Commission presentation on communication future cap in sca 6 december 2010

Ⓒ

Olo

f S

.

Communication on the future of the CAP

“The CAP towards 2020: meeting the food, natural resources and territorial challenges of

the future”

DG for Agriculture and Rural Development European Commission

2

Outline

1. The context

2. The CAP today

3. Why do we need a reform?

4. New objectives, future instruments and policy options

5. Next steps

3

1. The context

Background of reform

• Entry into force of Lisbon Treaty• Budgetary framework ends in 2013• Need to align CAP post-2013 to Europe 2020 strategy

Public debate

The Communication

• Strong public interest in Commission call to public: 5 600 contributions• Very successful Conference in July: 600 participants• Council, EP, EESC, CoR discussions and/or opinions

• Reflects broadly identified policy challenges• Responds to the public debate and outlines broad future options• Launches inter-institutional debate and prepares legal proposals

4

2. The CAP today

A substantially reformed policy…

• Structured in two complementary pillars

• Farm support mainly decoupled and subject to cross-compliance

• Role of market intervention mechanisms significantly reduced to safety net level

• Rural development policy strengthened with funds and new policy instruments

… better performing…

• Surpluses belong to the past

• Competitiveness improved

• Improved transfer efficiency

• More sustainable farming

• Integrated approach for rural areas

• Contribution to EU budget stability

… and resulting in a territorial and environmentallybalanced EU agriculture

5

The CAP today – budget relevance

RuralDevelopment

Direct payments

Markets

Pillar I

Pillar II

Modulation

6

CAP expenditure and CAP reform path(2007 constant prices)

0

10

20

30

40

50

60

70

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

% GDPbillion €

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

0.7%

Export subsidies Other market support Coupled direct paymentsDecoupled direct payments Rural development % of EU GDP

Source: European Commission - DG Agriculture and Rural Development

EU-10 EU-12 EU-15 EU-25 EU-27

7

3. Why do we need a reform?To respond to challenges ahead

Economicchallenges

• Food security

• Price variability

• Economic crisis

8

Recent trends in some commodity market prices

Sources: European Commission - DG Agriculture and Rural Development and World Bank

EUR/t for maize; EUR/bbl for crude oil

200

250

300

350

400

Jan-

00M

ay-0

0S

ep-0

0Ja

n-01

May

-01

Sep

-01

Jan-

02M

ay-0

2

Sep

-02

Jan-

03M

ay-0

3S

ep-0

3Ja

n-04

May

-04

Sep

-04

Jan-

05

May

-05

Sep

-05

Jan-

06M

ay-0

6S

ep-0

6Ja

n-07

May

-07

Sep

-07

Jan-

08

May

-08

Sep

-08

Jan-

09M

ay-0

9S

ep-0

9Ja

n-10

May

-10

Sep

-10

EUR/t for fresh milk

0

50

100

150

200

Fresh milk, EU Crude oil, avg spot price Maize, US, Gulf

9

EU developments in agricultural income (agricultural income/AWU in real terms)

( Index 2000 = 100 )

60

70

80

90

100

110

120

130

140

150

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

EU-15

20

40

60

80

100

120

140

160

180

200

EU-12

Source: Eurostat

EU-15

EU-12

10

Relative situation of agricultural income in the EU

Income gap with the rest of the economy

(average 2005-2007)

Agricultural income level between Member States

(2009)

Source: European Commission - DG Agriculture and Rural Development, based on Eurostat data

(agricultural income as % of average income in the total economy)

0%

20%

40%

60%

80%

100%

EU-15 EU-27 EU-12

(agricultural income/AWU in real terms - EU-27 = 100)

0

25

50

75

100

125

150

175

200

EU-15 EU-27 EU-12

11

Recent evolution of agricultural input and output prices

Source: Eurostat

(index 1996 = 100, in real prices)

70

80

90

100

110

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Output prices - EU-27 Input prices - EU-27

12

3. Why do we need a reform?To respond to challenges ahead

Economicchallenges

Environmentalchallenges

Territorialchallenges

• Food security

• Price variability

• Economic crisis

• GHG emissions

• Soil depletion

• Water/air quality

• Habitats and biodiversity

• Vitality of rural areas

• Diversity of EU agriculture

Equity and balance of support

Contribution to Europe 2020 strategy

13

4a. What are the objectives with the reform?

