Download - Owen Jones DG for Agriculture and Rural Development European Commission Edinburgh 16 March 2011
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Olo
f S
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Communication on the future of the CAP
“The CAP towards 2020: meeting the food, natural resources and territorial challenges of
the future”
Owen JonesDG for Agriculture and Rural Development European Commission
Edinburgh16 March 2011
2
Outline
1. The context
2. The CAP today
3. Why do we need a reform?
4. New objectives, future instruments and policy options
5. Concluding remarks
6. Next steps
3
1. The context
Background of reform
• Entry into force of Lisbon Treaty• Budgetary framework ends in 2013• Need to align CAP post-2013 to Europe 2020 strategy
Public debate
The Communication
• Strong public interest in Commission call to public: 5 600 contributions• Very successful Conference in July 2010: 600 participants• Council, EP, EESC, CoR discussions and/or opinions
• Reflects broadly identified policy challenges• Responds to the public debate and outlines broad future options• Launches inter-institutional debate and prepares legal proposals
4
2. The CAP today
A substantially reformed policy…
• Structured in two complementary pillars
• Farm support mainly decoupled and subject to cross-compliance
• Role of market intervention mechanisms significantly reduced to safety net level
• Rural development policy strengthened with funds and new policy instruments
… better performing…
• Surpluses belong to the past
• Competitiveness improved
• Improved transfer efficiency
• More sustainable farming
• Contribution to EU budget stability
… and resulting in a territorial and environmentallybalanced EU agriculture
5
0
10
20
30
40
50
60
70
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
-pre
lim
in b
illio
n €
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
0.7%%
of G
DP
Export subsidies Other market support Coupled direct paymentsDecoupled direct payments Rural development CAP as % of EU GDP
The policy outcome of CAP reform...
Source: European Commission - DG Agriculture and Rural Development
Enlargement with same budget!
Rural development to meet
environment, competitiveness and
territorial balance challenges
Decoupled direct payments to
enhance market orientation and
avoid trade distortions
Reduction of market interventions: now only safety net
Reduction of export subsidies
Change of CAP since 1980 (in 2007 constant prices)
EU-27
6
0%
10%
20%
30%
40%
50%
60%
% of GDP
CAP expenditure All EU public expenditure
Alternative views on the cost of the CAP
0
20
40
60
80
100
120
140
Billion of euros
CAP expenditure EU budget
CAP cost in 2009 (in relative terms)
CAP cost in 2009 (in absolute terms)
0.5% ofEU GDP
41% of EU budget
Source: European Commission - DG Agriculture and Rural Development
7
3. Why do we need a reform?To respond to challenges ahead
Economicchallenges
• Food security
• Price variability
• Economic crisis
8
Recent trends in some commodity market prices
Sources: European Commission - DG Agriculture and Rural Development and World Bank
EUR/t for maize and fresh milk; EUR/100 kg for SMP
0
50
100
150
200
250
300
350
400
Jan-
00M
ay-0
0S
ep-0
0Ja
n-01
May
-01
Sep
-01
Jan-
02M
ay-0
2S
ep-0
2Ja
n-03
May
-03
Sep
-03
Jan-
04M
ay-0
4S
ep-0
4Ja
n-05
May
-05
Sep
-05
Jan-
06M
ay-0
6S
ep-0
6Ja
n-07
May
-07
Sep
-07
Jan-
08M
ay-0
8S
ep-0
8Ja
n-09
May
-09
Sep
-09
Jan-
10M
ay-1
0S
ep-1
0Ja
n-11
0
25
50
75
100
125
150
175
200
Crude oil, EUR/bbl
Fresh milk, EU SMP, EU Maize, US, Gulf Crude oil, avg spot price
9
EU developments in agricultural income (agricultural income/AWU in real terms)
( Index 2000 = 100 )
60
70
80
90
100
110
120
130
140
150
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010e
EU-15
20
40
60
80
100
120
140
160
180
200
EU-12
Source: Eurostat
EU-15
EU-12
10
Relative situation of agricultural income in the EU
Income gap with the rest of the economy
