INFODOC

September 2000

EPP-ED GROUP GUIDELINES ON SUPPORTING
AND DEVELOPING AGRICULTURE
IN EUROPE

1. Introduction

Agriculture is one of the pillars of Community policy: this is demonstrated by the fact that some 50% of the Community budget is allocated to the CAP (Common Agricultural Policy). It is a dynamic and fragile economic sector which, over the years, has had to meet society’s various needs and face its realities. The CAP has therefore had to evolve - from its inception in 1957, when the ground rules were laid down in the Treaty of Rome and subsequently incorporated into Title II, Articles 32-38 of the Consolidated Treaties, to the present time, in which the greatest challenge is undoubtedly presented by enlargement to the Central and Eastern European Countries (CEEC) and by the World Trade Organisation (WTO) trade negotiations.

The objectives of Community legislation can thus be summarised as follows: to develop agricultural production, to ensure that the agricultural community has an acceptable standard of living, to stabilise the markets and to ensure that products are available to consumers at reasonable prices (Article 33 of the Consolidated Treaties).

The CAP’s basic tools are the Common Organisation of the Markets (COMs), which were introduced gradually and now cover most products. The COMs regulate the output and marketing of agricultural products, using all necessary measures, such as price regulation, subsidies for both production and distribution, storage and carry-over arrangements and common machinery for stabilising imports or exports (Article 34(2) of the Consolidated Treaties).

The EPP-ED Group has always considered this economic sector as one of the key targets of its political action and has had a strong influence on the evolution of the CAP, taking into account the requirements of both farmers and consumers, the Community farming world and the competitiveness of its products on the international markets.


2. How has the CAP managed to meet society's new requirements?

In the 1980s, agricultural legislation was no longer able to tackle the market imbalances which had arisen and remedial action was thus called for. The main reasons for the 1992 and 1999 CAP reforms were: production surpluses in several products (wine, meat, butter, etc.), an increasing gap between world and EC market prices (due to the fact that to standardise the prices of EC products the price chosen was often that applied in the country where the product was the most expensive), crop intensification, the subsidies that were needed in order to sell the products on the world markets and subsequent increase in the agricultural budget, the lack of support, which is particularly important for the smaller-scale farmers or those operating in less productive areas and, lastly, the agricultural agreements reached in the Uruguay Round.

The EPP-ED group has striven to meet the new agricultural requirements of our modern industrial society by encouraging the development of an ecological agriculture, a prerequisite for protecting the foundations of our existence. It has continued to pursue a rural development policy by coordinating all economic policy measures adopted in the regions, with a view to improving farmers’ sources of income.

The practical outcome of the CAP reforms of 1992 and 1999 was therefore the replacement of agricultural support based on institutional prices by a system of direct income support, the alignment of Community prices with world prices and the control of supply by means of stabilising mechanisms (production quotas, guaranteed maximum quantities, reduction of the areas under cultivation).

The reform also revised the COMs, which can now be classified as follows:

A. COMs with guarantee prices and aids to complement production (cereals, beef, sheepmeat, rice, olive oil, bananas and, from 2003, milk).

B. COMs with automatic intervention (sugar, dairy products), involving minimum or guarantee prices when market prices are too low.

C. COMs with conditional intervention (wine, pigmeat and some fresh fruit and vegetables) in the event of a serious market crisis.

D. COMs with direct production aids only (oilseeds, protein crops, feedingstuffs, tobacco, textiles, peas and beans, hops and processed fruit and vegetables).

E. COMs without direct production support (poultry, eggs, processed agricultural products, flowers and live plants and some fresh fruit and vegetables).


3. Agenda 2000: the most recent reform

Because of the new challenges, both internal and external, which European agriculture has to face in this new millennium, further amendments have been made to Community agricultural legislation. The main challenges are: ensuring that EU products are highly competitive on the world markets, enlargement to the CEEC and the review of the GATT agreements (Millennium Round).

The CAP reform decided by the Berlin European Council on 24 and 25 March 1999 favours an agriculture that is more competitive but more respectful of the environment - a policy which aims to support the farmer rather than his products and to reward farmers not only for their productive work but also for their additional contribution towards society.

