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Future of Agricultural Reform in Europe: Sustainable, Competitive, and Market-Oriented Policies

Explore the vision, objectives, and possible policy instruments of the future Common Agricultural Policy (CAP) in Europe. Learn about sustainable practices, global competitiveness, fair support conditions, and risk management tools for agricultural reform.

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Future of Agricultural Reform in Europe: Sustainable, Competitive, and Market-Oriented Policies

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  1. Agricultural reform in Europe: 2013 and beyond Ministry of Agriculture LATVIA May 14, 2008 Tallinn

  2. CONTENTS • CAP in future – • Basic principles • Vision and objectives • Possible policy instruments

  3. CAP in futureBasic principles of policy • SUSTAINABLE • MARKET ORIENTED • COMPETITIVE • REGIONALDIFFRENCES • PUBLIC GOODS

  4. CAP in future VISION • Agriculture – appreciated by general public • Rural economy – economically active and knowledge based. • Viable rural holdings – with or without support • production according to market demand and climatic conditions • increasing added value and shifting from quantity to quality 2

  5. CAP in futureVISION • Prosperous people in sustainably populated countryside of Latvia: • development of capacities of rural people • sustainable management - rural natural resources and landscape • development of rural living environment • Promoting entrance of young farmer in agri-business with a view of improving the aged structure of farm owners 4

  6. CAP in future OBJECTIVES Global competitiveness • Doha Round should not lead to a further reform of the CAP: • Green box provisions shall be retained Asinthecurrentdraftmodalities; • Level of customs tariffs shall ensure farmers competitiveness on domestic market; • Export subsidies and elements with similar effect shallbeeliminated ensuring fair competition in worldmarket. 5

  7. CAP in future OBJECTIVES • Fair, equal conditionsfordirectsupport among all MS: • distribution of financialenvelopesfordecoupledpayments; • new support criteria must reflect actual activities of farmers at present, instead of historical figures; • thesamepossibility to chooselevelofcouplingandhistoricalmodelin transition from SAPS SPS

  8. DP +RD area paymentsper MS 2013(in€/hectare UUAin 2007)

  9. Arable crops reference figures and actual area/yield

  10. Impact to income & efficiency – employed in agriculture and payment for employed/ UUA ha

  11. 4000 3500 3000 2500 2000 EUR/ha 1500 1000 500 0 Land price in reference year , DP = 0 Land price at DP= EUR Land price at DP= EUR 100/ha 300/ha Impact of decoupled support on land market price

  12. Impactofdecoupledsupportonrentpriceof farm land and buildings/ average farm size UUA ha

  13. CAP in futurePOSSIBLE POLICY INSTRUMENTS • “Capped” direct support rate per hectare • support for multifunctional services providing societal benefits State aid - SA Rural development area basedmeasures (RDP) MAX rate = ∑(SA+RDP+DP) ≤ 1000 EUR/ha Direct payments CC includingGAEC (DP)

  14. CAP in futurePOSSIBLE POLICY INSTRUMENTS • An equal support rate per unit must be laid down all over the EU for compliance with the same conditions 50 EUR/ha (for grass cutting) GAEC Direct payment Y EUR/ha Other CC requirements • restructuring of direct payments according to inputs and to avoid “support cutting” • why support for landscape maintenance costs be radically different in different member states?

  15. CAP in futurePOLICY INSTRUMENTS • Modulation • ... must serve as an instrument diminishing the differences among rural areas in the Community • BUT, too much of direct support, based on production criteria in the past, is simply shifted to Pillar II in respective MS- without analysing the rural development needs • LV aboutmodulation principles: • not more than50% of financing modulated to be channeled to respective MS • 50 % - to EU budget and finance distribution based on objective criteria

  16. CAP in futurePOSSIBLE POLICY INSTRUMENTS • Risk management • role of Community risk management tools ? • clearly defined EC and MS responsibilities to ensure transparency • promote motivated participation of producers

  17. CAP in futurePOSSIBLE POLICY INSTRUMENTS • Safety net • income loss compensation mechanism should be introduced in order to allow compensate income losses arising from market fluctuations, natural disasters (animal diseases, crop losses etc.). • Financing from Pillar I (intervention, Article 69) • Strengthened producer organizations decrease risk of hazards due to market fluctuations (Frenchapproach)

  18. Thank you for attention!

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