the eu a gro-food system in transition linking the common agricultural policy (cap), r esearch and...
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The EU agro-food system in transition
Linking the Common Agricultural Policy (CAP), research and innovation
Bologna18 September 2013
Pierluigi Londero
DG Agriculture and Rural DevelopmentEuropean Commission
Outline
1. Main drivers of world and EU agriculture
2. Structural change vs. productivity 3. Linking the CAP, Research and Innovation
2
3
The shifting balance of constant needs…
Food
Feed
Fibre Fuel
Population, incomeand demand drivers
Policy challengesin globalised
markets
Supply constraints and productivity
4
Domestic and trade policies (from G-2 and 3 pillars to G-20 and
export bans)
Weather variability increased due to climate change
… and the new realities of agricultural markets
Food supply and demand interaction
Financialisation of
commodities
Energy links (high energy prices,
biofuels)
Domestic and trade policies (from G-2 and 3 pillars to G-20 and
export bans)
Weather variability increased due to climate change
Macro linkages (GDP, interest
rates, exchange rates)
Macro linkages (GDP, interest
rates, exchange rates)
Energy links (high energy prices,
biofuels)
5
Long term commodity price trends19
4819
5019
5219
5419
5619
5819
6019
6219
6419
6619
6819
7019
7219
7419
7619
7819
8019
8219
8419
8619
8819
9019
9219
9419
9619
9820
0020
0220
0420
0620
0820
1020
12
0
50
100
150
200
250
300
350
400
450(World Bank MUV-deflated indices, 2005 = 100)
Agriculture Polynomial (Agriculture) Fertilizers EnergyMetals & minerals
Source: World Bank..
2.Impact on structural change and productivity in EU agriculture
6
The agricultural area has stayed stable
7Source: Eurostat, Farm Structure Survey
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
160,000,000
180,000,000
200,000,000
2005 2007 2010
ha U
AA EU-27EU-15EU-N12
EU-27: -0.05% / year
… but the number of farms in the EU continues to decrease
8Source: Eurostat, Farm Structure Survey
14,482,01013,627,230
12,014,570
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
2005 2007 2010
Num
ber o
f far
ms
EU-27EU-15EU-N12
EU-27: -3.7%/year
And agricultural* employment is still declining, but at a lower rate
9Source: Eurostat, National Accounts* Branch A of NACE R2: agriculture, forestry and
fishing; employment in number of persons
-3.00 -2.93
-2.32
-1.78
-2.24
-1.78
-3.50
-3.00
-2.50
-2.00
-1.50
-1.00
-0.50
0.00
European Union (27countries)
European Union (25countries)
European Union (15countries)
% d
eclin
e in
agr
icul
tura
l job
s (p
erso
ns)/
year
2000-20062006-2012
And labour use in agriculture is declining …
10Source: Eurostat, Farm Structure Survey
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
2005 2007 2010
Annu
al w
ork
units
(AW
U)
EU-27EU-15EU-N12
EU-27: -5.2% / year
In countries most affected by the debt crisis, people try to hold on to their farms
11Source: Eurostat, Farm Structure Survey
-3.67
-2.22
-4.70
-1.70 -1.87 -1.93-2.46
-3.12
-4.00
-5.85
-8.39-9.00
-8.00
-7.00
-6.00
-5.00
-4.00
-3.00
-2.00
-1.00
0.00
% lo
ss o
f far
ms
per
year
(20
05-2
010)
Farms that remain are bigger in both ha UAA/farm…
12Source: Eurostat, Farm Structure Survey
11.9 12.714.3
21.422.3
23.6
5.5 6.07.1
0
5
10
15
20
25
2005 2007 2010
ha/h
oldi
ng EU-27EU-15EU-N12
EU-27: +3.8%/year
… and in economic terms (Standard Output/farm)
13Source: Eurostat, Farm Structure Survey
0
10,000
20,000
30,000
40,000
50,000
60,000
2005 2007 2010
Stan
dard
Out
put (
EUR)
/farm
EU-27EU-15EU-N12
EU-27: +5.2% / year
…but slow down in labour productivity* growth
14
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
60
70
80
90
100
110
120
EU-27EU-15EU-N12
Labour productivity annual growth
1995-2002 2002-2011EU-15 +3.1% +2.1%EU-N12 +4.2%EU-27 +2.2%
* Labour productivity index, 2005=100, 3 year moving average, 2011 = avg(2009,2010,2011), calculation based mainly on the EAA
…while most TFP gain comes from labour productivityand capital productivity decreases in the EU-15
15
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
60
70
80
90
100
110
120
Int. cons. Labour Land Capital TFP
2011 = avg(09/10/11)
…yields are already very high in the EU-15
AT BG DE EE ES FR IE LT LV PL RO SI UKEU
-12-1%0%1%2%3%4%5%
0246810
Cereal yield, avg(09-11) Annual yield growth, btw 00-02 and 09-11
16
Cereals
Milk
AT BG DE EE ES FR IE LT LV PL RO SI UKEU
-12-1%0%1%2%3%4%5%
0246810
Milk yield, avg(09-11) Annual yield growth, btw 00-02 and 09-11
t/ha
t/ha
Still some large margins of improvement of TFP in the EU-N12
17
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
80
85
90
95
100
105
110
EU-15 EU-12 EU-27
And already a higher TFP growth in the EU-12…
18
LV RO SI AT SK PL UK NL BE FR DE IEEU
-15EU
-27-1%
0%
1%
2%
3%
4%
Annual growthbetween 2000-02 and 2009-11
…mainly driven by an increase in labour productivity
19
LV EE LT RO DK CZ HU SK EL SI FI AT BE NL SE PT DE FR UK PL ES LU IT IE EU-
15
EU-
12
EU-
27
-1%
1%
3%
5%
7%
9%
Annual growthbetween 2000-02 and 2009-11
