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Formulating interests of NMS in the CAP post-2013

Representatives of nine Central European Chambers of Agriculture gathered in Budapest in 28-29 November 2011 to have a discussion on the latest proposals of the European Commission on the future of the CAP. By the end of the meeting, a Joint Declaration has been signed, expressing the interests of the New Member States (NMS) in the future of the CAP.

The Declaration starts with the strong statement that the accession had an overall negative impact on NMS agriculture as its size and power has lost ground. Therefore the declaration clearly states that NMS have expected fundamental changes in the design of the CAP post-2013 and are highly disappointed with the recent proposals of the Commission. As clearly stated,

“The Commission’s proposal in its present form fails to envisage a stronger and more competitive European agriculture – instead it puts additional costs and various other administrative burdens on farmers. It does not come up with a genuinely simplified and transparent new regulation – instead it complicates the present system even further. It does not bring about a new, fair system of resource allocation – instead it still tolerates the historical reference system for many more years to come with yet another transition period. We need a stronger, simpler and fairer CAP than the one currently proposed by the Commission.”

In order to do so, the remaining part of the Declaration describes NMS proposals for reforming the CAP post-2013. Regarding direct payments, NMS believe that freezing the CAP budget in nominal terms together with introducing further cost-increasing elements under greening means a further decline in the anyway decreasing competitiveness of farmers. Due to high environmental, food safety, animal welfare and many other standards, farmers are losing positions in world competition and creating new burdens associated with greening would not help farmers to reverse this trend.

Therefore NMS suggest that greening measures should be voluntary and moved to the second pillar without any reduction in funding for the first pillar. Capping of direct payments are also against the interests of the NMS, according to the Declaration, as it does not encourage farmers to modernise farm structures as well as discriminates those using contract labour. Moreover, the Declaration calls for a fundamentally new system of calculating the national envelopes without historical references and transitional periods as current proposals seem to maintain the deep division across Member States in this regard.

Regarding proposals on common market organisation, NMS call for the maintenance of export refunds, updated intervention prices and the maintenance of milk and sugar quotas together with planting rights for the wine sector at least until 2020. All these interests are justified in the Declaration on the basis of the special characteristics of NMS agriculture.

As to rural development proposals, NMS require a clear definition of objective criteria and an equal redistribution of these funds across Member States without any bias. NMS also propose that 10 % of the total national envelopes be reallocated between Pillar 1 and 2, according to own decisions of Member States. Moreover, NMS find it essential that LFA payments are also received by only active farmers without any capping and also advise a compensation for farmers’ insurance payments and the reduction of the mandatory self-contribution to 10 %.

Though one might not agree with each and every proposal, NMS interests should be taken seriously if we really want to make the new CAP a common policy.

This post was written by Attila Jambor.

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2 Replies to “Formulating interests of NMS in the CAP post-2013”

