Embed Size (px)
Citation preview
1
The Health Check of the CAP: Is this a real Reform?
Seminar presented to The Belgian Association of Agricultural
Economists
06 February, 2008
by
Dr Andreas Schneider
Why a Health Check
• The Communication by the European Commission
• The Response by the European Parliament
• The Timetable of the Health Check
The Structure of the Seminar
• The patient is still breathing – so why a health check?
• Aim to address 3 questions:
• how to make the Single Payment Scheme more effective, efficient and simple?
• how to render market support instruments, originally for an EU-6, still relevant in a more globalised world an EU-27
• how to master new challenges, from climate change to growth in biofuels, water Mgt and ongoing such as biodiversity by adapting to new risk and opportunities
• To finish the MTR – i.e. decoupling
• Make the CAP fit for post-2013
Why a Health Check?
4
0
10
20
30
40
50
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
billion €
Export subsidies Market support Direct aids Rural development
The path of EU expenditure
5
A future direction for the CAP: A better balance?
CMO
DPs
AES
RD
Shares of CAP budget
10
20
30
40
50
60
70
80
90
100
2000 2020
SN
DDPs
AES
RD
Key: Pillar 1 blue Pillar 2 green
CMO Commodity Market Organisation SN Safety net DPs Direct Payments DDPs Decoupled Direct Payments AES Agri-Environment Schemes RD Rural Development
Fund switching
Decoupling
• Direct Payments
• Simplification of CAP/ Cross-Compliance/CMO
• Degression/Capping/Modulation
• Milk
• Safety Net
• Other issues
Main issues of the Health Check
Direct Payments • Keep Direct Payments
• DPs serve as a basic income guarantee, especially at times of market failure• Compensation for environmental, animal welfare and social standards
• Decoupling is needed• Further decoupling, especially for plant production (100%)• Stimulates greater autonomy in decision-making• Did not lead to structural breaks• BUT, keep coupling for animal production, because:
• intensive farming• mountainous and disadvantage regions
• Review of entitlement payments• Historical vs basic model – flat rate
• Article 69?
Commission’s Communication/Parliament’s Opinion
Simplification/Cross-Compliance/CMO
• Simplification of the Payment System
• Integration of smaller CMO (hemp, flax, dry feed) into Single Area Payment Scheme (SAPS) – high administration
• Abolishing of the energy crop premium (€69/ha)
• has no recognisable energy policy advantages
• Abolishing of set-aside
• a volume control instrument that lost its significance
• Cross-Compliance
• DPs without CC are no longer justified
• No expansion and overload of CC
• Abolishing of export subsidies
• Under proposal in DDA from 2013
Commission’s Communication/Parliament’s Opinion
Safety Net
• Anticipated increase in environmental and climate changes, risks of epidemics and price fluctuations in agricultural markets calls for risk prevention – important safety net
• Intervention should be set to “0”, maybe exempt wheat
• Intervention should be transformed into a Safety net and only be triggered in crisis situation
• Many 3rd countries have such a measure in place
• A common EU wide system is needed
• Can be funded through 2nd Pillar or Article 69
Commission’s Communication/Parliament’s Opinion
Modulation/Capping Capping – Commission proposes:
• > €100 000 – 10% Reduction• > €200 000 – 20% Reduction• > €300 000 – 45% Reduction
• Parliament rejects idea, as this is arbitrary and could lead to structural breaks, reduction of employment and to 1/3 reduction in payments (in some regions)
• Maybe a capping if employment can be made count and deducted from capping
• Modulation – Commission proposes:• > yearly 2% increase from 2010, i.e. 8% in 2013 = total of 13%
• Parliament proposes:• €10 000 - €100 000 1% (2010-2013)• €100 000 - € 200 000 2% (2010-2013)• € 200 000 - € 300 000 3% (2010-2013)• > € 300 000 4% (2010-2013) = total of 9% PLUS inc to €10 000
• Increase of lower limit to 1 ha or € 250
Commission’s Communication/Parliament’s Opinion
Milk
• Abolition of milk quota by 2015
• Clear signal is needed for ending milk quota and achieve soft-landing
• Substantial increase of milk quota in 2008 (maybe 2.5%)• EP rejects idea – maybe voluntarily - wait for Council
• Lowering of the Super levy from 2009 (maybe 20-25%)
• EU wide balancing mechanism
• Specific accompanying measures to prevent the dairy industry in mountainous regions and other disadvantaged areas – extensive grazing needs protection
• Support scheme has to be made available for soft-landing, maybe Article 69
Commission’s Communication/Parliament’s Opinion
Others
• Future funding of 1st and 2nd Pillar after 2013• Explore Article 69 and maybe inflate it to 15-20%
• Promote and strengthen producer organisations, export promotion, quality assurance schemes, and supply chain Mgt• Future support for disadvantaged region
• Pursue of supplying renewable energy
• EU farmers contribute to climate protection (biogas)
• 2nd generation of biofuels
Commission’s Communication/Parliament’s Opinion
13
A future direction for the CAP: A better balance?
CMO
DPs
AES
RD
Shares of CAP budget
10
20
30
40
50
60
70
80
90
100
2000 2020
SN
DDPs
AES
RD
Key: Pillar 1 blue Pillar 2 green
CMO Commodity Market Organisation SN Safety net DPs Direct Payments DDPs Decoupled Direct Payments AES Agri-Environment Schemes RD Rural Development
Fund switching
Decoupling
14
Where should the CAP move to?
• Keep money in the 1st Pillar
• Pay 2nd Pillar measures through 1st Pillar funds
• Strengthen 2nd Pillar
• Ensure that CAP supports production – especially in certain areas, but also delivers quality food
• Renationalising of CAP is not a way forward
• Funding of CAP and the relationship between Pillar 1 + 2
• What is the added value of EU expenditure
15
Timetable of Health Check
• 20 Nov 07 European Commission Communication
• 27 Nov 07 European Parliament working paper
• 12 Jan 08 European Parliament report
• 22 Jan 08 Committee in Agriculture Debate in EP
• 18 Feb 08 Vote in Committee
• 16 Mar 08 Vote in Plenary
• 22 May 08 Legislative Proposal from European Commission
• 2nd Half of 08 Adoption of Health Check in Council
