Transcript CAP -BACKGROUND

CAP -BACKGROUND
• Importance of Agriculture
- size of sector
- relationship to industry
- political and social dimensions
• Agricultural Problem
- price instability (short term)
- falling income (long term)
- distribution of income
- regional aspects
• Possible Solutions
- free market approach
- price supports
- quotas
- deficiency payments
- direct income support
- capital grants and cost subsidies
CAP
• Objectives of CAP
- to increase agricultural productivity
- ensure a fair standard of living for the agricultural
community
- to stabilise markets
- to provide certainty of supplies
- to ensure supplies to consumers at reasonable prices
• Principles of CAP
- Single Market
- Community Preference
- Financial Solidarity
• Financing CAP
EAGGF (FEOGA)
- Guarantee Section
- Guidance Section
FORMER MARKET SYSTEMS
•
70% - Community Produce
- assured minimum prices on internal market
- external protection (import levies)
•
25% - External Protection (Only)
- e.g. poultry and flowers
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Certain Products (Additional Aid)
- e.g. wheat and olive oil
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Cotton, Tobacco and Oilseeds
- subsidies on inputs
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Flat-Rate aids
- flax, hemp, hops, silkworms and seeds
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Quota System
- applied to sugar
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Unsupported Products
- small range such as potatoes and other vegetables
GUIDANCE SECTION
• Supports investments which improve the competitiveness
of farms
• Schemes that improve processing and marketing and
forestry products
• Schemes that promote the non-agricultural use of farmland
• Schemes that protect the environment or develop
afforestation
- LEADER scheme introduced 1991
- incorporated since 1988 in Structural Funds
1992 REFORMS
Five Objectives:
• To maintain the Community's position as a major agricultural producer
and exporter by making farmers more competitive
• To bring production down to levels in line with demand
• To focus income support for farmers where it is most needed
• To encourage farmers to remain on the land
• To protect the environment and develop the natural potential of the
countryside
- price cuts linked to withdrawal of land from production
MAIN MEASURES (1992)
Price cuts for key products linked to withdrawal of land from
production. Farmers directly compensated for loss of income
• Cereals prices reduced by 29% over 3 years 93/94
- land to be taken out of cereals production each year in line with
forecast demand. In first year to be 15% - does not apply to smallest
of EU cereals farmers
Full and direct compensation for loss of earnings
• Beef prices cut by 15% over 3 years
- Cattle on open land to receive extra premiums and existing premiums
to be increased
• Conservation measures, improved pensions etc.
AGENDA 2000
• Concerned with impact of accession of Central and
European countries to the EU
• Major implications for CAP financing (agriculture is
especially important in these countries)
• Price increases could stimulate overproduction in new
accession countries
• Further price reforms necessary with shift to direct income
support and rural development and environmental policy
• Obvious implications for Irish agriculture
AGENDA 2000 AND RECENT REFORMS
Profound questions raised by prposed entry of 10 new countries (Czech
Republic, Estonia, Hungary, Poland, Slovenia, Slovakia, Cyprus, Latvia,
Estonia Lithuania and Malta) to EU e.g. cost to EU and degree of
compatibility required before entry
•
Such enlargement would lead to an increase of more than 50% in the
agricultural land of the EU and an effective doubling of the agricultural labour
force
•
Commission approach is to concentrate on further cuts in intervention prices
for cereals, beef and milk, a continued switch to direct income supports and
further structural adjustment in agricultural sector with a more
environmentally friendly approach
•
Explanation of terms decoupling, modulation and degression
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The intention is that natural growth in the budget (in the region of 2.5% pa)
will enable agricultural financing to be maintained within an overall limit of
1.27% of member states income
•
However this depends on a number of conditions being met and of course
additional problems may attach to further enlargement
LATEST REFORMS
In June 2003, EU farm ministers adopted a fundamental reform of the
Common Agricultural Policy
•
Key elements
- a single farm payment for EU farmers independent of production,
though limited coupling payments may be preserved
- payment will be linked to respect for environmental, food safety and
animal and health issues
- strenghtening of rural development schemes
- a reduction in direct payments (modulation) for bigger farms
- a mechanism to ensure that farm budget is not exceeded till 2013
- revision in market policies with substantial price cuts for milk and
cereals