To this end, the European Council believes that the reform may be implemented within a financial framework averaging EUR 40.5 billion, to which EUR 14 billion should be added for rural development and measures in the veterinary and plant protection sectors.

The EPP-ED Group considered it useful to analyse each individual productive sector, but deems it essential to take a global, in-depth approach to the reform’s objectives, to ensure consistency amongst all sectors.

CAP reform under Agenda 2000 is multifaceted and involves, inter alia, the COMs for cereals and arable crops, beef and veal, milk and dairy products (including the additional levy), olive oil and wine, as well as the promotion and development of rural areas and the financing of the CAP. Pre-accession measures to boost agriculture and rural development in the applicant countries of Central and Eastern Europe have also been introduced and should be implemented before these countries join the EU.

The EPP-ED Group has played a vital role in pre-enlargement agricultural reform (Resolutions R4-0219/1988, R4-0232/1999 and R4-0214/1999)

In the European Parliament resolution adopted in June 1998 (Resolution R4-0219/1998), the Group managed to secure the adoption of the EPP guidelines (Adopted by the EPP Working Group on Agriculture in February 1998) on the consolidation of the European model of agriculture, market and price policy, the policy of compensatory payments and income support and the rural development policy.

The Group considers the effects of this agreement to be certainly more positive than the Commission’s initial proposals, given that the lowering of prices has been less dramatic (20% for beef and veal, 20% for cereals) and that several measures have been introduced or enhanced (cattle slaughter premiums, milk quotas).

The Group welcomed the introduction of specific measures for promoting rural areas, as the members of the EPP-ED have always maintained that agriculture must be able to fulfil the need to safeguard and protect rural areas.

Nevertheless, several aspects of the reform remain dubious:

The European agricultural model as defined at the Cork Conference (Conference in Cork, Ireland, November 1996) has been adopted only partially: the application of the measures concerning rural areas has been left to the discretion of the Member States and the measures are dependent on national co-financing. The risk is, therefore, that they might be applied only in part, or not at all.

The direct payments made to compensate for the price reduction are not enough to offset the real economic losses that will ensue.

The Council has asked the Commission to submit, in 2002, a report on developments in agricultural expenditure, the main objective being to make further ‘savings’ in the agricultural sector. The agricultural budget has already been called into question owing to the reconstruction commitments which have to be fulfilled in the Balkans: EUR 300 million are to be deducted from the budget heading relating to the sugar sector.

Furthermore, the European Council has stated that all decisions on CAP reform adopted within the framework of Agenda 2000 are to be used as a basis for drawing up the Commission’s negotiating brief for future WTO multilateral trade negotiations. However, given the lacklustre start to the Millennium Round, serious doubts are arising as to whether the current reform will be able to be remain on course when the WTO negotiations resume.

Agricultural reform will therefore have a strong influence on agriculture’s economic strength in all Community regions. It will most likely be the small agricultural holdings in particular that will benefit from the rural promotion measures.


4. The European agricultural model

The EPP-ED Group has always tried to promote an agricultural policy which met the requirements of modern society. It is still essential today to supply people with food via the sustainable management of rural areas, but it is becoming increasingly important to protect the environment and to produce products that are not only of quality, but that are above all safe.

The ‘EPP Group guidelines for the future common agricultural policy (CAP) of the European Union' (Approved by the EPP Working Group on Agriculture on 17 February 1998 (see Annex 1)) constitute a basic policy document with regard to both the aims and framework conditions which apply to the future CAP and the Group’s principles in respect of a future CAP in an enlarged European Union.

The Group is seeking to establish a European agricultural model based on competitive farming on a small-scale basis. Agricultural management involving maximum agricultural land use must be able to provide an adequate response to the following: the sustainable development of the rural environment, agricultural output which respects the environment and the welfare of animals, and the production of high-quality foodstuffs.

The higher production costs in the EU in comparison with other regions (partly because of higher social standards, stricter production requirements and structural disadvantages) must be compensated for on a permanent basis through direct payments if prices are adjusted to world market levels.


5. Rural development

The development of rural areas is one of the EPP-ED Group’s key demands. The Group has always insisted on promoting rural development actions which must be closely linked to the rules of the agricultural market.

