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AGRICULTURE

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					COMMON AGRICULTURAL
     POLICY




Subventions system
EU budget – spending
Agriculture – 46% - the largest amount
of money
Structural and cohesion funds – 34%
Other policies and administrative
spending – 20%
                           CAP
                  Organization
             I Pillar                        II Pillar
Common Market Organizations           Rural development
  Prices                          Accompanying measures
  Intervention system             Measures to modernize and
  Financial aid (direct           diversify agricultural holdings
  payments, export
  restitutions, etc)
  Production quotas and
  maximum guaranteed
  quantities, national ceilings
  and base areas
  Customs protection
                 I Pillar
                 Prices
The EU Council establishes annually three level
of prices
The indicative price – the Council recommends
the selling of agricultural products at this price
The intervention price – minimum guaranteed
price – in case of surplus, the Community buys
and stocks the product at this price
The threshold price – the imports of agricultural
products cannot enter the EU under this price
            I Pillar
         Financial aid
  Direct payments
- Production aid
- Compensatory payments
  Export restitutions
  Other financial aid
       Direct payments
        Production aid
For products with high costs  consumption
would be discouraged
It is calculated either on product or on area or
heads
Example of products: olive oil, oilseeds,
sheep meat
Premium: durum wheat, suckling cows,
slaughtering
Processing payments: cereals, seeds, fruits,
vegetables
   Direct payments
Compensatory payments
Compensations as a result of cutting the
prices
Annual fixed amount of money per ha or
animal head, calculated on the basis of the
statistic evidence of production obtained in a
reference period
Linked to conditionality principle
Products: arable crops, potato starch, flex
and hemp, silkworms, seeds, rice, beef meat,
milk and milk products, etc
        Other financial aid
    Can be granted either from the common budget
    or from the individual budgets of the MS
    In both cases the Community conditions must be
    observed
    Examples:
-   Natural disasters
-   Voluntary set aside
-   Promoting product quality
-   Small farms which benefit of financial aid less
    than large farms
                 I Pillar
Quotas and guaranteed quantities
 Introduced in order to avoid overproduction
 Limit production for certain agricultural
 products (quotas: milk, sugar; guaranteed
 quantities: fruits/ vegetables, sugar, bananas,
 dried fodder, fiber crops, olive oil, etc)
 The production in exceed of quotas is
 penalized
     National ceilings
Represent the maximum number of
eligible animals for which a MS receives
direct payments
It is granted for beef, sheep and goat
          Base areas
Represent the maximum base area
eligible at national level
System applied for cereals, oilseeds,
protein crops, rice
                  II Pillar
Rural development - Measures

  Accompanying measures       Measures to modernize and
                              diversify agricultural holdings
- early retirement
                          -   farm investment
- Agri-environment and    -   Setting – up of young
  afforestation               farmers
- Less favoured areas     -   Training
  scheme                  -   Investment aid for
                              processing and marketing
                              facilities
                          -   Additional assistance for
                              forestry
                          -   Promotion and conversion of
                              agriculture
  Financing of the CAP
The European Agricultural Guidance
and Guarantee Fund (EAGGF)
Set up in 1962
Two sections: guidance and guarantee
Financial solidarity
                         EAGGF
          Guarantee                        Guidance
-   expenditure on agricultural   -   other rural development
    market organizations              expenditure (not financed
-   Rural development                 by the EAGGF Guarantee
    measures that accompany           Section)
    market support and rural
    measures outside of
    Objective 1 regions
-   Certain veterinary
    expenditure
-   Information measures
    related to the CAP
         CAP Reform
Decoupling of production from direct
payments
Eco-conditionality
New measures of rural development
Modulation
Subvention cuts
        Negotiations
    Chapter 7 – Agriculture
      Financial aspects
Total amount of money – approx. 4,721
milliard Euro for 2007 – 2009
CAP mechanisms + rural development
(3,921 milliard Euro)
Approx. 0,8 milliard Euro estimated for
projects financed from structural funds
(Guidance section of EAGGF)
     Market measures
732 milliard Euro
Measures from I pillar of CAP (prices,
export restitutions, stocking)
Phased in - 3 years
Do not require for cofinancing
         Direct payments
   I pillar of CAP
   “Phasing-in”
- 25% in 2007 from EU 15 level in 2007
- 30% in 2008
- 35% in 2009
- 40% in 2010
- 50% in 2011
- 60% in 2012
……..
- 100% in 2016
   Rural development
2,308 milliard euro commitments in 3
years
Measures from II pillar of CAP
Requires for co-financing from the
national budget (20%)
Rule n, n+2 (eg. Sums committed in
2007 will be spent in 2007, 2008, 2009)
Main negotiation results
having financial impact
Base area for arable crops – 7.012.666 ha
Reference yield – 2,650 t
Slaughtering or export premia for bovine –
1.233.000 heads of which 1.148.000 heads
bulls, steers, cows and heifers and 85.000
heads calves
Suckling cow premium – 150.000 heads
Special beef premium – 452.000 heads
Main negotiation results
having financial impact
Ewe premium – 5.880.620 heads
Milk quota – 3.057.000 t. of which 1.093.000 t
for deliveries and 1.964.000 for direct sales +
188.400 t. restructuring reserve (plus approx.
2.000.000)
Sugar quota – 109.164 t. sugar beet +
329.636 t. processing quota + 9.981
izoglucose
Seeds – aid for production – rice 100 t. +
other 2.294 t.
Main negotiation results
having financial impact
Hops – 198 ha
Maximum guaranteed quantity for raw
tobacco – 12.312 t.
Maximum guaranteed area for nuts –
1.645 ha
          Conclusions
Romanian farmers benefit from all market
measures of CAP
The access to subventions will gradually
increase
The participation to the internal market
implies the observance of all Community
standards
The CAP gets more and more market
oriented + accent on rural development

				
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