of the CAP reform The Health Check of the CAP reform Price Transparency

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of the CAP reform The Health Check of the CAP reform  Price Transparency Powered By Docstoc
					The future of the CAP:
issues of the post-2013 debate


    Conference on the future of the CAP – 28 May 2009 – Tartu (Estonia)
    García Azcárate Tomás
    DG for Agriculture and Rural Development European Commission
 1.      The CAP today

 2.      The CAP until 2013

 3.      The CAP beyond 2013




AGRI-L1               CAP perspectives   2
                                     1. The CAP today

     A substantially reformed policy …
       –      Farm support is mainly decoupled and subject to cross-compliance
       –      Role of market intervention mechanisms is significantly reduced to safety net level
       –      Rural Development policy is strengthened with funds and policy instruments




    AGRI-L1                              CAP perspectives                                       3
                     CAP expenditure and CAP reform path
                                                   (2007 constant prices)
     billion €                                                                                                          % GDP
70                                                                                                                                   0.7%
                  EU-10                         EU-12                                EU-15                  EU-25        EU-27

60                                                                                                                                   0.6%

50                                                                                                                                   0.5%

40                                                                                                                                   0.4%

30                                                                                                                                   0.3%

20                                                                                                                                   0.2%

10                                                                                                                                   0.1%

 0                                                                                                                                   0.0%
     1980
            1981
            1982
                   1983
                          1984
                          1985
                                 1986
                                 1987
                                        1988
                                               1989
                                               1990
                                                        1991
                                                        1992
                                                               1993
                                                                      1994
                                                                      1995
                                                                             1996
                                                                             1997
                                                                                    1998
                                                                                    1999
                                                                                           2000
                                                                                                  2001
                                                                                                  2002
                                                                                                         2003
                                                                                                         2004
                                                                                                                2005
                                                                                                                       2006
                                                                                                                       2007
                                                                                                                              2008
            Export subsidies                            Other market support                      Coupled direct payments
            Decoupled direct payments                   Rural development                         % of EU GDP

 Source: European Commission – DG Agriculture and Rural Development

     AGRI-L1                                              CAP perspectives                                                              4
                                 … and alternative views on its cost
                     CAP cost in 2008                                                      CAP cost in 2008
                     (in absolute terms)                                                   (in relative terms)
120                                                                        50%


100
                                                                           40%
       44% of EU
 80      budget
                                                                           30%

 60
                                                                           20%        0.43% of
 40                                                                                   EU GDP
                                                                           10%
 20


 0                                                                         0%
                         Billion of euros                                                          % of GDP

          CAP expenditure                      EU budget                         CAP expenditure    All EU public expenditure
      Source: European Commission – DG Agriculture and Rural Development

        AGRI-L1                                               CAP perspectives                                          5
                                     1. The CAP today

     A substantially reformed policy …
       –      Farm support is mainly decoupled and subject to cross-compliance
       –      Role of market intervention mechanisms is significantly reduced to safety net level
       –      Rural Development policy is strengthened with funds and policy instruments


     … and better performing
       –      Surpluses belong to the past
       –      Competitiveness is improved
       –      Better value for money and contribution to EU budget stability
       –      More sustainable farming




    AGRI-L1                              CAP perspectives                                       6
Reductions in EU price support, bringing EU prices in
               line with world prices
                                  Cumulative % reduction in price support from 1991 to 2009
   0


 -20


 -40


 -60


 -80


-100
          Soft wheat           Durum                Beef             Rice     Butter          SMP   Sugar
                               wheat


                                                In nominal terms            In real terms
Source: European Commission – DG Agriculture and Rural Development

  AGRI-L1                                               CAP perspectives                                    7
     Impact of CAP reforms on EU net production surplus
                                            Net production surplus as % of consumption
45%
40%
35%
30%
25%
20%
15%
10%
 5%
 0%
-5%
-10%
-15%
          Wheat        Barley       Maize         Beef        Pork    Poultry     SMP       Butter      Cheese      Sugar


                       Net production surplus: 1990/94 ol avg                    Net production surplus: 2004/08 ol avg


 Sources: European Commission - Eurostat, OECD-FAO, USDA and Fapri.

   AGRI-L1                                               CAP perspectives                                                   8
              The evolving role of EU support prices - wheat
                                                ( in € per metric tonne )
250


200


150


100


 50


  0
      1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

          EU intervention price                  EU common wheat market price     US (SRW Gulf)


  Sources: European Commission and World Bank

      AGRI-L1                                      CAP perspectives                                    9
                                 2. The CAP until 2013

     “Health Check” – fine tuned the reform process
       Direct aids
       – Further decoupling
       – MS allowed to move to flatter rates of support
       – New article “68”
              •   Targeted measures to economic/environmental disadvantages in certain regions/sectors
              •   Risk management measures
       Market mechanisms
       – Increase milk quotas by 1% annually
       – Intervention streamlined and simplified
       Rural development
       – “New challenges” (Climate change, bioenergy, water management, biodiversity,
          innovation, dairy)
       – Modulation increase


