Key Notes

Reform of the CAP and support from environmentally-friendly production methods and quality products

Background: Importance of the subject

Agricultural policy has always been a basic pillar in the process of European integration. When the European Economic Community was established, the Treaty of Rome set out the objectives of the CAP and specified that agriculture formed part of the Common Market as an integrated policy.

In order to allow the CAP to cope better with the demands of changing economic and political realities, a number of key changes have been made to the policy's architecture since its creation in the early 1960s. In recent years, the 1992 Reform marked a shift in the CAP away from price and market-guidance policy towards a system designed primarily to maintain farmers' incomes and it introduced greater emphasis on environmental considerations. The Berlin European Council agreement of 1999 on the Agenda 2000 package deepened the reform process. The aim was to gradually replace agricultural price maintenance and support measures with a direct aid scheme backed up by a consistent agricultural and rural development policy.

At the Copenhagen Summit in December 2002, European leaders reached a historic deal, opening the way for EU enlargement. Agriculture was a difficult and important part in the negotiations. The agreement reached means that farmers from the new Member States will have full access to the market measures of the CAP, together with a gradual introduction of direct payments.

Beyond its natural link with the dynamics of EU reform and the enlargement process, European agricultural policy is simultaneously the product of broader changes including globalisation, liberalisation and the rise of productivity-enhancing technologies.


I. What does the European Union do?

The Agenda 2000 set out the following agricultural priorities:

• making European agriculture competitive on the domestic and world markets, especially in view of EU enlargement and the WTO negotiations;
• food quality and safety;
• respect for the environment, environmentally-friendly production methods and animal welfare considerations. Furthermore, farmers were called on to play a key role in managing natural resources and landscape conservation;
• the guarantee of a fair standard of living for people engaged in agriculture. The concepts of modulation and the redistribution of income aid for farmers were developed;
• keeping farmers and their families in work and creating additional job opportunities;
• innovative rural development measures, with rural development itself becoming the second pillar of the CAP.

The Agenda 2000 reforms have recently been the subject of a thorough "Mid-Term Review" process, which culminated in a new reform package agreed by Agriculture Ministers in Luxembourg on 26 June 2003. This represents perhaps the most fundamental reform of the CAP in its history. At the heart of the compromise is the agreement to replace production-linked support to farmers with a new decoupled Single Farm Payment, calculated instead on the basis of historic reference amounts. The new decoupled system will apply to most agricultural sectors, although Member States will have the option of allowing up to a certain percentage of the new Single Farm Payment to remain production-linked in specific sectors.

The new system will come into force in 2005 but a Member State may defer this until 2007 to make necessary adjustments. So as to boost the rural development pillar of the CAP, modulation will be introduced from 2005, meaning a small reduction in direct aid payments so that, by 2007, around €1.2 billion per year in extra money will be available to spend on an expanded selection of countryside initiatives. Other key provisions of the reform include: flexibility in implementation at regional level, especially for the Less Favoured Areas; the setting up of national reserves to help in difficult cases; a mechanism to ensure that budgetary ceilings are not exceeded; and a commitment by the Commission to produce a report in 2007 on the operation of the single farm payment.


II. What has the EPP-ED Group achieved?

The EPP-ED Group has played an active part in developing the CAP as an integrated policy and has developed the most important objectives for European Agriculture: food quality and safety, respect for the environment, environmentally-friendly production methods and animal welfare considerations. Farmers are called on to play a key role in managing natural resources and landscape conservation.

The challenge for the EPP-ED Members, is to guarantee a fair standard of living for people engaged in agriculture, keeping farmers and their families in work and to create additional job opportunities. Rural development measures (the second pillar of the CAP) has also being a priority.

Throughout the development of the CAP, the EPP-ED has strongly emphasised the basic right of consumers to enjoy safe food. It has campaigned for comprehensive, workable rules so that Europe's citizens can feel confident that what they eat meets certain standards - from the farm to the fork! At the same time, the Group is also pushing to ensure that agricultural products entering the EU from third countries are produced according to the same standards we expect of our farmers and that harmful products are kept out through improved controls at our borders.


III. EPP-ED goals for the next legislative period

The objectives of the CAP have considerably changed during the last 50 years. The goals of a modern agriculture include a multifunctional, environmentally-friendly and landscape-sensitive agriculture, which must promote biological diversity, ensure the rational development of agricultural production and encourage an optimum utilisation of resources. Agriculture policy should ensure comparable living conditions and a fair level of income for the agricultural and wider rural community.

The challenge now for the EPP-ED is to help ensure that fair competition is not distorted as a result of the various options opened to the Member States by the Council and to try to prevent farmers being tied up in more red-tape. Group Members will also pay particular attention to the functioning of the new Cross-Compliance system to be ushered in by the reform, which links the full receipt of the Single Farm Payment to the respect of environmental, food safety, animal and plant health as well as animal welfare standards.

Ahead of the forthcoming WTO negotiations, the EPP-ED Group is leading the European Parliament in the ongoing process of agricultural negotiations in order to reach a comprehensive agreement that will include a balance between trade and non-trade issues, addressing, at the same time, the legitimate interests of developing countries. The participation of developing countries, especially the least developed, in the international trade system, should be promoted in order to reduce poverty.

The EPP-ED Group stresses the need for a broad negotiating round in order to increase the competitiveness of European Agriculture. EPP-ED Members will insist, in particular, that future agreements relating to internal support, market access and export subsidies must ensure the survival of the European model of agriculture and the multifunctional role of agriculture.

With the EPP-ED Group's support, the new EU Constitution would extend the co-decision procedure for agriculture policy, strengthening the role of the European Parliament, thereby reinforcing European democracy.


Jorge Soutullo
EPP-ED Adviser for Agriculture