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State of play in the CAP reform debate

25 February 2012

During the EU Agricultural Council meeting in January 2012, discussions were held on the EC proposals for further reform of the CAP. According to EU reports, ‘the debate focused on the exceptional measures in case of market disturbances and on the proposed measures aiming at a more competitive and well functioning food supply chain’.

Most member states considered that the EC proposal on exceptional measures moved ‘in the right direction’. However, some member states highlighted the need for a tight definition of the exceptional circumstances that would justify the deployment of funds from the proposed emergency facility. Other member states representatives ‘questioned the financing of this crisis fund’.

Many member states backed EC proposals for reinforcing producer organisations as a means of ensuring a better balance in bargaining power along supply chains. However some member states felt this should remain ‘voluntary’ and should avoid distorting competition.

In the EU report, ‘many countries mentioned that the end of sugar quotas scheduled for 2015 should be postponed to allow the sector to better adapt.’ This echoed calls from EU farmers’ organisation Copa-Cogeca for EU sugar production quotas to be extended until at least 2020.

Addressing the Oxford Farming Conference in January 2012, the UK Agriculture Minister, Jim Paice, called for a CAP which increasingly supported investment, innovation and research, and a longer-term vision of a CAP where there was no longer a single payment scheme. While this was not foreseen within the current planning, the Minister thought this should be achieved ‘eventually’.

In February 2012, a joint Franco–Spanish statement was issued, declaring that both governments ‘will not accept’ any budget overhaul that fails to preserve the EU’s current level of farm spending. Specifically they argued that it was ‘essential to maintain the CAP budget at least at the level of commitments reached at the end of the current programming period’. This is seen as being in line with current EC proposals, while calling for careful phasing in of payment convergence. The joint statement further questioned the EC approach to ‘the greening of the CAP’ (integrating environmental considerations), including the proposal to link 30% of the farm payment to the introduction of ‘greening measures’. It favoured the deployment of more targeted payments to achieve many of the environmental objectives that the EC had outlined.

Editorial comment

There remains no consensus as yet on the overall package of reform measures tabled by the EC. Consensus only appears to be emerging in areas where policy initiatives can be taken without significant budgetary implications (e.g. on strengthening the functioning of supply chains).

Recent debates need to be seen against the background of the Spanish government’s rejection in October 2011 of EC proposals for reform of the direct aid payment system and its general expression of ‘disappointment’ with the EC proposals, and the UK-led group which favours more fundamental reforms.

Of greatest immediate concern to the ACP are the proposals for the abolition of the sugar production quotas. Here, the fears of a number of member states (mainly Bulgaria, Finland, Greece, Italy, Portugal, Romania, Czech Republic, Hungary, Ireland, Latvia, Lithuania, Slovakia, Spain and Sweden, where 15.8% of production takes place in high or very high cost production zones) over the impact of quota abolition on domestic sugar beet production run up against the commercial realities of the operation of the current sugar regime, which has been generating sugar shortages and price increases to the detriment of sugar-based, value-added food processing companies across the EU.

It is unclear how this debate will be resolved. The EC remains committed to its initial proposals, with the sugar section of the December 2011 EC report on prospects for EU agricultural markets and income being based on the assumption that the current system of production quotas would lapse by 2015 (i.e. fall away, if no consensus on its renewal emerged).

Overall, the debate on the overall level of financing to be made available will have a critical impact on the final structure of reforms agreed and the external effects of the deployment of CAP instruments.

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