    AGRI-L1                               CAP perspectives                                               10
                              3. The CAP beyond 2013

     General context
       –      Economic crisis
       –      Volatility in production and prices
       –      Food security, climate change, limited resources




    AGRI-L1                             CAP perspectives         11
        Recent trend of some commodity market prices
       EUR/t for maize and fresh milk; EUR/100 kg for SMP and beef                      Crude oil, EUR/bbl
400                                                                                                             200
350                                                                                                             175
300                                                                                                             150
250                                                                                                             125
200                                                                                                             100
150                                                                                                             75
100                                                                                                             50
 50                                                                                                             25
  0                                                                                                             0
       Jan-00



       Jan-01



       Jan-02



       Jan-03



       Jan-04



       Jan-05



       Jan-06



       Jan-07



       Jan-08



       Jan-09



       Jan-10
      Sep-00



      Sep-01



      Sep-02



      Sep-03



      Sep-04



      Sep-05



      Sep-06



      Sep-07



      Sep-08



      Sep-09
      May-00



      May-01



      May-02



      May-03



      May-04



      May-05



      May-06



      May-07



      May-08



      May-09
          Fresh milk, EU                      SMP, EU             Maize, US, Gulf   Crude oil, avg spot price

Sources: European Commission and World Bank

  AGRI-L1                                               CAP perspectives                                            12
                                 3. The CAP beyond 2013

     General context
       –      Economic crisis
       –      Volatility in production and prices
       –      Food security, climate change, limited resources


     Institutional context
       –      New European Parliament and Commission
       –      Lisbon Treaty
       –      WTO
       –      New financial perspectives
                •   New priorities for EU budget
                •   Budget for CAP?




    AGRI-L1                                  CAP perspectives    13
                3. The CAP beyond 2013: the debate
  1.        Direct payments
   –      We face a major income problem: EU 15 but also EU 12
   –      Despite the relevance of the direct payments in the farm income
   –      Redistribution within and among Member States
  2.        Market mechanisms
   –      Safety net
   –      Rebalancing the food chain
  3.        Rural development
   –      Balance between competition, environmental and rural economy challenges
   –      The 3rd axis of RD an integral part of the CAP reform?




AGRI-L1                             CAP perspectives                                14
    Adjusted SPS                                           Safety net
                              Income


Direct payments                                          Markets


                                                         Price support/
       GAEC                                              Quotas reform



                       Axis 1
                                             Axis 2
                     (structural
                                         (environment)
                    adjustment)



                   Rural development

                                  Axis 3
                              (territory and
                             diversification)



  AGRI-L1                  CAP perspectives                               15
                 3. The CAP beyond 2013: the debate
Direct payments
    –      We face a major income problem: EU 15 but also EU 12
    –      Despite the relevance of the direct payments in the farm income
    –      Redistribution within and among Member States




 AGRI-L1                             CAP perspectives                        16
Developments in agricultural income in the EU-15
           (1993-2009), 1993=100
     125




     120




     115




     110




     105




     100
           1993   1994   1995   1996   1997   1998   1999   2000   2001   2002   2003   2004   2005   2006   2007   2008   2009
AGRI-L1                                       CAP perspectives                                                               17
      Developments in agricultural income in the EU-12
                 (2000-2009), 2000 = 100
200


190


180


170


160


150


140


130


120


110


100
      2000      2001   2002   2003       2004      2005   2006   2007   2008   2009




      AGRI-L1                        CAP perspectives                           18
Share of DP and total subsidies in agricultural income
                                 EU-15                                                      EU-12
100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

  0%
          2004          2005         2006          2007         2008     2004      2005       2006      2007      2008


         Share of DP in agricultural income                            Share of total subsidies in agricultural income

Source: European Commission – DG Agriculture and Rural Development

  AGRI-L1                                               CAP perspectives                                                 19
                 Average payments per ha (UAA) and per beneficiary
EUR/ha                                                                                                                                                                                                                                                                                                                    EUR/ben.
 700                                                                                                                                                                                                                                                                                                                           48000

 600                                                                                                                                                                                                                                                                                                                           40000

 500
                                                                                                                                                                                                                                                                                                                               32000
 400
                                                                                                                                                                                                                                                                                                                               24000
 300
                                                                                                                                                                                                                                                                                                                               16000
 200

 100                                                                                                                                                                                                                                                                                                                           8000


   0                                                                                                                                                                                                                                                                                                                           0




                                                                                                                                                                                                                                                                                                                      Latvia
                                                                                                           Slovenia




                                                                                                                                                                                                                                       Slovakia
                                                                                                 Ireland
                                                                     Italy




                                                                                                                               EU-15




                                                                                                                                                                                EU-27




                                                                                                                                                                                                                                                                   EU-12
                                                                                                                                                                                                                                                  Spain
         Malta




                                                                                                                      France




                                                                                                                                                                                                   Sweden
                 Greece




                                                                                                                                                                                                                                                          Poland
                                                                                                                                                                                        Finland




                                                                                                                                                                                                                                                                                                  Romania
                                                                                                                                                                                                            Austria
                                                                                                                                       Bulgaria




