Ⓒ olof s. communication on the future of the cap “the cap towards 2020: meeting the food,...
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Ⓒ
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
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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
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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
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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
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The CAP today – budget relevance
RuralDevelopment
Direct payments
Markets
Pillar I
Pillar II
Modulation
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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
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3. Why do we need a reform?To respond to challenges ahead
Economicchallenges
• Food security
• Price variability
• Economic crisis
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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
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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
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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
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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
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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
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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
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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
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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)
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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
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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
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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
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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
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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
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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
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Thank you