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Farming-out the Money

  • October 27th, 2006
  • Posted by 7thmin

fischer-boel-reduced.jpgA former Danish Agriculture Minister with a commitment to efficient business practices is campaigning to see through the reform of Europe’s cumbersome, expensive and always controversial Common Agricultural Policy – the CAP.

Mariann Fischer Boel is the European Commission’s Agriculture and Rural Development member, an executive responsible for annual spending in the order of EU 50-billion (A$82.6-billion; Decrates).

The budget figure is at the heart of the drive for renovation, because, as the Commissioner avers, the European Union is committed to substantial capping of its expenditure from 2013:

“If I have recently begun speaking about what the CAP could look like after 2013, this is not because I want to whip up an atmosphere of permanent change … but that if further change is probably necessary we need to think about it now.”

In response to that sentiment she has been following a hectic schedule of speech-making and brain-storming with allies, advisors and clients in agriculture.

(Read the full article on agri-politics, in EUAustralia Online, Features – Commentary)

Most recently, over three hundred were called together for a two-day, invitation-only conclave in Brussels (3-4.10.06), a conference on Simplification of the CAP: 20 academics; 60 representatives from EU institutions such as the European Parliament or Commission; 60 from farmer organisations mostly current and active producers; 40 non-farming non-government organisations (NGOs) like environment, trade or industry groups; 30 specialist media, and 90 from EU member state governments or regions.

Imperative for change …

The opening premise put to this gathering was an imperative:

However defensive the language, it said the system was too costly and unpopular, and must change: “The role of the CAP is to provide a common set of over arching rules …. Over time the CAP became more and more complex in certain areas. The complexity of certain rules could jeopardise the sound application of the policy. It also makes it more difficult to ensure the sound expenditure of EU funds and this has played a part in diminishing public understanding of CAP measures.”

Paying for change …

The Commissioner has been more blunt, on occasions citing opinion polls that indicate only heavily qualified public support for farm industries, with an aversion to the old model of production-based subsidies:

“Most European citizens are still prepared to pay public money to farmers – but they want to see it spent well. At a time when other economic sectors are having to make huge restructuring efforts, our taxpayers are not willing to hand over large sums to agriculture simply to hide a lack of competitiveness,” she said on 17 October last.

The answers:

In a keynote Conference address the Mrs Fischer Boel outlined a program for the coming seven years:

• Sectoral reforms, like new systems already set up for sugar and or under discussion for wine, bananas and fruit and vegetables.
• A detailed review of the CAP aimed at reformative change, described as a “health check” on the CAP, in 2008. At a media conference the Commissioner said that in using the term “health check”, she had been looking for non-alarmist language, an alternative to terms like “CAP reforms”.
• Agriculture’s place in the coming general review of the whole European Union budget. This was planned for “sometime around 2009″, and would include “reflections on the CAP’s longer-term future beyond 2013″.

The spending issue brought discussion back to the budget-chopper set to start up in 2013. The EU is marching in step with liberal doctrine that eschews hefty government expenditure; sentiment in 2006 is towards lean budgeting, and the agriculture sector is being told by its chief executive, and friend, to prepare good arguments:

“For me it is important that these discussions on the CAP are ‘policy-driven,’ she said.

“Of course when formulating the new policy we have to bear in mind that we won’t have the same amount of money available for its financing .

“In other words: we need to create or reshape our policy tools in a way that they are at the same time efficient in maintaining a competitive European agricultural production, simple in order to keep the administrative burden … to an absolute minimum, and less costly in order to respond to budgetary restraints.”

Current changes …

I n the meantime changes already in train, to “simplify” the CAP, are structural, well beyond ordinary housekeeping.

Work is forthcoming on the consolidation of the 21 Common Marketing Organisations (CMOs) in the agricultural sectors, into a single CMO; and also on a declared Action Plan currently containing twenty proposals for administrative change.

• A single CMO.

According to Commissioner Fischer Boel, the single organisation will set out marketing politics in one clear legal document. It will aid transparency, and replace COMs that have “multiplied to the point where only experts can use them with confidence”; but, with “no deletions, no additions” to market policy instruments contained in the present structures.

She hopes to table a proposal for creating the single CMO by December this year.

• Action Plan.

Twenty simplification proposals have been put forward to “make life easier for framers, businesses and national administrators, without change of fundamental policy”. More proposals are being invited.

The Commissioner provided an example with olive oil production, suggesting a bar on farmers using trees planted after 1998, to obtain support not coupled to production, had become redundant. Similarly, decoupling had removed the need for farmers to keep on meeting listed conditions when producing for dried fodder.

Goodbye quotas?

Some proposals and ideas in the area of policy will be more discomfiting for farm lobbies and others resistant to change in the CAP.

“Some say we should abolish production quota systems.

“This would give farmers in some sectors freedom to produce whatever quantities the market would pay for, without worrying about artificial limits …”, Mrs Fischer Boel said.

She foreshadowed further development of the Single Payment scheme, the consolidated payments arrangement introduced as part of the reform of the CAP in 2003, for processing direct payments under decoupling, (where payments no longer vary in line with the amount of agricultural production).

It had been drawing in 90% of payments but exceptions should be pulled back.

“There are ‘standard’ entitlements, and those with special conditions attached – related to set-aside, for example.