Rural areas are being forced to tackle two extremely serious phenomena, namely rural depopulation and desertification. A particular problem at present is the extraordinary flight from the land. It is a phenomenon which must be curbed at all costs, by attempting to encourage young people to stay in the countryside, by proposing development measures and by fostering work diversification, or part-time work.

The future of agriculture lies in its multi-functionalism, i.e. its diversified role beyond that of food production. A multisectoral and integrated approach must be taken to the rural economy with a view to diversification. This will enable agriculture’s potential to be harnessed and provide the opportunity of creating new sources of income and jobs, as well as protecting the rural heritage.

For this purpose, in 1999 the Berlin European Council allocated EUR 14 billion to rural development and measures relating to the veterinary and plant protection sectors.

The rural development measures decided by the European Council concern the following:

• support for structural adjustments to the agricultural sector (investments in agricultural holdings, settlement of young people, training and early retirement)
  
• support for farmers in less-favoured areas
  
• allowances for agri-environmental activities
  
• support for investments in processing and distribution facilities and for forestry
  
• encouragement to renew and convert rural areas used for farming.
  

6. Young people and women in agriculture

The great rural-urban migration that has been taking place for several years is a cause for considerable concern. Country life is attracting young people, particularly women, less and less because of the lack of rural infrastructure and job prospects. The migration, especially of young people, towards towns and cities, is resulting in the economic, social and cultural impoverishment of rural areas, an aging population and depopulation.

Young people and women in agriculture are the top priority for the EPP-ED Group: their presence is crucial not only for the future of agriculture but also for the protection and development of rural areas. To this end the Group considers it essential to promote farming amongst young people by adopting socio-structural and support measures, such as those contained in the LEADER programme, in order to create more jobs and thus make agriculture-related occupations more attractive. Young people should be guaranteed an income based on market rules; at the same time, all time- and money-wasting red tape should be reduced. A simple system should be established for the submission of applications for funding, the relevant procedures and the approval of the applications, as well as subsequent monitoring and/or modifications.

Women show little interest in agriculture for several reasons: the work is often physically too demanding, their workload is doubled because of their simultaneous housekeeping and family roles, infrastructure - especially in rural and remote areas - is lacking, and their professional status (employee, casual or seasonal worker) is not clearly defined, which means that they often have insufficient social protection.

The EPP-ED Group maintains that women must not be excluded from farming, but must become fully involved in it. It is essential that their professional status be defined and that they be given adequate social protection. At the same time, all necessary public services need to be established, including nursery schools and welfare services, to enable them to reconcile their family lives with their working lives.


7. The IGC and agriculture

On 14 February 2000 the Foreign Ministers of the Member States inaugurated the Intergovernmental Conference (IGC), whose mandate is to prepare the reform of the EU institutions to adapt them to the challenges that will be presented by the forthcoming enlargement to the CEEC.

As regards the work of the IGC, the EPP-ED Group is firmly persuaded that the codecision procedure should become the normal decision-making method in the Community for general legislation. The Group therefore proposes that the codecision procedure be extended to all Community decisions of a legislative nature, including those related to agriculture. At present, agricultural legislation is based on Article 37 of the Consolidated Treaties, which provides for mere consultation of the European Parliament, whose proposals may not necessarily be taken into consideration by the Council when adopting a decision. Codecision (Article 251 of the Consolidated Treaties), on the other hand, places the Council and Parliament on the same level, in that they become co-legislators, i.e. no decision may be adopted without the consensus of the European Parliament.

With regard to public health, food safety and consumer protection, issues which are closely linked to agriculture, decisions are already made in accordance with the codecision procedure. To ensure greater uniformity between the various measures and to make Community action more effective and clear-cut, the EPP-ED Group therefore considers it essential that the codecision procedure be extended to agricultural legislation.


8. CEEC and Agenda 2000

The role played by the agricultural sector in the run-up to EU enlargement is extremely important and the required changes must on no account hinder the continued implementation of the Common Agricultural Policy with its uniform market organisations, a policy which must be guaranteed in all Member States.

The agricultural sector has a crucial role to play in the CEEC accession negotiations. The countries of Central and Eastern Europe have an overall population which is 36% that of the euro-zone countries, but their combined GDP barely reaches 6%. Excluding Poland and taking the other applicant countries individually, their GDP is around 1% that of the euro-zone.