                                                                                                                                                                                                                                                                                                            Estonia
                                                                                                                                                                                                                                                                                      Lithuania
                                                                                                                                                  Luxembourg




                                                                                                                                                                                                                                                                           Portugal
                                        Belgium
                                                  Cyprus




                                                                                       Hungary




                                                                                                                                                                                                                      United Kingdom
                                                           Denmark


                                                                             Germany
                          Netherlands




                                                                                                                                                               Czech Republic




                                                                                                                                                                                                  DP net ceilings fully phased-in (EUR/ha)
                                                                                                                                                                                                  EU flat rate
       Source: European Commission - DG Agriculture and Rural Development                                                                                                                         DP net ceilings fully phased-in (EUR/beneficiary)

            AGRI-L1                                                                                                            CAP perspectives                                                                                                                                                                                20
                3. The CAP beyond 2013: the debate
Market mechanisms
   –      Safety net to be maintained: clear Council statement
   –      Rebalancing the food chain




AGRI-L1                             CAP perspectives             21
                    Rebalancing the food chain I


     Today, often the food chain is not adding value but destroying value
     Every one is loosing, but those who loose more are the farmes, the
      weakest part of the chain.
     I am not calling to a class fight between farmers, industries and
      retailers. You do not fight against your clients and providers.
     “Win – win” strategies have to be promoted.




    AGRI-L1                    CAP perspectives                          22
                    Rebalancing the food chain II

     Competition policy applies to agriculture: it is a good news
     Current rules allow more margin than many people foreseen for
      “working together” strategies
     Transparency is welcome. Price observatories and codes of good
      conducts are useful and welcome
     Exceptions for agriculture to some competitions rules are possible, but
      have to follow the 3 principles of transparency, proportionality and
      effectiveness
     It is the way to rebuild a market income.




    AGRI-L1                    CAP perspectives                          23
          3. The CAP beyond 2013: the debate

Rural development
   – Balance between competition, environmental and rural economy
     challenges
   – The 3rd axis of RD an integral part of the CAP reform?




AGRI-L1                    CAP perspectives                         24
       The three 2007-2013 RD thematic axes in the MS
100%
 90%
 80%

 70%
 60%
 50%
 40%
 30%

 20%
 10%
  0%




                                                                                                                                                                                                                                                                                    United Kingdom
                            Bulgaria




                                                                                                                                                                Lithuania
                  Belgium




                                                                                                                                                       Latvia




                                                                                                                                                                                                                                             Slovakia
                                                                                                                                                                                                                                                        Slovenia
                                                                                     Finland




                                                                                                                                                                                                                                                                                                     EU-27
                                                                                                                                                                                                                                                                                                             EU-15
                                                                                                                                                                                                                                                                                                                     EU-12
                                                                                                                                                                                         Malta
        Austria




                                                                           Estonia




                                                                                                                                                                                                                                   Romania
                                                                                                                                               Italy




                                                                                                                                                                                                               Poland
                                                                                                                                     Ireland
                                                                                                                           Hungary




                                                                                                                                                                                                                                                                   Spain
                                                                                                                                                                            Luxembourg




                                                                                                                                                                                                                        Portugal
                                                                                                                                                                                                 Netherlands
                                                Czech Republic
                                                                 Denmark




                                                                                                        Germany
                                       Cyprus




                                                                                                                  Greece
                                                                                               France




                                                                                                                                                                                                                                                                           Sweden
             Axis 1: Competitiveness                                                              Axis 2: Environment and land management                                                                                    Axis 3: Quality of life and diversification


Source: European Commission – DG Agriculture and Rural Development

  AGRI-L1                                                                                                                  CAP perspectives                                                                                                                                                                            25
                    3. The CAP beyond 2013: the debate
     Do we need the “C” and the “P” of the CAP?
     Current structure (I and II pillar)? If yes
      1.   Direct payments
       –      Income support vs. public goods
       –      Redistribution within and among Member States
      2.        Market mechanisms
       –      Safety net
       –      Other instruments
      3.        Rural development
       –      Balance between competition, environmental and rural economy challenges
       –      The 3rd axis of RD an integral part of the CAP reform?

      4.        Financing
       –      Distribution between pillars and areas
       –      Co-financing
    AGRI-L1                              CAP perspectives                               26
                          Markets


Direct payments




                                         Rural
                                      Development
                  Modulation




   AGRI-L1         CAP perspectives                 27
                       For further information

     The CAP after 2013
      http://ec.europa.eu/agriculture/cap-post-2013/index_en.htm

     EU agriculture and CAP reform
      http://ec.europa.eu/agriculture/index_en.htm

     Economic Analysis and Evaluation
      http://ec.europa.eu/agriculture/analysis/index_en.htm

     Agricultural Policy Analysis and Perspectives
      http://ec.europa.eu/agriculture/analysis/perspec/index_en.htm



    AGRI-L1                  CAP perspectives                         28
            Thank you




AGRI-L1   CAP perspectives   29

				
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Description: of the CAP reform The Health Check of the CAP reform Price Transparency