COMAGRI co-rapporteur proposes Omnibus Regulation amendments

We are pleased to bring you this guest post by Paolo de Castro MEP who is a co-rapporteur for the European Parliament’s AGRI Committee on the so-called Omnibus Regulation which proposes to amend the CAP basic acts with a view to their simplification. Mr de Castro introduced his draft report at the AGRI Committee last Monday 13 March, and it is now open for amendment by other AGRI Committee members until March 21st. The following is an edited version of his remarks.

The Omnibus proposal represents, despite its significant management and administrative complexity, an important opportunity to improve and solve the major issues that our farmers have been facing over the first three years of application of the new CAP. We welcome such initiative from the European Commission, but I believe the Parliament has the duty to make the Commission’s proposals more ambitious, while complying with the two main objectives of the overall text, which are procedural simplification and red tape cutting.
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This is why, together with the co-rapporteur Albert Dess, we decided to define general guidelines – approved by the coordinators of all the political groups – for our interventions as well as for all the amendments. The objective is to guarantee a significant contribution of the AGRI Committee, aimed at clearly targeted and achievable results.

Therefore, I want to reassure Commissioner Hogan who, in his letter dated 23 February 2017, expressed deep concerns regarding Parliament and Council’s amendment proposals, which could have delayed the reaching of an agreement between the three institutions and the entry into force of the package, foreseen for the 1st January 2018. On the contrary, our draft report is closely related to the objective of simplification wanted by the Commission, and is not affecting in any way the political agreement achieved during the latest CAP reform, thereby ensuring the stability in the basic acts that our farmers need.

I would also like to clarify that, from a strictly numerical point of view, despite the 94 amendments Albert Dess and I drew up, these refer to just over 30 specific measures, in line with the 31 measures proposed by Commissioner Hogan.

Turning now to the content of the text:

Simplification

SIMPLIFICATION, ORGANIZATION and RISK MANAGEMENT have been the guiding principles of our work, following the inputs received with the Commission proposal. Even though the Commission’s proposal is commendable in several of its aspects, in our view it does not show enough ambition on several points, especially in light of the evidences emerging from the first years of application of the 2013 reform.

We do not find the results on the administrative-bureaucratic front very satisfactory and we have several doubts on the effectiveness of some measures considered as strategic for the future of the CAP – such as greening and risk management – and quite a few concerns on effectiveness of the current tools to cope with severe market crisis. This was our starting point. Through a fruitful mediation between two mostly coincident visions, but with different shades, we have drafted a proposal trying to give answers that we consider more effective in the direction indicated by the Commission with its proposal.

So, we largely followed this direction, but not completely. One first difference is on the concept of ACTIVE FARMER. The legitimacy of the CAP is based on the principle of effectiveness and transparency of public action, which cannot be sacrificed. We are aware of the difficulties of implementation of the definition of active farmer in some Member States, but we believe that the solution should be facilitated and encouraged confirming and not putting aside the principle that support under the CAP shall only be granted to those who are actually entitled to it. After all, this was one of the hottest topics during the debate that anticipated the 2013 reform, representing a key point of the last reform, that shall not be completely reopened.

With regard to SIMPLIFICATION, the Member States’ administrative systems in the management of rural development programs needs to be simplified, and procedures speeded up. It is not just a matter of cutting red tape: farmers should be given more certainties about the timing of their investments and of the related public contributions.

Moreover, the complexity and the doubts regarding the efficacy of GREENING have been largely discussed since its introduction. We have tried to identify common grounds that could combine simplification together with an ENHANCED ENVIRONNMENTAL ROLE OF AGRICULTURE. For this reason, we have decided to include herbaceous, under-water and leguminous crops in the list of sustainable cultivations.

