19 July 2002

Fischlers CAP plans under fire

By Philip Clarke

Europe editor

EU FARM commissioner, Franz Fischler, faced a barrage of criticism over his CAP reform plans when agriculture ministers debated his mid-term review ideas in Brussels this week.

The most common complaint was that the package went way beyond what the commission was mandated to produce by the 1999 Berlin summit.

"Farmers and the food industry were given a policy framework for seven years by the Agenda 2000 agreement," said Irish farm minister Joe Walsh. "They have legitimate expectations that there would be policy stability over that seven-year period."

Belgian minister, Annemie Neyts, agreed, adding that EU farm spending is well within the ceilings imposed in Berlin. "There are no financial reasons that would justify a full-scale review now."

But Dr Fischler defended his plans to decouple subsidies from production and cut up to 20% from direct payments to boost rural development. "The Berlin decisions did not rule out any new proposals, they merely set the minimum scope of the mid-term review," he said. It was imperative to respond to the growing loss of public confidence in the current CAP.

It was also far from certain that the budgetary ceilings would be respected in future. Market perspectives were less optimistic than they had been and the stronger k was making it increasingly likely export refunds would have to be stepped up.

Despite the criticisms, Dr Fischler found a ready backer in the form of DEFRA secretary, Margaret Beckett. "Our farmers are dissatisfied and our citizens have made it clear they want a different kind of farming policy in Europe," she told the farm council.

As for the details of the mid-term review, she said she supported the concept of boosting rural development by cutting farmers direct aids (modulation), though there was scope to widen the range of schemes eligible for such funding.

But she did call for a redistribution of funds to overcome the "serious and damaging imbalance in the current allocation". Despite farming 12% of the EU area, the UK gets just 3.5% of the EU rural development budget.

Mrs Beckett said she was "very disappointed" the commission had not moved to abolish milk quotas and regretted that the package did little to save money.

"Our long-held preference has been to make direct payments degressive, scaling them down year on year and putting some, not all, into rural development."

She supported the idea of de-coupling payments. "This would allow farmers to make business decisions based on a realistic appraisal of market opportunities."

But some ministers warned that the policy of setting a single payment per farm based on historic receipts risked putting the industry in a straitjacket. "We have already had very bad experiences doing this with milk quotas," said Luxembourg minister, Fernand Boden.

His Italian counterpart, Giovanni Alemanno, added that it would make it difficult for new entrants to come into farming, or for new areas to be cultivated. &#42

DEFRA secretary, Margaret Beckett, talks "mid-term review" with Austrias Wilhelm Molterer (left) and Greeces Georgios Drys in Brussels this week.

"Cross compliance will be very complicated to implement and will introduce extra cost. Rather than seeing greater simplicity in the CAP we are seeing greater complexity." Miguel Arias Cañete Spain

"We can agree to a stronger second pillar, but farmers incomes must be secured and, if possible, improved. Funding should not be based on cutting direct payments, but by stricter (financial) controls and a maximum ceiling on the amount individuals can receive." Annemie Neyts Belgium

"The one thing that is missing is cost savings. We must phase out the current system of price supports so that production incentives and export subsidies are eliminated." Margareta Winberg Sweden

"Based on our own experience (of modulation) the requirement for co-financing is going to place a burden on national budgets that will result in failure." Hervé Gaymard France

"Decoupling aid payments will change the balance (in the WTO), showing from the outset that the EU is willing to cave in to the demands of our main negotiating partners." Hervé Gaymard France

"The 20% (rate of modulation) proposed could threaten the very existence of some farms or even regions. But we welcome the redistribution of modulated funds (from one country to another)." Armando Pinto Portugal

"Farming in the new Lander of eastern Germany involves very large farms for historic reasons. It is wrong to discriminate against them (by capping payments at k300,000)." Renate Künast Germany

"We attach a lot of importance to degressivity, (cutting direct payments over time), to give financial leeway to pay for enlargement." Renate Künast Germany

"Decoupling does not end the current discrimination in arable payments. Farmers in the best areas will continue to get the most support, and vice-versa. This is neither logical nor justified." Jari Koskinen Finland

"A compulsory farm audit is a problematic development as it would lead to considerable expense that would have to be borne by farmers." Wilhelm Molterer Austria

"The commissions proposals to decouple direct payments are bold and imaginative. They would, at a stroke, remove many of the incentives to over-production with the consequent risks of environmental damage that exist in the current system." Margaret Beckett UK

"There is doubt as to whether compensation for any further cuts in the cereals intervention price can be justified." Margaret Beckett UK

"To complicate modulation with franchises and ceilings risks making the system unworkable as well as discriminating unfairly against some of Europes most competitive farmers." Margaret Beckett UK

"We need a fairer sharing out of aid between farmers, so we agree to a ceiling being put on aid. But we would not support a redistribution (of modulated funds) based on a regions prosperity." Fernand Boden Luxembourg

"What has been presented is courageous and visionary. For too long EU farm policy has been supply sided. We need to produce for markets, not warehouses and stores." Laurens-Jan Brinkhorst Holland

"Modulation involves a reduction in direct payments to farmers. These direct payments are compensation for price decreases… some of which have yet to be introduced. I cannot see how we can ask farmers to accept such reductions." Joe Walsh Ireland

"It will be hard to explain why farmers should still get aid, even if they stop producing altogether. Fully decoupled payments would be a step on the road to dismantling the whole CAP." Giovanni Alemanno Italy

"Enlargement of the EU should be achieved by increasing the total budget, not by cutting existing payments. The CAP should not be held hostage to enlargement." Georgios Drys Greece

"Any money generated by modulation should be returned to the same country." Poul Ottosen Denmark