3. Linking the Common Agricultural Policy (CAP), research and innovation
20
21
From linear to complex innovation systems• Old linear model of science push: basic science leads to applied science
which causes innovation and wealth – popular approach in post second world war years. This approach established a link between the flow of new knowledge and economic innovation
• However, innovation often does not come straight from science. Actually, sometimes it comes before science (steam engines and thermodynamics)
• Innovation uses a vast pool of existing knowledge, recent or old, whether it is with scientists or practitioners or in other places
• In this context, Research and Development should not be seen as a process of discovery that initiates innovation but as a problem-solving activity within already-existing innovation processes
• Hence the linear model has to be replaced by complex innovation systems implying a variety of actors interacting in networks
• In agriculture this implies to recognise the importance of various actors, to acknowledge the importance of tacit knowledge, the importance of networks, the role of facilitators of innovation (brokerage activity) and the importance of putting (part of) agricultural research into a problem-solving mode
2222
European Innovation Partnership (EIP)Closing The Innovation GAP
Research
Farming Practice
Interaction
23
EU research in agriculture
• EU funded research represents less than 10% of agricultural research done directly by the Member States
• About €2 bio spent on agriculture and forestry, food chain and biotechnologies in 2007-2013, of which roughly €700 mio for agriculture and forestry
• Proposal by the Commission for 2014-2020 to double the above amount (€4.7 bio for the Societal Challenge 2)
FP 1
FP 2
FP 3
FP 4
FP 5
FP 6
FP 7H20
200.0
10.020.030.040.050.060.070.080.090.0
100.0
Total budget of FP (€ bio, H2020 Commission proposal)
24
Europe 2020 Priorities
Tackling Societal Challenges- Health, demographic change and wellbeing- Food sec., sust. agri., mar. res. & bioeconomy- Secure, clean and efficient energy- Smart, green and integrated transport- Supply of raw materials, resource efficiency
and climate action- Inclusive, innovative and secure societies
Creating Industrial Leadership and Competitive Frameworks
- Leadership in enabling and industrial technologies (Biotechnology,…)
- Access to risk finance - Innovation in SMEs
Excellence in the Science Base- Frontier research (ERC)- Future and Emerging Technologies (FET)- Skills and career development (Marie Curie)- Research infrastructures
Common rules, toolkit of funding schemes
European Research Area
Simplified access
International cooperation
Coherence with other EU and MS actions
EIT will contribute to addressing these challenges
Shared objectives and principles
Framework Programme for Research and InnovationHorizon 2020
25
Horizon 2020Societal Challenge "Food security, sustainable agriculture,
marine and maritime resources & the bioeconomy"
• Sustainable agriculture and forestry
• Sustainable and competitive agri-food sector for a safe and healthy diet
• Unlocking the potential of aquatic living resources
• Sustainable and competitive bio-based industries
• Cross-cutting marine and maritime research
What's new with Horizon 2020?
• Covers research and innovation
• Larger topics, more challenge-based and less prescriptive
• SME instrument
• Financial instruments
• Rules for participation:• 100% of direct costs, 20% of direct cost envelope to cover indirect costs• Up to 100% co-funding in case of primarily research, up to 70% when it is
primarily innovation activities• One project = one rate of funding• All entities participating refunded at the same level (NGOs, Research
Organisations, SMEs, big businesses, farmer organisations, Universities, etc.)
26
Fostering innovation with the EIP
•Rural Development programmes• Cooperation (Article 35), including pilot and demonstration projects "OPERATIONAL
GROUPS"
• Knowledge exchange, training and advisory services
• Business development
• Investments in physical assets, quality schemes, etc.
•European Union Research policy (Horizon 2020)• Basic and applied research enhancing the knowledge base
• Close-to-user activities (farm experiments, demonstrations and pilots)
• Collaborative projects with a "multi-actor approach" and networks
27
Some concluding comments
• Challenges (to be) faced by agriculture call for ambitious research and innovation at national and EU levels
• The new CAP and Horizon 2020 are coming with instruments and resources to contribute to this endeavour
• Innovation is a priority in the new rural development policy. Due attention to the relevant measures by MS is necessary (in particular Article 36 on cooperation)
• AGRI will be directly involved in management of part of the resources of Societal Challenge 2. "Phasing in" in 2014 and 2015
28
29
Thank you for your attention!
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