“I see a strong case for sweeping aside the variations and creating a single type of entitlement.

The end of set-aside?

It could for instance mean the end of set-aside, which is a relic from the days when cereals subsidies were linked to production or (later) to planted area. The end of set-aside would lift a heavy burden form the shoulders of farmers and administrators alike.

“This is only a question at this stage not a clear conviction.”

Set asides were the famed device for paying producers to exclude land from cultivation.

Not about scrapping the CAP …

While there are repeated assurances in the course of the current campaign, that it is “not about scrapping the CAP”, the language is meant to persuade against resistance.

Journalists were told recalcitrant voices at the Simplification conference had been led to understand they would “not be able to reopen aspects of the CAP they were not happy with”; in a political world, new approaches should not be undermined, as “we depend on our taxpayers.”

Goodbye to exceptions?

All were told:

“Simplification of the CAP is a worthy goal, which offers very substantial benefits. But there is a price tag: In a simple CAP, exceptions to the rule must be just that – exceptions. They cannot be the norm. .. Here’s a hard truth: we can’t have our cake and eat it too. We can’t both keep things simple and also hand out exceptions to anyone who asks“.

Telling hard truths can be necessary and good politics.

Commissioner Fischer Boel, 63, is an experienced political hand, a member of Denmark’s majority Liberal party, wedded to free market ideologies, though not so free as to go too far denying benefits to faithful constituents.

To this politician with early background in the pump-priming world of local politics, looking after constituents must be a prime concern, hence the repeated and public assurances now, that the CAP itself will not be getting closed down.

Working the crowd …

As a politician not an actual farmer, as the saying goes “with real cow shit under their boots”, she does have part interests in some farming concerns in Denmark, (and has weathered a few political challenges over that co-incidence of interest).

Two weeks after bringing together the EU network at Brussels she was urging a major farmers’ gathering – the Congress of European Farmers, at Strasbourg, 17.10.06 – to take on board that “competitiveness” was not a dirty word.

A “new-style CAP” would provide a handy framework for more independent farming, and – here is the selling-point – there would still be good money on hand in the way of support.

The Single Farm Payment scheme would bring farmers benefits from decoupling:

“It leaves them free to produce whatever they can farm most competitively, without worrying about a possible impact on their cheque from the CAP.”

There would be requirements to meet mandatory standards of environmental care, animal husbandry and public health, but these were a public good, and so there would be compensation.

Level playing fields …

In fact, some sleight of hand enters the argument at this point.

“Third country farmers” are not bound by the same European standards, and so – getting some spin from a term borrowed from the actual free trade parties at the World Trade Organisation (WTO) – it is suggested that special assistance will “level the playing field“.

“It is logical that public money should cover the extra costs which these obligatory standards impose on our farmers, because it is the public that benefits from those standards – not, primarily, whoever buys the product,” said Politician Fischer Boel.

“By covering these costs, the new-style CAP levels the playing field on which our farmers compete with those outside the European Union.

“This approach is fair; it falls within the WTO’s Green Box of non-trade-distorting domestic support; and I believe it is the basis on which our farmers will accept globalisation.”

A little odd “logic” was never out of place in rural politics.

Rural Development …

After direct payments, help is offered also in the form of a Rural Development package, governed by an EU Regulation already in place, to apply from January next year through to the end of that year of reckoning – 2013.

“The best-known traditional measures to maintain competitiveness will still be there,” the farmers were told.

“There will be support for modernising holdings and improving farm infrastructure, for example.”

Rural development also will have its special circumstances and special pleading, as with farmers in some regions “always hindered by geographical handicaps”:

“Do we turn out backs …? No. They will be part of the competitiveness agenda, like everywhere else. But we must also do everything we can to soften the impact of their handicaps …”

Budgets re-weighted …

In fact, direct aids have been advancing as a percentage of the overall agricultural budget since 1992, just after the first “decoupling” reforms were pushed through.

Rural development then adds a significant margin, so that by 2002 those two forms of assistance were making up over 75% of the total – displacing the traditional export subsidies and market support.

The whole available budget actually had continued to grow, not beginning to contract until later years as public spending was reduced across the full spectrum.

The standard bearer of the new CAP has set out to be match-maker in an odd marriage, subsidised agriculture and the ideology of the market:

“As far as possible, I want life to be predictable for farmers, even in an unpredictable world. I understand that, in order to be competitive, they need as much stability as possible, because plans must be drawn up and investments must be made.”

Reference:

Mariann Fischer Boel, Simplification of the CAP: Meeting the Challenge; Conference “A Simple CAP for Europe” SPEECH/06/556. Brussels, 3 October 2006.

Mariann Fischer Boel, Promoting the Competitiveness of European Agriculture, Congress of European Farmers SPEECH/06/605. Strasbourg, 19 October 2006.

European Commission, Commissioner Mariann Fischer Boel: http://ec.europa.eu/commission_barroso/fischer-boel/index_en.htm (25.10.06)

European Commission, Agriculture and Rural Development: http://ec.europa.eu/agriculture/events/simplification/index_en.htm (26.9.06)

The Common Agricultural Policy Explained, EU Directorate General for Agriculture, October 2004. ISBN 92-894-8204-4

Wikipedia, Mariann Fischer Boel: http://en.wikipedia.org/wiki/Mariann_Fischer_Boel (25.10.06)

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