The EPP-ED Group has stressed that in certain fields there are considerable divergences between the CEEC and the EU Member States as regards quality and hygiene standards and farming and production structures. It therefore believes that the relevant standards and agricultural regulations must be harmonised as soon as possible. It also proposes that the support measures be discontinued as from the pre-accession stage and that post-accession transitional periods be established to limit as far as possible the risks of market turmoil and competitive distortions.

As regards, therefore, the agricultural aspects of the accession of the CEEC, the rapidity of the decision-making process is not paramount. What is needed, however, is a safe, reliable and lasting solution for all parties.

This is why the EPP-ED Group vigorously supported the adoption of the SAPARD Programme, which provides for a range of measures covering all aspects of the preparation of the CEEC with regard to the application of the Community agricultural acquis. In this regard, EUR 520 million per year have been earmarked for the ten CEEC - an aggregate of EUR 3.640 billion for the period 2000-2006.

The spirit of the statements issued on several occasions by Commissioner Fischler, according to whom the applicant countries must be able to fulfil their production capacity, is comprehensible.
Nevertheless, problems of market stability could arise which, if ignored, could have serious repercussions on price trends and hence on agricultural revenue. Already in 2006 (According to information supplied by Commissioner Fischler on 10 March 2000 at the agricultural conference in London) the CEEC could have 8 million tonnes of surplus cereals available for export. The milk surplus could reach 2.8 million tonnes. Similar situations could arise with pigmeat and poultry. In such conditions, the adoption of criteria to curb the CEEC’s production capacity should be taken into consideration. Market stability is an important condition for all farmers.

Another delicate aspect which could reach significant proportions, is job creation in the rural areas of the CEEC. At present, the percentage of farm workers in the CEEC is on average 20%, against an EU average of 5.3%. The CAP alone is unable to create the new jobs that will be needed. For this reason the European Union, more than ever before, must undertake to create the conditions for boosting the economy and fostering new kinds of employment, exploiting the potential offered, amongst others, by the latest technologies .


9. How can the CAP face the challenges of globalisation?

The growth in population and wealth is leading to an increased demand for foodstuffs on the world market and European agriculture must be able to meet the new demands. Agriculture is faced with several risks. The vast array of available foods may, on the one hand, lead to a lack of hygiene and low quality, damaging people’s health and on the other, help to increase consumers’ feelings of uncertainty.

The EPP-ED Group therefore insists on the twofold protection of consumers: firstly, via tighter measures and stricter monitoring, to ensure that high-quality and, above all, safe products are placed on the market, increasing Community control over the implementation of such measures and secondly, via labelling, indicating the origin of foodstuffs. Organic farming (Report A4-0156/97) - an alternative to traditional farming involving tighter controls, also with regard to genetic modification – should also be promoted and encouraged by means of more flexible laws.

Consumer health is a priority for the EPP-ED Group. Consumers have been scared by the recent appalling events concerning BSE (bovine spongiform encephalopathy) and dioxin. Unfortunately, producers are geared towards intensive production in the attempt to meet market demands rapidly, thereby seriously jeopardising the quality and hygiene of foodstuffs.

The Group has a special interest in food safety, quality and hygiene and has firmly maintained, both during the BSE (Resolution R4-3007/97 of 19 February 1997 and Report A4 0362/97) and the dioxin (B5-002, 005, 0010, 0015 and 0017/99) scandals, that in all food safety measures absolute priority must be given to prevention and to consumer protection. Particular emphasis must be placed on inspections – a system which has shown considerable shortcomings – and on their transparency.

Naturally, the risks linked to a global economy are high, but it is essential to foster the competitiveness of European agriculture by producing high-quality products. Moreover, the challenge of globalisation is particularly dangerous for the least-favoured areas, which are more vulnerable in a world economy. Special attention must therefore be paid to these areas, which include the outermost, mountain and Arctic areas, and supplementary direct income support should be paid to farmers.

At the same time it is essential to promote the use of the new technologies, which, also for agriculture, are a key factor in being able to adapt to the new requirements and new developments of the international markets, with the aim of launching high-quality products onto the markets and guaranteeing their origin.



Publication: Pascal Fontaine
Author: Emma Petroni
Or: IT
Research and Documentation Service
EPP-ED Group – European Parliament
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