(average 2005-2007)
Agricultural income level between Member States
(2010e)
Source: European Commission - DG Agriculture and Rural Development, based on Eurostat data
(agricultural income as % of average income in the total economy)
0%
20%
40%
60%
80%
100%
EU-15 EU-27 EU-12
(agricultural income/AWU in real terms - EU-27 = 100)
0
25
50
75
100
125
150
175
200
EU-15 EU-27 EU-12
11
Recent evolution of agricultural input and output prices
Source: Eurostat
(index 1996 = 100, in real prices)
70
80
90
100
110
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010e
Input prices - EU-27 Output prices - EU-27
12
3. Why do we need a reform?To respond to challenges ahead
Economicchallenges
Environmentalchallenges
• Food security
• Price variability
• Economic crisis
• GHG emissions
• Soil depletion
• Water/air quality
• Habitats and biodiversity
13
Declining trend of GHG emissions in EU agriculture since 1990
Source: EEA
Tg CO2 equivalents
100
200
300
400
500
600
700
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
EU-27 = -20%
EU-15 = -12%
14
3. Why do we need a reform?To respond to challenges ahead
Economicchallenges
Environmentalchallenges
Territorialchallenges
• Food security
• Price variability
• Economic crisis
• GHG emissions
• Soil depletion
• Water/air quality
• Habitats and biodiversity
• Vitality of rural areas
• Diversity of EU agriculture
15
Importance of agriculture in the EU territory
• 13.7 million farms (70% with less than 5 ha)
• The agrifood sector has 17.5 million employees (7.7% of total employment)
16
3. Why do we need a reform?To respond to challenges ahead
Economicchallenges
Environmentalchallenges
Territorialchallenges
• Food security
• Price variability
• Economic crisis
• GHG emissions
• Soil depletion
• Water/air quality
• Habitats and biodiversity
• Vitality of rural areas
• Diversity of EU agriculture
Equity and balance of support
Contribution to Europe 2020 strategy
17
4a. What are the objectives with the reform?
Viable foodproduction
Sustainable management of
natural resources and climate action
Balanced territorialdevelopment
• To contribute to farm income and limit its variability
• To improve sector competitiveness and share in food chain value-added
• To compensate areas with natural constraints
• To guarantee the provision of public goods
• To foster green growth through innovation
• To pursue climate change mitigation and adaptation
• To support rural vitality and employment
• To promote diversification
• To allow social and structural diversity in rural areas
Common EU response needed
18
4b. What policy instruments?
Better targeted to objectives Based on two pillar structure
Direct payments
• Redistribution
• Better targeting
• Redesign:• Greening of direct
payments• Capping of
payments• Small farmers
support• Areas with
specific natural constraints
19
Average direct payments per potentially eligible area and beneficiary
Direct payments net ceilings fully phased-in (in 2016)
Source: European Commission - DG Agriculture and Rural Development
0
100
200
300
400
500
600
700
800
Mal
ta
Bel
gium
Net
herla
nds
Italy
Gre
ece
Cyp
rus
Den
mar
k
Slo
veni
a
Ger
man
y
Fra
nce
EU
-15
Luxe
mbo
urg
EU
-27
Irel
and
Aus
tria
Hun
gary
Cze
ch R
epub
lic
Spa
in
Fin
land
Sw
eden
Uni
ted
Kin
gdom
Bul
garia
Pol
and
EU
-12
Slo
vaki
a
Rom
ania
Por
tuga
l
Lith
uani
a
Est
onia
Latv
ia
EUR/ben.EUR/ha
0
8000
16000
24000
32000
40000
48000
DP net ceilings fully phased-in (EUR/ha)EU-27 average (EUR/ha)DP net ceilings fully phased-in (EUR/beneficiary)
20
4b. What policy instruments?
Better targeted to objectives Based on two pillar structure
Direct payments Market measures
• Market orientation
• Streamline and simplification
• Improved food chain functioning
• Redistribution
• Better targeting
• Redesign:• Greening of direct
payments• Capping of
payments• Small farmers
support• Areas with
specific natural constraints
21
4b. What policy instruments?
