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The Common Agricultural Policy The Common Agricultural Policy Reykjavik, 22-6-2011 Directorate General for Agriculture and Rural Development Budget Introduction Pillar II – rural development Structure of the presentation Structure of the presentation 2
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The Common Agricultural PolicyThe Common Agricultural Policy
Dušan Chrenek, Head of Unit for Enlargement Directorate General for Agriculture and Rural Development
European Commission
Reykjavik, 22-6-2011
Directorate General for Agriculture and Rural Development 2
Structure of the presentationStructure of the presentation
Introduction
Pillar I - agricultural markets and direct payments
Pillar II – rural development
Budget
Closing remarks
Directorate General for Agriculture and Rural Development 3
EU agricultureEU agricultureEU Iceland
Number of farmers 13.5 million 3.366Agriculture as % of GDP
1,6% 1,3%
Agriculture as % of employment
5% 2.6%
Production (000 head): Sheep Cattle (dairy) Pigs
91.15488.837 (24.000)
153.067
45972 (26,2)
4Agricultural tradeEU agricultural imports from ISEU agricultural exports to IS
Total Export : 90.6 billion36.7 mio euro 99.9 mio euro
Land (UAA; 000 ha) 178.813 129
Directorate General for Agriculture and Rural Development 4
Initial measures
4
Foundations of the CAPFoundations of the CAP
Community preference
Financial solidarity
Initial principlesMarket unity
Price support measuresIntervention buying
Import tariffsImport quotasExport refunds
Directorate General for Agriculture and Rural Development 5
Origins and principlesOrigins and principles
The CAP’s objectives
a) Increase agricultural productivity b) Ensure a fair standard of living for the
agricultural communityc) Stabilise marketsd) Assure the availability of suppliese) Ensure that supplies reach consumers at
reasonable prices
Pillar IPillar I
Agricultural markets and Agricultural markets and direct paymentsdirect payments
Directorate General for Agriculture and Rural Development 7
11stst Pillar: markets and income support Pillar: markets and income support
Market support (Council Regulation 1234/2007)– Price support via public storage, private storage, production limitations, import tariffs,
export refunds, producer organisations, wine envelope, disturbance clause, …– Reference prices (≠ intervention price and ≠ guaranteed price!)
– Private storage: (mandatory) butter and (optional) white sugar, olive oil, beef pig meat, sheep meat
– Production limitations: milk, sugar, wine (until 2015), potato starch (until 2012)
reference price (euro/tonne) intervention period (months) quantitative limit (tonnes)wheat 101,31 7 3.000.000other cereals 101,31 7 0rice 150,00 4 0beef/veal 2224,00 12 unlimitedbutter 2463,90 6 30.000SMP 1698,00 6 109.000pigmeat 1509,39
Directorate General for Agriculture and Rural Development 8
Development of market support since 1990Development of market support since 1990
Abandon structural nature of support towards use only in times of severe market difficulties by:– Reduction of guaranteed prices– Intervention limited in time and quantity, turning guaranteed
prices into reference prices.– Gradually moving away from micro management of
individual markets.– More market: more price volatility.
Directorate General for Agriculture and Rural Development 9
Cumulative % reduction in price support from 1991 to 2009
-100
-80
-60
-40
-20
0
Soft wheat Durumwheat
Beef Rice Butter SMP Sugar
In nominal terms In real terms
Reductions in EU price support, bringing EU prices in Reductions in EU price support, bringing EU prices in line with world prices line with world prices
Source: European Commission – DG AGRI
Directorate General for Agriculture and Rural Development 10
11stst Pillar: market and income support Pillar: market and income support
Income support (Council Regulation 73/2009)– Basic direct payment linked to eligible land– Support and stabilize farmers’ incomes making them less vulnerable to fluctuations in
prices– Farmers production decisions more market driven than subsidy driven – Contribute to ensuring the longer term economic viability of farms
Subject to meeting certain requirements (cross compliance) – Areas covered: public-, animal- and plant health, environment and animal welfare.– Contribute to rendering farming sustainable and providing basic public goods
Directorate General for Agriculture and Rural Development 11
0
100
200
300
400
500
600
700
Aus
tria
Bel
gium
Bul
garia
Cyp
rus
Cze
ch R
epub
lic
Den
mar
k
Est
onia
Finl
and
Fran
ce
Ger
man
y
Gre
ece
Hun
gary
Irela
nd Italy
Latv
ia
Lith
uani
a
Luxe
mbo
urg
Mal
ta
Net
herla
nds
Pol
and
Por
tuga
l
Rom
ania
Slo
vaki
a
Slo
veni
a
Spa
in
Sw
eden
Uni
ted
Kin
gdom
EU
-27
EU
-15
EU
-12
EUR/ben.EUR/ha
0
8000
16000
24000
32000
40000
48000
DP net ceilings fully phased-in (EUR/ha)DP net ceilings fully phased-in (EUR/beneficiary)EU flat rate
Average payments per ha (UAA) and per beneficiaryAverage payments per ha (UAA) and per beneficiary
Source: European Commission – DG AGRI
Directorate General for Agriculture and Rural Development 12
Share of Direct Payments and total subsidies in agricultural Share of Direct Payments and total subsidies in agricultural income income
