Ministry of Agriculture LATVIA

Ministry of Agriculture

LATVIA

Agricultural Agricultural reform in Europe: reform in Europe:

2013 and beyond2013 and beyond

May 14, 2008 May 14, 2008

TallinnTallinn

CONTENTSCONTENTS

CAP in future –CAP in future –

Basic principles Basic principles Vision and objectivesVision and objectivesPossible policy instrumentsPossible policy instruments

CAP in futureCAP in future Basic principles of Basic principles of

policypolicy

SUSTAINABLESUSTAINABLE MARKET ORIENTEDMARKET ORIENTED COMPETITIVECOMPETITIVE REGIONALREGIONAL DIFFRENCESDIFFRENCES PUBLIC GOODSPUBLIC GOODS

22

CAP in futureCAP in future

VISIONVISION Agriculture – Agriculture – appreciated by appreciated by

general publicgeneral public Rural economy – Rural economy – economically economically

active and knowledge based.active and knowledge based. Viable rural holdingsViable rural holdings – with or – with or

without supportwithout support production according to market production according to market

demand and climatic conditions demand and climatic conditions increasing added value and shifting increasing added value and shifting

from quantity to qualityfrom quantity to quality

44

CAP in futureCAP in future

VISIONVISION

Prosperous people in sustainably Prosperous people in sustainably populated countryside of Latvia:populated countryside of Latvia:

development of capacities of rural peopledevelopment of capacities of rural people sustainable management sustainable management -- rural natural rural natural

resources and landscaperesources and landscape development of rural living environmentdevelopment of rural living environment

Promoting entrance of young Promoting entrance of young farmerfarmer in agri-business with a view of in agri-business with a view of improving the aged structure of farm improving the aged structure of farm ownersowners

55

CAP in futureCAP in future

OBJECTIVESOBJECTIVES

GGlobal competitivenesslobal competitiveness Doha Round should not lead to a Doha Round should not lead to a

further reform of the CAP:further reform of the CAP: Green box provisions shall be retained AsGreen box provisions shall be retained As

in the current draft modalities;in the current draft modalities; Level of customs tariffs shall ensure Level of customs tariffs shall ensure

farmers competitiveness on domestic farmers competitiveness on domestic marketmarket;;

Export subsidies and elements with similar Export subsidies and elements with similar effect effect shall be shall be eliminated ensuring fair eliminated ensuring fair competition in competition in worldworld market.market.

CAP in futureCAP in future

OBJECTIVESOBJECTIVES

Fair, equal Fair, equal conditions for direct conditions for direct support support amongamong all MS all MS::

ddistribution of financistribution of financial envelopes for ial envelopes for decoupled payments;decoupled payments;

new support criteria must reflect actual activities of farmers at present, instead of historical figures;

the same possibility to choose level of the same possibility to choose level of coupling and historical model coupling and historical model in transition in transition from from

SAPSSAPS SPSSPS

DP DP +RD area p+RD area paymentaymentss per per MS 2013MS 2013

(in(in € /hectare UUA in 2007)

3652 55

70 81 81 82106 106 108

119 128 128 130 130 130140 149 149

156 156 160186 190 195

221

374

0

50

100

150

200

250

300

350

400

MT NL BE UK IT DE CY SE PT LU ES SI CZ LV SK PL RO AT FR BG FI EE LT HU DK GR IE

/eur/ha

Source: Eurostat

Arable crops reference Arable crops reference figures and actual figures and actual

area/yieldarea/yield

0

2 000 000

4 000 000

6 000 000

8 000 000

10 000 000

12 000 000

14 000 000

16 000 000

BE BG CZ DK DE EE IE GR ES FR IT CY LV LT LU HU NL AT PL PT RO SI SK FI SE UK

Ha

0

1

2

3

4

5

6

7

8

9

t/ha

Reference, ha area, ha (2007) Reference, t/ha actual yield, t/ha (2007)

Impact to income & efficiency – Impact to income & efficiency – eemployed in agriculture and payment for mployed in agriculture and payment for

employedemployed// UUA ha UUA ha

020040060080010001200140016001800

0,000,020,040,060,080,100,120,140,160,180,20

LV ES LT UK EE PT PL FR IT HU FI SK LU IE DE DK BE NL CZ SI EL

EUR

Employed/ha

Emploued (2005) to ha UAA(2006) Payment to employed (2006) to ha UAA (2006)

Source: Eurostat/Total employment/ NACE A

Impact of decoupled support on Impact of decoupled support on

land market priceland market price

0

500

1000

1500

2000

2500

3000

3500

4000

Land price in reference year, DP = 0 Land price at DP= EUR

100/ha

Land price at DP = EUR

300/ha

EUR/ha

Impact of decoupled support onImpact of decoupled support onrrent ent price ofprice of farm land and buildings/ farm land and buildings/ aaverage farm verage farm ssize UUA haize UUA ha

CAP in futureCAP in future POSSIBLE POLICY POSSIBLE POLICY INSTRUMENTSINSTRUMENTS

““Capped” directCapped” direct support rate per support rate per hectarehectare support support for multifunctional servicesfor multifunctional services providing providing

societal benefitssocietal benefitsState aid - SA

Rural development area based

measures (RDP)

Direct payments CC including

GAEC(DP)

MAX rate = ∑(SA+RDP+DP) ≤ 1000 EUR/ha

CAP in futureCAP in future POSSIBLE POLICY INSTRUMENTSPOSSIBLE POLICY INSTRUMENTS

An equal support rate per unit must be laid down all over the EU for compliance with the same conditions

Direct payment

50 EUR/ha(for grass

cutting)

Y EUR/ha

GAEC

Other CC requirements

restructuring of direct payments according restructuring of direct payments according to inputs and to avoid to inputs and to avoid “support cutting”“support cutting” why support for why support for landscape maintenance landscape maintenance costscosts be radically different in different be radically different in different member statesmember states??

CAP in futureCAP in future POLICY INSTRUMENTSPOLICY INSTRUMENTS

ModulationModulation ... 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 about LV about modulation principlesmodulation principles::– not more thannot more than 50% of financing 50% of financing modulated modulated

to beto be channeled to respective MS channeled to respective MS– 50 50 % % -- to EU budget and finance to EU budget and finance

distribution distribution based on objective criteriabased on objective criteria

CAP in futureCAP in future POSSIBLE POLICY POSSIBLE POLICY

INSTRUMENTSINSTRUMENTS Risk managementRisk management

rrole of Community risk management ole of Community risk management tools ?tools ?

clearly defined Eclearly defined ECC and MS and MS responsibilities responsibilities to to ensure transparencyensure transparency

promote motivated participation of promote motivated participation of producersproducers

CAP in futureCAP in future POSSIBLE POLICY POSSIBLE POLICY INSTRUMENTSINSTRUMENTS

Safety netSafety net income loss compensationincome loss compensation mechanism mechanism

should be introduced in order to allow should be introduced in order to allow compensate income losses arising from compensate income losses arising from market fluctuations, natural disasters (animal market fluctuations, natural disasters (animal diseases, crop losses etc.).diseases, crop losses etc.).

Financing from Pillar I (intervention, Article 69)Financing from Pillar I (intervention, Article 69) Strengthened producer organizations decrease Strengthened producer organizations decrease

risk of hazards due to market fluctuationsrisk of hazards due to market fluctuations (French approach)(French approach)

Thank you Thank you for for

attentionattention!!