Viable foodproduction

Sustainable management of

natural resources and climate action

Balanced territorialdevelopment

Common EU response needed

Economicchallenges

Environmentalchallenges

Territorialchallenges

14

4b. What policy instruments?

Better targeted to objectives Based on two pillar structure

Direct payments

• Redistribution

• Better targeting

• Redesign:• Greening of direct

payments• Capping of

payments• Small farmers

support• Areas with

specific natural constraints

15

Average direct payments per potentially eligible area and beneficiary

Direct payments net ceilings fully phased-in (in 2016)

Source: European Commission - DG Agriculture and Rural Development

0

100

200

300

400

500

600

700

800

Mal

ta

Bel

gium

Net

herla

nds

Italy

Gre

ece

Cyp

rus

Den

mar

k

Slo

veni

a

Ger

man

y

Fra

nce

EU

-15

Luxe

mbo

urg

EU

-27

Irel

and

Aus

tria

Hun

gary

Cze

ch R

epub

lic

Spa

in

Fin

land

Sw

eden

Uni

ted

Kin

gdom

Bul

garia

Pol

and

EU

-12

Slo

vaki

a

Rom

ania

Por

tuga

l

Lith

uani

a

Est

onia

Latv

ia

EUR/ben.EUR/ha

0

8000

16000

24000

32000

40000

48000

DP net ceilings fully phased-in (EUR/ha)EU-27 average (EUR/ha)DP net ceilings fully phased-in (EUR/beneficiary)

16

4b. What policy instruments?

Better targeted to objectives Based on two pillar structure

Direct payments Market measures

• Market orientation

• Streamline and simplification

• Improved food chain functioning

• Redistribution

• Better targeting

• Redesign:• Greening of direct

payments• Capping of

payments• Small farmers

support• Areas with

specific natural constraints

17

Slow, limited, asymmetric price transmission along the food supply chain

95

100

105

110

115

120

Jan

-07

Fe

b-0

7

Ma

r-0

7

Ap

r-0

7

Ma

y-0

7

Jun

-07

Jul-

07

Au

g-0

7

Se

p-0

7

Oct

-07

No

v-0

7

De

c-0

7

Jan

-08

Fe

b-0

8

Ma

r-0

8

Ap

r-0

8

Ma

y-0

8

Jun

-08

Jul-

08

Au

g-0

8

Se

p-0

8

Oct

-08

No

v-0

8

De

c-0

8

Jan

-09

Fe

b-0

9

Ma

r-0

9

Ap

r-0

9

Ma

y-0

9

Jun

-09

Jul-

09

Source: European Commission – DG Economic and Financial Affairs, based on Eurostat data

FOOD PRICE CRISIS PRODUCERS’ LAG RETAILERS’ LAG STABILISATION

Agriculturalcommodity prices

Overall inflation(HICP)

Food producer prices

Food consumer prices

18

4b. What policy instruments?

Better targeted to objectives Based on two pillar structure

Direct payments Market measures Rural development

• Market orientation

• Streamline and simplification

• Improved food chain functioning

• Environment, climate change and innovation as guideline themes

• Improved coherence with other EU policies

• More effective delivery mechanisms

• Address risk management

• New distribution criteria

• Redistribution

• Better targeting

• Redesign:• Greening of direct

payments• Capping of

payments• Small farmers

support• Areas with

specific natural constraints

19

4c. What policy options?

Option 1

• Continue the gradual reform process• Adjust the most pressing shortcomings (e.g.

more equity in the distribution of direct payments)

Option 2

• Capture the opportunity for reform• More sustainable and balanced CAP (between

policy objectives, MS and farmers)• More ‘green’ targeted measures

Option 3

• More fundamental reform• Focus on environmental and climate change

objectives through rural development• Move away from income support and most

market measures

20

5. Next steps

Inter-institutional debate on the Communication

Preparation of Impact Assessment (IA)

Preparation of Legal Proposals

• In-depth Commission analysis of new policy settings, options and their economic, social and environmental impacts

• Stakeholders consultation: analytical contributions from stakeholders based on Consultation document published on the 23th of November

Legal proposals presented by mid-2011

21

For further information

• The CAP after 2013

http://ec.europa.eu/agriculture/cap-post-2013/index_en.htm

• The Communication on the future of the CAP

http://ec.europa.eu/agriculture/cap-post-2013/communication/ index_en.htm

• Public consultation

http://ec.europa.eu/agriculture/cap-post-2013/consultation/ index_en.htm

22

Thank you