  1. The New Member States (NMS)belong to the biggest potential losers of the latest EC proposals. Why? Because NMS farmers operate on the common market but receive much less financial support in comparison to the EU-15 farmers, especially in direct payments (DP) aid, main financial instrument of the CAP (more than 70% of the CAP financial support. Their discrimination has roots in the historical conditions of the Accession Treaties including 10-years transition period to achieve full DP level called in the EU jargon “phasing-in”. The Declaration does not express interests of all 12 NMS but can be treated as representative for them and important from the EU agricultural employment point of view (49% of the EU-27 agricultural employment. Difference in DP distribution between EU-15 and EU-10 in 2005-2009 period(Bulgaria and Romania have been excluded due to latest accession to the EU) illustrate a simple number: average, statistical ha in the EU-15 received 953 € more than respective ha in the EU-10 (own calculations using EC “Basic data – key agricultural statistics 2005-2009 (UAA) and “Annex 1 “Indicative figures on the distribution of aid, by size-class of aid – financial year 2005-2009”). In 2009, after 5 years of NMS accession to the EU farmers of these countries received 102 €/ha, wheras their collegues from EU-15 276 €/ha!
    In 2013 (end of transition period) this difference will be still substantial (own calculation using official DP data for 2013 and eligible ha in 2009): 312 €/eligible ha for EU-15 and 215 €/ha. At the same time NMS’ farmers being less rich in comparison to EU-15 farmers (for simplification my comparison is based on averages) have to meet the same EU standards and obligations (leaving out some small exceptions). In such situation it is natural that NMS expect radical change of DP distribution. Moreover, such expectations would allow the EU agricultural policy to meet the fundamental goals and values of European Union (inter alia expressed in articles 2-4 TEU and articles 11, 18, 39, 40, 168, 174, 191 of TFEU). But the EC proposals do not meet these expectations. Since 2017 (own calculation based on EC proposals and eligible ha in 2009) EU-15 farmers shall receive 293 €/ha and EU-12 shall receive only 218 €/ha. The DP distribution is not only unjustified from the NMS point of view and the Treaties provisions, but it is also in contraction with the DP income function – this function is underlined by the EC as justification of this payment existence. If they have such function the higher DP per ha should be directed to less rich farmers from NMS but the EC do not propose such solution! Some stakeholders from EU-15 argue that DP should be higher in the states with higher GDP per inhabitant due to higher cost of agricultural production and necessity to keep level of living of farmers in relation to persons hired in whole economy. However, such opinions are not supported by any reliable data. Moreover, proposed DP distribution indicates that there is no such relation. There are states with GDP per inhabitant above EU-27 average and farmers from these states shall receive DP below EU-27 average (Austria, Sweden, United Kingdom or Finland). Also there are states with GDP per inhabitant above EU-27 average and farmers from these states shall receive DP above EU-27 average (Luxembourg, Nederland, Denmark or Germany).
    So, there is no way to find relation between DP distribution proposals with the EC declared objectives of the future CAP (leaving out contradiction between them and obligatory the CAP objectives expressed in article 39 TFEU) as viable food production, sustainable management of natural resources and balanced territorial development. It seems that “pragmatic approach” can not be reasonable justification of DP distribution…
    I agree with Attila Jambor that one might not agree with every NMS’ proposal. One can have serious reservations at least to some of them.
    Capping. The NMS’s proposal to reject capping is very doubtful. Contrary to this opinion, I am convinced that the EC capping proposals are too less restrictive to achieve declared goals for this tool. It is not possible to achieve legitimacy and support of public opinion for the CAP if par example huge, very profitable farms receive 1 million or more DP support. How to achieve sustainable development of agriculture through the whole EU if less than 2% of DP beneficiaries receive more than 87% beneficiaries of these payments (the latest 2009 data)? One can understand fears of Czech and Slovakia due to the specific agriculture structure in these countries; in consequence they have the highest share of DP above 100 thousand € in total DP distribution in whole Union (above 60% in 2009). But at the same time relatively many farmers from these countries receive annually below 1.250 € of DP (respectively 36% and 68%). To achieve the EU more balanced situation it seems that transitional period only for NMS concerning capping is needed in order to compensate them losses in transition period 2004-2016.
    Mandatory greening. The NMS’ proposal to introduce it on a voluntary basis is doubtful if we take in consideration the state of the EU natural resources and viability of ecosystems. The EC proposals are really too complex and do not take into consideration diverse situation in particular member states. So, introduction of crop rotation (written down in schoolbooks for decades) as obligatory requirement to the CAP 1-st pillar seems to be the easiest and justified solution. This measure can constitute the basic element of cross-compliance.
    Small farmers’ scheme. In opposite to the NMS my opinion on the EC proposal is negative. This scheme concerns above 60% of the EU farmers (62,5% DP beneficiaries receive below 1.250 € in 2009). It is very hard to imagine how maximum 1.000 € per year (the EC proposal) will help 4,9 million EU farmers to survive on agricultural market. Only small part of them have additional sources of income (agro-tourism, other services). Only small part of them will be retired. Remain small farmers will abandon agricultural activity what will increase unemployment in rural areas. It will be completely against inclusive growth declared by the European Commission.
    Roman Izdebski

    1. I agree that NMS can be potential losers of the CAP reform if they can not stand out for their interests. What I see as a great problem is actually the lack of a common interest. It seems that even the region does not know what she needs. I find the declaration an important document to start with but somehow I feel we are running out of time which goes by very fast in the debate. One of the most important tasks would be to persuade Brussels that the ‘one-size-fits-all’ policy is outdated and that there is a great diversity among member states in EU27 but even inside the NMS. As you clearly suggest, the uneven distribution of direct payments was not in favour of the anyway declining competitiveness of NMS agriculture and I think that the proposed ‘cosmetics’ of the SPS/SAPS system will not change anything in this regard. As to NMS’ proposals in the declaration, I think we both agree that there are plenty of caveats here – the question is whether we have better ideas and if yes, whether each and every member state in the region can support them.

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