Better targeted to objectives Based on two pillar structure
Direct payments Market measures Rural development
• Market orientation
• Streamline and simplification
• Improved food chain functioning
• Environment, climate change and innovation as guideline themes
• Improved coherence with other EU policies
• More effective delivery mechanisms
• Address risk management
• New distribution criteria
• Redistribution
• Better targeting
• Redesign:• Greening of direct
payments• Capping of
payments• Small farmers
support• Areas with
specific natural constraints
22
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%D
enm
ark
Net
herla
nds
Bel
gium
Fra
nce
Gre
ece
Ger
man
y
Uni
ted
Kin
gdom
Spa
in
Italy
Irel
and
Sw
eden
Luxe
mbo
urg
Fin
land
Cyp
rus
Hun
gary
Aus
tria
Por
tuga
l
Cze
ch R
epub
lic
Pol
and
Lith
uani
a
Slo
vaki
a
Slo
veni
a
Est
onia
Latv
ia
Bul
garia
Rom
ania
Mal
ta
% of total expenditure
First Pillar Second Pillar
Source: European Commission - DG Agriculture and Rural Development
CAP expenditure between pillars (in 2009)
23
4c. What policy options?
Option 1
Continue the reform process by introducing further gradual changes while adjusting the most pressing shortcomings (e.g. more equity in the distribution of direct payments)
Option 2
Capture the opportunity for reform ensuring that CAP becomes more sustainable and balanced (between policy objectives, MS and farmers) through more ‘green’ targeted measures
Option 3
More fundamental reform focusing entirely on environmental and climate change objectives through rural development, moving away from income support and most market measures
24
4c. What policy options?D
irec
tp
aym
ents
• More equitable distribution among MS and among farmers
• More equitable distribution among MS and among farmers
• Greening of direct payments• Capping of payments• Increase small farmers
support
• Gradually phase out direct payments
Mar
ket
mea
sure
s • Streamline and simplify existing measures
• Streamline and simplify existing measures
• Phase-out most measures
• Keep disturbance clause for severe crises
Ru
ral
dev
elo
pm
ent • Continue emphasis on
climate change, biodiversity, bio energy and innovation
• More focus on environment, restructuring and innovation, climate change, local initiatives
• Risk management tools and income stabilisation tool
• New distribution criteria
• Primarily focus on measures linked to the environment and the delivery of public goods
Option 1 Option 2 Option 3
25
5. Concluding remarks
With reform, the CAP needs to:
better respond to the economic, environmental and territorial challenges
be more sustainable, balanced, better targeted, simpler, effective and more accountable
improve current CAP instruments and design new ones
26
6. Next steps
Inter-institutional debate on the Communication
Preparation of Impact Assessment (IA)
Preparation of Legal Proposals
• In-depth Commission analysis of new policy settings, options and their economic, social and environmental impacts
• Stakeholders consultation: analytical contributions from stakeholders based on Consultation document published on the 23th of November
Legal proposals will be presented in the second semester of 2011
27
For further information
• The CAP after 2013
http://ec.europa.eu/agriculture/cap-post-2013/index_en.htm
• The Communication on the future of the CAP
http://ec.europa.eu/agriculture/cap-post-2013/communication/ index_en.htm
• Public consultation
http://ec.europa.eu/agriculture/cap-post-2013/consultation/ index_en.htm
28
Thank you
29
Climate change- Possible impacts on EU agriculture
▲ Floods risk▲ Hotter and drier summers▲ Sea levels▲ Risk crop pests, diseases▲ Crop, forage yields▼ Animal health, welfare
▼ Water availability ▲ Risk drought, heat spells▲ Risk soil erosion▼ Growing season, crop yields ▼ Optimal crop areas
▼ Summer rainfall▲ Winter storms, floods▲ Length growing season, yields▲ Suitable farmland▲ Pests, diseases risks
▲ Winter rainfall, floods ▼ Summer rainfall ▲ Risk drought, water stress ▲ Soil erosion risk ▲ Yields, range of crops
Source: DG Agriculture and Rural Development, based on EEA reports, JRC and MS academic studies