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Measure of time Talking of the CAP future, generally
the period 2014...is meant 2007-2013 has in essence been
settled, now “health check” of the implementation of the decisions made in 2003 is in process
2014... can broadly be connected with the budget negotiations for the EU next financial period of 2014-2020
As Einstein has already told 80 years ago:
Common believe is not commonknowledge or actual and/or future reality.
Was Malthus right?
Foodstuffs production opportunities of the world are limited
World population is growing Prices of agricultural products on
record level New agricultural commodities
markets: bioenergy
The statement of Mr. Jeroen van der Veer (CEO of Shell) concerning the world energy situation:
“After 2015, easily accessible supplies of oil and gas probably will no longer keep up with demand.”
http://www.shell.com/home/content/aboutshell-en/our_strategy/shell_global_scenarios/two_energy_futures/two_energy-_futures_25012008.html)
Cereals needed for bioethanol
0
20
40
60
80
100
120
140
160
Mil
lio
n t
on
nes China - maize
Canada - wheat
Canada - maize
EU - wheat
EU - maize
USA - maize
World cereals production (rice excluded) 2016: 1850 million tons
Source: OECD
Quantities not problematic – price problematic
Even with growing biofuel production adequate food supplies can be guaranteed for the world food security
… provided that food will be distributed on equal terms
Food security is not a quantity problem … but depends on purchasing
power, i.e. on incomes and prices
How wealthy are we?
http://www.globalrichlist.com/ Estonian residents - on an average
814,456,058 In the world, more than 6 000 000
000 people
Is invisible hand acceptable when we are talking about food supply
Are net exporters ready to guarantee food supply for export markets in case of failure in their own food production chain?
Wise man don’t keep all the eggs in one basket
Challenges for CAP 2013+
Increasing input prices – energy as fuel, fertilizers etc
Increasing demand instead of supply limiting instruments
Climate change – agriculture as problem and/or solution
Market orientation versus environmental sustainability
Technical challenges Decoupled payments – to whom, why,
common market common approach? Partial coupling for environmental,
social etc reasons Safety net Direct payments versus rural
development (structural actions, agri-environment)
What should be taken into account?
Environment
Biodiversity
GMO Increasein
consumption
Climate change
Non-food agriculturalcommodities
Bioenergy
World food market
CAP
Short review The CAP main elements at the moment
2 pillars De-coupling of support payments Decrease in the impact of market regulation 3 axes of rural development policy European Agricultural Guidance and Guarantee
Fund European Agricultural Fund for Rural
Development
The two pillars of the EU Common Agricultural Policy
Market regulation Rural development policy
I pillar II pillar
Common internal market
- customs duties
- export refunds
- consumption aid
Direct payments
Increase in competitiveness
Agri-environment and landscapes
Rural enterprise and village development
LEADER approach
The EU budget and the share of the CAP in it
In the budget of 2008, expenditure on agriculture and rural development constitutes 53,8 billion EUR or 41,67% of budget volume.
Thus, expenditure on agriculture and rural development makes up only 0,43% of the EU gross national income.
The two pillars of the EU Common Agricultural Policy
Market regulation
Rural development policy
I pillar II pillar
80%
20%
Proportion of the I pillar (direct payments) and the II pillar support payments from the EU budget (estimate – data of 2006)
0
2
4
6
8
10
12
14
16
BE CZ DK DE EE IE GR ES FR IT CY LV LT LU HU MT NL AT PL PT SI SK FI SE UK BG RO EL-27
The two pillars of the EU Common Agricultural Policy in Estonia
Market regulation Rural development policy
I pillar II pillar
50% 50%
Present direct payments
Single Payment Scheme Entitlements Regional and historic approach
Single Area Payment Scheme Partially coupled support payments
Article 69 Cross Compliance
The CAP future issues
Principles of direct support payment Public good? Entitlements? Cross compliance has come to stay –
expand? If and how many coupled direct
payments? Integration of direct payments and LFA
Direct payments and LFA
Contradiction?
€
Low fertility
Poor climatic conditions
High agricultural intensity
LFA
Direct payments
Market intervention
Export subsidies shall be phased out by 2013
Limitations on production shall be phased out by 2014 (milk quota will be the last)
Support payments coupled with the production of a certain impact
The CAP II pillar 2007-2013 rural development policy
Agricultural fund for rural development
Single programming, financing, monitoring and auditing
I
Competitiveness
II
Environment and land use
III
Economic diversification and quality of
life
LEADER
Rural development 2007-2013
3 axes?
Competitiveness of agriculture and forestry > 10%
Agricultural landscapes and environment > 25%
Diversification of rural enterprise and village development > 10%
LEADER approach
LEADER – a method to improve local initiative or waste of administrative costs?
LEADER – minimum share > 5%
Aim and some “keywords” To increase agricultural productivity by
promoting technical progress, by ensuring reasonable development of agricultural production and by the optimum use of factors of production, particularly labour force Energy efficiency ? GMO ? Decoupled payments ? Entitelments ?? Research and development ? Innovation ?
Aim and some “keywords” To ensure fair standard of living for the part of
the population engaged in agriculture, primarily by the increase in individual earnings of those working in agriculture Non-agricultural living standard in rural areas ? Decoupled payments, entitelments – farmers or
landowners ?
Aim and some “keywords” To stabilise markets
Stabilizing for which direction? To avoid sharp decreases or increases?
To guarantee food security Export taxes?
To secure reasonable consumer prices How ?
Aim and some “keywords” Reduction of negative environmental impact of
agriculture Strong agri environmental programmes ? Cross-compliance
CAP first pillar needs ideolodical and financial revision
SPS – LFA Direct payments coupled with public
good Abolishing historical reference which
defines direct payments envelopes according of intensity of certain commodities production between member states
Direct payments and LFA
Contradiction?
€
Lower public good High public good
Direct payments with integrated LFA
CAP second pillar should be stronger
Increasing need for stong agri-environmental programmes
Real structural development Landscape management and biodiversity Local food chains Low input agriculture Research and development Innovation Sustainable bioenergy
The CAP II pillar 2013+ rural development policy
Agricultural fund for rural development
Single programming, financing, monitoring and auditing
I
Competitiveness
II
Environment and land use
III
Economic diversification and quality of
life
LEADER
Rural development
Balance between I and II pillar
The balance should move toward II pillar
But – strict rules for limiting cofinancing and additional state aid to minimize unfair competition