31.8.2017   

EN

Official Journal of the European Union

C 288/10

Rapporteur:

John BRYAN

1.1

The EESC believes that the Common Agricultural Policy (CAP) is an essential EU policy, which must provide European citizens and the agriculture sector with a truly common policy and which has delivered on its key objectives set out in the Treaty of Rome. While the request for an exploratory opinion speaks of reshaping the CAP, the EESC places emphasis on upgrading the CAP in the interests of stakeholders, adopting a cautious and organic approach. Upgrading the CAP must be approached in a positive way and the CAP budget must be adequate to address existing and new demands, regarding to the agricultural economy as well as social and environmental criteria.

1.2

A reshaped CAP must meet the needs of the new challenges facing Europe, including the EU commitments under the United Nations Sustainable Development Goals (SDGs) and climate change commitments under the 21st Conference of Parties (COP21), bilateral trade deals and market volatility.

1.3

The CAP must strongly support the European Model of Agriculture, with its traditional family farms, farming cooperatives and companies, as well as redress the major income inequality both between rural and urban areas and within agriculture with the involvement of agricultural sectoral organisations.

1.4

In providing a sustainable supply of high-quality safe food for over 500 million EU citizens, and exports worth EUR 131 bn, representing 7,5 % of the EU’s total exports, the CAP budget, which amounts to 38 % of total EU budget, must strike a balance, providing value for money. Future funding must be sufficient to address the additional financial demands resulting from Brexit, pressure on farm incomes and the increased demand for public goods.

1.5

The EESC supports the retention of the two-pillar model of the CAP. Direct payments in Pillar 1 must support farm incomes, market management measures and increased delivery of public goods. Rural Development payments in Pillar 2 should focus on economic, environmental and social programmes based on the objectives set down in Cork 2.0 to support vulnerable regions and sectors, and should ensure a targeted approach to the delivery of public goods.

1.6

The valuable contribution that agriculture makes to the environment is underestimated. The carbon sinks in grassland, forestry, peatlands and hedgerows need to be accounted for, protected and enhanced under both the CAP Pillar 1 and Pillar 2 payments.

1.7

Strong targeted programmes which focus on young farmers, especially women, and retirement must be implemented to address the important issue of generational renewal. In addition, programmes aimed at enhancing the role of women in general in agriculture should be adopted.

1.8

Simplification should be a key part of a reshaped CAP with the use of modern technology to simplify and reduce the ever increasing bureaucratic burden facing farmers. Changes should be made to the audit/inspection process encompassing a close out model, the yellow card system, reduced cross compliance requirements and greater tolerances, all focused on simplification and improved delivery of payments.

1.9

A reshaped CAP should maintain the principle of community preference and territorially balanced food sovereignty with EU food for EU citizens. The potential for agriculture must be highlighted in any bilateral or multilateral trade deals without sacrificing the sector to obtain benefits in other areas. All EU food imports must — while respecting the principle of conformity — meet full EU standards on sanitary, phytosanitary (SPS), labour and environmental conditions.

1.10

The farmer’s position in the food chain must be strengthened. The positive recommendations from the EU Agricultural Markets Task Force should be adopted and implemented. Further, even stronger, sector and region oriented promotion of cooperation between producers and existing cooperatives and producer organisations (POs), especially small ones, is vital. In particular, specific emphasis should be put on those sectors and regions where cooperation is low.

1.11

Both a strong Pillar 1 and Pillar 2 are essential for a new, reshaped CAP with flexible Rural Development Programmes available across all Member States, including Areas of Natural Constraint (ANC) focused on vulnerable regions and sectors.

1.12

The level of direct aid paid to farmers in the individual EU Member States needs to be further harmonised, in order to create a level playing field for farmers in all Member States and to ensure the balanced development of rural areas throughout the EU.

2.1

Agriculture is more integrated into the EU than any other economic sector. It is the only major sector with a common policy, centrally funded from the EU budget. The farming and agri-food sector is an extremely important employer in the economy, with 11 million farmers, 22 million agricultural workers and a further 22 million related jobs in food processing, food retail and services (1). Many of the jobs are located in poorer rural regions. Farming contributes to economic activity in every Member State and across all regions. Over the past 10 years, the value of EU agri-food and drink exports has grown by an average of 8 % pa, reaching EUR 131 billion in 2016 (2).

2.2

The CAP is an essential EU policy, providing a sustainable supply of safe quality food for 500 million EU citizens at affordable prices. The CAP must also a) ensure a reasonable level of income for EU farmers and b) bring about social, environmental and economic development across rural areas. Farmers and foresters manage over 82 % of the EU land area (3) and are thus an essential element of a sustainable agricultural economy that must be multifunctional in nature.

2.3

With a budget of EUR 59 billion, the CAP provides vital support to farmers and their enterprises through direct payments, market support measures and rural development programmes. It should be noted that the CAP support is related to the delivery of public goods and to meeting higher European standards. These Pillar 1 direct payments are indeed linked to cross-compliance and statutory management requirements (SMRs) measures on food safety, animal and plant health and welfare standards, and environmental controls and are essential in helping farmers stabilise incomes and deal with market volatility. Currently 30 % of direct payments are linked to Greening requirements focused on soil quality, biodiversity, and carbon sequestration; nonetheless, there continue to be environmental and social problems that must be solved. Market measures, while seriously eroded in the last CAP reform, are still important, particularly in times of market crisis. New measures are necessary to address volatility. The co-funded Rural Development Programme provides an essential second pillar fund for economic, environmental and social programmes that are implemented at both individual farm level and in rural areas.

