Regions || + || +++ || ++ 
 Functioning of the internal market || 0 || ++ || + 
 Social || Employment || + || ++ || ++ 
 Culture, Heritage || + || +++ || ++ 
 Well-being of European consumers || 0 || + || - 
 Environmental || Sustainable production || 0 || ++ || + 
 Simplification || + || ++ || +++ 
Better management under the ‘enhanced
status quo’ scenario should lead overall to a small but noticeable positive
impact in all areas. Maintaining the current trend, each individual programme
would continue to have valuable outcomes. However, the absence of a global
approach will undermine the coherence of the whole policy, and run the risk of neglecting
opportunities offered in specific sectors or markets, especially in third
countries. The new technical support could boost relations between
beneficiaries and help them to find partners to implement multi-country
programmes. Nevertheless, this scenario does not address management issues
raised by multi-country programmes, which will remain under shared management of
the Commission and Member States.
At the other end of the spectrum, the ‘exclusive
third countries’ scenario pursues a more forceful and commercial approach
by limiting promotion measures to third country markets and making more
ambitious use of private brands and origin. This scenario would lead to
significant economic impacts, especially for SMEs allowed to mention their own
brands in promotion actions. Nevertheless, it does not respond to the European
consumer’s need for information. This absence of promotion actions on the
internal market will ultimately affect the purchasing behaviour of European
consumers.
The ‘targeted’ scenario takes into
account the needs of both internal and external markets. A global agricultural
promotion strategy would be efficient and it would address both economic
opportunities in third countries and information needs on the internal market.
Generic promotion would not primarily be to the economic advantage of agri-businesses.
However, publicity material for consumers offered by this scenario would give
visibility to private brands and the origin of products so this should be
partially offset.
The ‘targeted’ and ‘exclusive
third countries’ scenarios would generate more multi-country programmes,
with high added value for Europe. The analysis however shows that a greater administrative
burden — to a certain extent — cannot be avoided.
In terms of budget, the financial resources
of the new policy will be defined within the limits of the new multiannual
financial framework for 2014-2020. Without prejudice to the availability of
such resources, the ‘targeted’ scenario would place the highest demand
on the EU budget. This follows from the desire to remain ambitious in developing
activities in third country markets and from a significant increase of
multi-country programmes.
The budget for the ‘exclusive third
countries’ scenario would be half that of the ‘targeted’ scenario,
assuming that expenditure of the latter is evenly shared between the internal
market and third country markets. Even if the ‘exclusive third countries’
scenario is less expensive, the two scenarios are equivalent in terms of cost-effectiveness.
Clearly, the ‘exclusive third countries’ scenario cannot adequately
address the expectations of European consumers; on the other hand, the ‘targeted’
scenario would raise awareness about the quality of European agricultural
products on the internal market, so increasing demand and encouraging
sustainable production.
The ‘targeted’ scenario would maximise
EU added value by better promotion of the quality of European
agricultural products and raising consumer awareness throughout the EU, by
addressing important cross-border issues related to the management of
multi-country programmes, and by reinforcing exchange of good practices among
Member States.
The following table assesses the potential
of each of the three scenarios to meet the specific objectives of the reform:
   || ‘Enhanced status quo’ scenario || ‘Targeted’ scenario || ‘Exclusive third countries’ scenario 
 Awareness of the quality of European agricultural products || ++ || +++ || + 
 Develop and open new markets on the internal market and in third countries || + || +++ || ++ 
 Effectiveness and efficiency || + || ++ || ++ 
 EU added value || + || +++ || ++ 
The ‘enhanced status quo’ scenario
appears insufficiently focused on activities with high added value for the
European Union while the ‘exclusive third countries’ scenario seems too
risky considering the low level of knowledge on agricultural products in Europe.
The ‘targeted’ scenario provides the right balance to progressively turn
the agricultural promotion policy into a policy more targeted to the needs of
the agricultural sector and markets while also improving the level of consumer awareness
vis-à-vis a wider range of agricultural products.
The ‘targeted’ scenario will allow
the agricultural sector to respond better to the pressures on its
competitiveness; targeted measures in third countries will address the fierce
competition from other countries. The lack of awareness of the quality of EU
products will be addressed by a comprehensive strategy to improve information activities
on the internal market, including close monitoring of market trends. Last but
not least, on both the internal and the external markets, this scenario will
address the increased cost pressures on the EU farming economy and will help to
preserve the diversity of EU agricultural production, environment and rural
world[6].
7.           Monitoring and evaluation
Today, an assessment of the impacts of each
individual information and promotion programme is systematically made, using
indicators and objectives established by the proposing organisation and
assessed by the Commission services when approving the programme. However, in
the absence of an overall strategy, the results of these evaluations are
difficult to aggregate at the wider level of the promotion policy.
In the future, it will be important to
reinforce monitoring and evaluation of the European promotion policy for
agricultural products. The future monitoring and evaluation system should also
better reflect the reinforced strategic approach. Therefore, common indicators
based on objectives and priorities should be implemented to facilitate the use
of evaluation in the selection process for programmes.
The monitoring and evaluation system for
the agricultural promotion policy should be linked with the common monitoring
and evaluation framework for the CAP, as proposed in the reform proposal on
financing, management and monitoring of the CAP[7].
To this end, the following set of indicators is proposed:
- Impact indicators linked to the general
objective
·              
Agricultural trade balance
·              
Agricultural factor income
- Result indicators linked to specific
objectives
·              
EU agricultural exports
·              
Value of production under EU quality schemes
·              
Level of awareness of the quality of European
agricultural products
- Output indicators linked to the different
measures of the promotion policy
·              
Number of programmes on the internal market and
in third country markets
·              
Number of new beneficiaries
·              
Number of multi-country programmes
[1]               See
the impact assessment on CAP towards 2020 (SEC(2011) 1154 final/2).
[2]               COM(2011)
436 final.
[3]               Communication
on promotion measures and information provision for agricultural products: a reinforced
value-added European strategy for promoting the tastes of Europe (COM(2012)
148).
[4]               See for example in April 2012 the initiative with the
creation of a new association in the US: CCFN — Consortium for Common Food
Names — an international initiative to preserve the right to use generic food
names.
[5]               PDO - protected designation of origin; PGI -
protected geographical indication.
[6]               See study Scenar 2020 which shows the negative
impacts of a scenario with no CAP
http://ec.europa.eu/agriculture/agrista/2006/scenar2020/final_report/scenar2020final.pdf.
[7]               See Article 110 of COM(2011) 628 final/2.