We also propose further simplifications of the greening framework: from the raising to 15 ha of the threshold over which the diversification provision is required, to the elimination of the 30 ha threshold for farms where environmentally sustainable cultures and practices cover more than 75% of their arable land. We consider this and some other fine-tuning actions to be important steps forward to make life easier for farmers – especially smallholders – as well as for control agencies.

Moreover, it seems rather bold to consider “big” an 11 or 12 ha farm, especially if we focus on its profitability. These amendments aim at valorising farmers’ environmental functions, pushing toward an extension of environmental services, while reducing the related administrative restrictions. On top of that, promoting leguminous crops is important not only thanks to their environmental function, but also to reduce protein external dependence.

Finally, we propose a solution to the issue of continuity of rural development planning, in order to avoid interruptions – as it happened during the adoption of the latest CAP reform. This is why we propose that, before the entry into force of the new regulations, the current rural development programmes shall continue to apply.

CMO Regulation amendments

Moving on to the Markets organization, I would like to thank my colleague Michel Dantin – who was rapporteur for the CMO regulation during the 2013 reform – for his availability to cooperate right from the beginning of the drafting process with important inputs and a constant dialogue. We have based our amendments on the conclusions of the Agricultural Market Task Force. In particular, our report stresses the need to improve the quality of organizational tools and to encourage the contractual economy model in the supply-chain governance.

The Commission’s proposal on actions related to coaching is remarkable, but does not seem enough to react to tensions in the market of the magnitude we have seen over the past years. This is the reason why we propose the possibility of establishing BARGAINING ORGANISATIONS. This should be intended as an instrument that completes the supply-chain reinforcement path, which started with recognition of producers’ organisation and, subsequently, their associations. We think that this idea can contribute to renovate and reinforce the organisational measures, by extending to other sectors the concepts already expressed in the milk package.

The proposed solutions aim at promoting the opportunities of supply concentration and at sharing organisational and commercial functions. This is important in order to encourage collective contractual agreements, aiming at stabilising the relations along the supply-chain as well as increasing the inter-branch cooperation. This would represent an important step forward to rebalance the bargaining powers along the supply-chain, and to make the organisational measures more efficient and, at the same time, available to farmers operating in any sector.

Focusing on crisis prevention and management, we have built on the recent experiences related to the crisis in the European dairy sector. The exceptional and fragmented nature of the measures put in place made them ineffective, with poor and only late results. We propose to regulate in a more coordinated way the possibility to support the reduction in production as a result of clearly specified conditions, with the aim of restoring markets balance.

Risk management

The new framework for risk management tools is one of the most important innovations of the 2013 reform. But, as we could see from a recent specific study requested by the AGRI Committee, risk management measures were not successful. Not all the Member States activated them and only a few national authorities have started making use of mutual funds. Encouraging the taking up of these measures is of paramount importance to give Member States and farmers a modern “tool-kit” to cope with volatility and the consequences of climate change.

A partial solution comes from the Commission proposal to lower to 20% the threshold for income loss compensation in a newly introduced sectorial income stabilization tool (IST). This move means that the Commission recognises that the instrument’s opportunity-cost is too high for farmers, thus it proposes ways to make it more attractive. We agree on this view but have serious concerns regarding the applicability of the new sectorial instrument. Thus, we propose to extend the LOWERING of THE COMPENSATION THRESHOLD to insurance policies and mutual funds for natural damages, as well as to the ‘general’ IST that was introduced with the 2013 reform.

Moreover, we believe that the increased farmers’ confidence at the insurance system and the lesser complexity of insurance policies compared to the mutuality funds, may lead to insurance formulas for income loss coverage. For this reason, we propose to add an INCOME INSURANCE to the list of the supported risk management tools. However, further simplification is needed here as well. One of the main reasons of the failure of income risk management tools is the lack of reliable information on agricultural holdings’ income. This is why we open to the possibility that indexes may be used to easily reconstruct the reference income of a given holding on the basis of objective elements, with the aim of verifying the possible income loss.

This post was written by Paolo de Castro.

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