The reform of the EU's Common Agricultural Policy: drivers and challenges ABARES – Outlook 2014 Canberra, 4-5 March 2014 Tassos Haniotis Director, Economic Analysis, perspectives and evaluations DG Agriculture and Rural Development European Commission
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The reform of the EU's Common Agricultural Policy reform of the EU's Common Agricultural Policy: ... productivity, climate change ... sectors and farm sizeAuthors: Alan SwinbankAffiliation:
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The reform of the EU's Common Agricultural Policy:
drivers and challenges
ABARES – Outlook 2014 Canberra, 4-5 March 2014
Tassos Haniotis
Director, Economic Analysis, perspectives and evaluations
DG Agriculture and Rural Development
European Commission
Outline
Four basic questions of (any) reform
1. How much?
2. For whom?
3. Why?
4. How?
2
3
How much: the path of CAP expenditure 1980-2020
Source: DG Agriculture and Rural Development.
0
10
20
30
40
50
60
70
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
billion EUR (current prices)
Export refunds Other market measures Market expenditure Coupled support
Decoupled support Direct payments Rural development
EU-28 EU-10 EU-12 EU-15 EU-25 EU-27
For whom: redistribution of Direct Payments
4
Source: DG Agriculture and Rural Development.
5
Why: the main drivers of CAP reform
What sort of "insecurities" drive the current policy debate?
• Commodity price developments: volatility, co-movement and level
• Supply concerns: terms of trade, productivity, climate change
▲ Winter rainfall, floods ▼ Summer rainfall ▲ Risk drought, water stress ▲ Soil erosion risk ▲ Yields, range of crops
Source: DG Agriculture and Rural Development, based on EEA reports, JRC and MS academic studies.
Importance of primary sector in employment
11
How: the future CAP at a glance
12
Improved sustainability
Enhanced competitiveness
Greater effectiveness
Enhanced market orientation
Greener Direct Payments
Improved targeting
Better functioning of the food supply chain
Greener Rural Development More equitable distribution
Bridging the gap between knowledge and practice
Increased focus on research and innovation
Strategic approach to spending
How: enhanced competitiveness
13
Better functioning of the food supply chain
Enhanced market orientation
Bridging the gap between
knowledge and practice
Phasing out of quotas and other restrictions to production Streamlining market measures; enhancing the safety net Strengthening the crisis management mechanism
Reinforced framework for POs and IBOs Financial support for creation of Producer Organisations Strengthened support to short supply chains
European Partnership for Innovation in Agriculture Enhance agricultural research and knowledge transfer Enhance Farm Advisory Services
Commodities Intermediate Final products Other products Confidential Trade Balance
Source: COMEXT
Exports
in million Euro
Imports
15
EU competitiveness - Wheat
Source: elaboration by DG Agriculture and Rural Development
50
100
150
200
250
300
350
03/0
7/0
1
03/1
1/0
1
03/0
3/0
2
03/0
7/0
2
03/1
1/0
2
03/0
3/0
3
03/0
7/0
3
03/1
1/0
3
03/0
3/0
4
03/0
7/0
4
03/1
1/0
4
03/0
3/0
5
03/0
7/0
5
03/1
1/0
5
03/0
3/0
6
03/0
7/0
6
03/1
1/0
6
03/0
3/0
7
03/0
7/0
7
03/1
1/0
7
03/0
3/0
8
03/0
7/0
8
03/1
1/0
8
03/0
3/0
9
03/0
7/0
9
03/1
1/0
9
03/0
3/1
0
03/0
7/1
0
03/1
1/1
0
03/0
3/1
1
03/0
7/1
1
03/1
1/1
1
03/0
3/1
2
03/0
7/1
2
03/1
1/1
2
03/0
3/1
3
03/0
7/1
3
03/1
1/1
3
€/T
EU cereal support price EU Wheat Rouen US SRW Wheat
101.31
16
EU competitiveness - Beef
Source: elaboration by DG Agriculture and Rural Development
100
150
200
250
300
350
400
450
03/0
1/0
0
03/0
6/0
0
03/1
1/0
0
03/0
4/0
1
03/0
9/0
1
03/0
2/0
2
03/0
7/0
2
03/1
2/0
2
03/0
5/0
3
03/1
0/0
3
03/0
3/0
4
03/0
8/0
4
03/0
1/0
5
03/0
6/0
5
03/1
1/0
5
03/0
4/0
6
03/0
9/0
6
03/0
2/0
7
03/0
7/0
7
03/1
2/0
7
03/0
5/0
8
03/1
0/0
8
03/0
3/0
9
03/0
8/0
9
03/0
1/1
0
03/0
6/1
0
03/1
1/1
0
03/0
4/1
1
03/0
9/1
1
03/0
2/1
2
03/0
7/1
2
03/1
2/1
2
03/0
5/1
3
03/1
0/1
3
€/100kg carcass
EU Intervention Price US Omaha EU Beef A/C R3 Brazil Arroba do boi
347
324
301
156
17
EU competitiveness - Milk
Source: elaboration by DG Agriculture and Rural Development
100
150
200
250
300
350
400
450
15/0
1/0
0
15/0
6/0
0
15/1
1/0
0
15/0
4/0
1
15/0
9/0
1
15/0
2/0
2
15/0
7/0
2
15/1
2/0
2
15/0
5/0
3
15/1
0/0
3
15/0
3/0
4
15/0
8/0
4
15/0
1/0
5
15/0
6/0
5
15/1
1/0
5
15/0
4/0
6
15/0
9/0
6
15/0
2/0
7
15/0
7/0
7
15/1
2/0
7
15/0
5/0
8
15/1
0/0
8
15/0
3/0
9
15/0
8/0
9
15/0
1/1
0
15/0
6/1
0
15/1
1/1
0
15/0
4/1
1
15/0
9/1
1
15/0
2/1
2
15/0
7/1
2
15/1
2/1
2
15/0
5/1
3
€/T
EU Milk Equivalent Support Price World Milk Equivalent Price EU Milk Price
282 263
244 225
220 215
How: improved sustainability
18
Greener rural development
Greener direct payments
Increased focus on research and
innovation
Introduce mandatory "green" practices at farm level Link these practices to 30% of direct payment budget Reinforce cross-compliance
Priorities on "resource efficiency" & "eco-systems" Enhance ambition for environment/climate measures Mandatory min of 30% for environmental actions spending
European Partnership for Innovation in Agriculture Enhance agricultural research and knowledge transfer Enhance Farm Advisory Services
How: greater effectiveness
19
More equitable distribution
Improved targeting
Strategic approach to
spending
Provisions for active farmer and young farmers Green payment Specific support to regions, sectors and farm size
Convergence of payments among MS Convergence of payments among farmers Flexibility in choice of regionalisation for MS
Improved integration with other EU policies Strategic approach in rural development programming Improved monitoring and evaluation of policy