CAP: vision for the future

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Agricultural reform in Europe 2013 and beyond
Ministry of Agriculture LATVIA
May 14, 2008 Tallinn
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CONTENTS

• CAP in future
• Basic principles
• Vision and objectives
• Possible policy instruments

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CAP in future Basic principles of policy

• SUSTAINABLE
• MARKET ORIENTED
• COMPETITIVE
• REGIONAL DIFFRENCES
• PUBLIC GOODS

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CAP in future VISION

• Agriculture appreciated by general public
• Rural economy economically active and knowledge
  based.
• Viable rural holdings with or without support
• production according to market demand and
  climatic conditions
• increasing added value and shifting from quantity
  to quality

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CAP in future VISION

• Prosperous people in sustainably populated
  countryside of Latvia
• development of capacities of rural people
• sustainable management - rural natural resources
  and landscape
• development of rural living environment
• Promoting entrance of young farmer in
  agri-business with a view of improving the aged
  structure of farm owners

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CAP in future OBJECTIVES

• Global competitiveness
• Doha Round should not lead to a further reform of
  the CAP
• Green box provisions shall be retained As in the
  current draft modalities
• Level of customs tariffs shall ensure farmers
  competitiveness on domestic market
• Export subsidies and elements with similar effect
  shall be eliminated ensuring fair competition in
  world market.

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CAP in future OBJECTIVES

• Fair, equal conditions for direct support among
  all MS
• distribution of financial envelopes for decoupled
  payments
• new support criteria must reflect actual
  activities of farmers at present, instead of
  historical figures
• the same possibility to choose level of coupling
  and historical model in transition from
• SAPS SPS

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DP RD area payments per MS 2013(in /hectare
UUA in 2007)
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Arable crops reference figures and actual
area/yield
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Impact to income efficiency employed in
agriculture and payment for employed/ UUA ha
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Impact of decoupled support on land market price
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Impact of decoupled support onrent price of farm
land and buildings/ average farm size UUA ha
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CAP in future POSSIBLE POLICY
INSTRUMENTS

• Capped direct support rate per hectare
• support for multifunctional services providing
  societal benefits

State aid - SA
Rural development area based measures (RDP)
MAX rate ?(SARDPDP) 1000 EUR/ha
Direct payments CC including GAEC (DP)
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CAP in future POSSIBLE POLICY INSTRUMENTS

• An equal support rate per unit must be laid down
  all over the EU for compliance with the same
  conditions

50 EUR/ha (for grass cutting)
GAEC
Direct payment
Y EUR/ha
Other CC requirements

• restructuring of direct payments according to
  inputs and to avoid support cutting
• why support for landscape maintenance costs be
  radically different in different member states?

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CAP in future POLICY INSTRUMENTS

• Modulation
• ... must serve as an instrument diminishing the
  differences among rural areas in the Community
• BUT, too much of direct support, based on
  production criteria in the past, is simply
  shifted to Pillar II in respective MS - without
  analysing the rural development needs
• LV about modulation principles
• not more than 50 of financing modulated to be
  channeled to respective MS
• 50 - to EU budget and finance distribution
  based on objective criteria

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CAP in future POSSIBLE POLICY INSTRUMENTS

• Risk management
• role of Community risk management tools ?
• clearly defined EC and MS responsibilities to
  ensure transparency
• promote motivated participation of producers

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CAP in future POSSIBLE POLICY INSTRUMENTS

• Safety net
• income loss compensation mechanism should be
  introduced in order to allow compensate income
  losses arising from market fluctuations, natural
  disasters (animal diseases, crop losses etc.).
• Financing from Pillar I (intervention, Article
  69)
• Strengthened producer organizations decrease risk
  of hazards due to market fluctuations (French
  approach)

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• Thank you
• for
• attention!