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Share of DP in agricultural income Share of total subsidies in agricultural income
Source: European Commission – DG AGRI
EU-15 EU-12
Directorate General for Agriculture and Rural Development 13
EU developments in agricultural incomeEU developments in agricultural income (agricultural income/AWU in real terms)
( Index 2000 = 100 )
60
70
80
90
100
110
120
130
140
150
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
EU-15
20
40
60
80
100
120
140
160
180
200EU-12
Source: Eurostat
EU-15
EU-12
Pillar IIPillar II
Rural developmentRural development
Rural development policy 2007-2013 (€ 96.2 billion):
Objectives and Priorities
« LEADER Axis » local development / governance
Axis 1: Com-petitiveness :
Axis 2: Environmentand Land
Management :- Eco-systems (Natural Resources/ Biodiversity /Habitats)
- Landscape Amenities- Climate Change
Axis 3: Diversification and quality of life :
EAFRD: European Agricultural Fund for Rural Development
- Human and physical capital- Innovation- Knowledge-transfer- IT technologies
- Diversification of economic activities
- Quality of life
(€ 34.4 billion)* (€ 18.1 billion)(€ 43.7 billion)
* Figures in parantheses are indicative expenditures per axis 2007-13 as programmed by all 27 Member States including expenditures for technical assisstance and DP Romania and Bulgaria
Directorate General for Agriculture and Rural Development 16
The three 2007-2013 RD thematic axes in the MSThe three 2007-2013 RD thematic axes in the MS
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%A
ustri
a
Belg
ium
Bulg
aria
Cypr
us
Czec
h Re
publ
ic
Den
mar
k
Esto
nia
Finl
and
Fran
ce
Ger
man
y
Gre
ece
Hun
gary
Irel
and
Italy
Latv
ia
Lith
uani
a
Luxe
mbo
urg
Mal
ta
Net
herla
nds
Pola
nd
Port
ugal
Rom
ania
Slov
akia
Slov
enia
Spai
n
Swed
en
Uni
ted
Kin
gdom
EU-2
7
EU-1
5
EU-1
2
Axis 1: Competitiveness Axis 2: Environment and land management Axis 3: Quality of life and diversification
Source: European Commission – DG AGRI
Share of each axis of total EAFRD expenditure EU-27*
Axis 1: 35.8% Axis 2: 45.4% Axis 3: 18.8%
* Including funds allocated for Technical Aid and DP ROM
BudgetBudget
Directorate General for Agriculture and Rural Development 18
EU Agricultural Budget 2011EU Agricultural Budget 2011
• Total budget € 58 billion
• Direct payments: € 40 billion• Market management: € 3.5 billion• Rural Development: €14.5 billion
• Council Regulation 1290/2005 on the financing of the common agricultural policy which regulates:
• Paying agency ;• Controls;•“financial discipline” to respect the ceiling for direct payments and market management (in 2013: € 44.9 billion).
Directorate General for Agriculture and Rural Development 19
CAP expenditure and CAP reform pathCAP expenditure and CAP reform path(2007 constant prices)(2007 constant prices)
0
10
20
30
40
50
60
70
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
% GDPbillion €
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
0.7%
Export subsidies Other market support Coupled direct paymentsDecoupled direct payments Rural development % of EU GDP
Source: European Commission - DG AGRI. 2009 data are provisional
EU-10 EU-12 EU-15 EU-25 EU-27
Directorate General for Agriculture and Rural Development 20
0%10%20%30%40%50%60%70%80%90%
100%
Den
emar
ken
Ned
erla
nd
Bel
gië
Fran
krijk
Grie
kenl
and
Dui
tsla
nd
Ver
enig
d K
onin
krijk
Spa
nje
Italië
Ierla
nd
Zwed
en
Luxe
mbu
rg
Finl
and
Cyp
rus
Hon
garij
e
Oos
tenr
ijk
Por
tuga
l
Tsje
chië
Pol
en
Lito
uwen
Slo
wak
ije
Slo
veni
ë
Est
land
Letla
nd
Bul
garij
e
Roe
men
ië
Mal
ta
% van de totale uitgaven
Eerste pijler Tweede pijler
Source: European Commission - DG Agriculture and Rural Development
Division CAP expenditure between two pillarsDivision CAP expenditure between two pillars (in 2009)(in 2009)
Directorate General for Agriculture and Rural Development 21
Total indicative Rural Development expenditures for EU-27 Total indicative Rural Development expenditures for EU-27 (2007-2013)(2007-2013)
• EAFRD: € 96.2 billion*41.4%
• National co-financing: € 57.3 billion**24.7%
• Private expenditures: € 66.2 billion**28.5%
• National measures: € 12.4 billion**5.3%
• TOTAL: € 232.1 billion100.0%
* This figure includes the additional amounts from Health Check and Recovery Package ** These figures are based on the revised programmes approved end of December 2009.
Directorate General for Agriculture and Rural Development 22
The CAP todayThe CAP today
A substantially reformed policy…
• Structured in two complementary pillars
• Farm support mainly decoupled and subject to cross-compliance
• Role of market intervention mechanisms significantly reduced to safety net level
• Rural development policy strengthened with funds and new policy instruments
… better performing…
• Surpluses belong to the past
• Competitiveness improved
• Improved transfer efficiency
• More sustainable farming
• Integrated approach for rural areas
• Contribution to EU budget stability
… and resulting in a territorial and environmentallybalanced EU agriculture
Directorate General for Agriculture and Rural Development 23
The CAP in one clickThe CAP in one click
http://ec.europa.eu/agriculture/index_en.htm
http://ec.europa.eu/agriculture/capexplained/sustain/index_en.htm
Directorate General for Agriculture and Rural Development 24
Thank you for your attention.Thank you for your attention.