2.4

Over the last six decades, despite its shortcomings, the CAP has delivered significant benefits for EU citizens, producers, consumers, taxpayers and broader EU society. However, in some areas, we are facing problems involving biodiversity, the environment and the landscape, and these have to be addressed. It has proven itself to be adaptable and flexible to the demands of the times. The unique structure of CAP Pillar 1 and Pillar 2 has enabled the policy to change and focus on different targets while retaining its overall objective of fostering the European model of agriculture and family farming.

2.5

The compensation payments under the CAP have changed dramatically over the years from mainly market and price supports to decoupled supports with a substantial environmental element. Pillar 2 was introduced to support vulnerable regions and sectors. Pillar II ensures smart and sustainable rural development is at the heart of EU agricultural policy. Agriculture has to have an integrated rural development policy.

2.6

Farming and agriculture under a positively reshaped, modernised and simplified CAP has an essential role to play in meeting European goals on sustainability, the environment and nature, competitiveness, investment, growth and job creation.

2.7

A reshaped CAP must retain the positive aspects of the current policy and adopt new measures to deal with the new challenges which include societal demands for the delivery of public goods, the EU commitments under the United Nations SDGs, climate change commitments under the COP21, bilateral trade deals and market volatility. A reshaped CAP must also get the correct balance between the needs of the consumer, taxpayers and producers.

2.8

Under a reshaped CAP, the EU must continue to strongly support the European model of agriculture and sustainable family farm businesses, as opposed to the industrial model of agricultural production developed in other areas such as Mercosur, the USA and Oceania. Special attention must be given to small and medium-sized farms. On food safety, European farmers operate under the precautionary principle, leaving them at a competitive disadvantage in global trade in basic agricultural products and foodstuffs to farmers in North/South America, Oceania and other areas, who use substances such as hormones and beta agonists, which are all banned in the EU.

2.9

The European model of agriculture is a social contract between EU farmers and society whereby farmers sustainably produce high quality food and other public goods, while ensuring environmental protection and landscape management. In return, the CAP should provide support for the continuation of family farms, cooperatives and companies with sustainable farming models and rural areas. This model has provided goods of immense value to European society as a supplier of diverse, healthy, safe, affordable and high quality food, contributing to territorial balance maintaining rural areas and helping to protect the environment and landscape.

2.10

In addition, the EU needs to work harder to ensure that the CAP and its associated benefits are properly understood and supported by farmers and EU citizens.

3.1

The CAP has served Europe and EU citizens well over the last 60 years, delivering substantial benefits to the agriculture sector and good value for money to taxpayers. However, in many EU countries there is a growing inequality of income evident in rural areas versus urban areas, as well as within agriculture. Farm incomes in most Member States are not sufficient and substantially lower than the national or regional average. Agricultural prices have not grown in line with inflation, with increases in input prices such as fertilisers and energy. In recent years, price volatility has caused farm income problems.

3.2

The current rural development policy with its diverse range of flexible instruments has proven to be essential in supporting rural areas and particularly ANC regions. The strong Rural Development Plan set out under the Cork 2.0 declaration A Better Life in Rural Areas must be a key priority for the reshaped CAP. Investing in rural viability and vitality as well as improving job creation in economically vulnerable and remote areas and supporting the diversification of agriculture are major challenges for a reshaped CAP (4).

3.3

As a percentage of EU budget, CAP expenditure has gone from 65-75 % in the 1980s down to 38 % currently. However, agriculture is expected to make an increasingly significant contribution to meeting the EU targets in COP21 and the SDGs, in addition to providing high quality affordable food. The UK exit from the EU presents a major challenge to the future funding of the CAP.

3.4

With the world population forecast to increase from 7 billion to 9,5 billion by 2050, there is a pressing need to substantially increase world food production in the coming years. One of the core SDGs set by the United Nations is to drastically reduce the prevalence of undernourishment, with studies by the World Health Organisation (WHO) estimating that one in seven people globally are currently undernourished. It is clear that global food production will need to grow in a sustainable way to meet this increased demand for food and help eradicate hunger. The EU and a reshaped CAP has a critical role to play as a responsible world force in food production. The CAP policy must also be responsible in terms of exports and continue to encourage developing countries improve domestic production.

3.5

EU agriculture and the CAP are central to EU commitments for the UN Sustainable Developments Goals and to the EU’s ambitious targets under the global COP21 climate agreement. Since 1990, EU agricultural carbon emissions have reduced by 23 % and nitrates in rivers have reduced by 17,7 % since 1992 (5). While significant progress has been made under the CAP in terms of environmental delivery, further challenges lie ahead in reshaping the CAP so that agriculture can deliver more and play its vital role in helping Europe reach the targets set by COP21 and the SDGs.

3.6

The agricultural sector delivers vital ecosystem services, contributes to habitat management, biodiversity preservation, animal welfare standards and landscape aesthetics and the protection of soil and water. It must also be acknowledged that the agricultural sector should contribute more with regard to biodiversity, the environment and the landscape. A significant amount of EU food is produced using natural water, that otherwise would be wasted. There is also a large proportion of EU agriculture devoted to grassland and forestry and areas of peatlands, all of which provide a valuable carbon sink. All of these vital ecosystem attributes of agriculture must be captured and encouraged in a reshaped CAP.

3.7

Under the CAP, EU citizens enjoy strong food security and an abundant supply of affordably priced safe food. The percentage of income spent by EU citizens on food has decreased from 50 % in the post Second World War period to 10 % today, despite the significant increase in production costs. A reshaped CAP must ensure that consumers continue to have access to affordable, high quality, safe food produced in accordance with current European standards.

3.8

With the majority of farmers aged over 55 years, there is a major challenge in attracting young people to agriculture and the sector suffers from generational renewal issues. Access to finance and land, low incomes as well as knowledge transfer and access to education are practical problems for young people. In addition, low farm incomes fail to provide for retirement savings. Land abandonment is increasing in some areas, with both social and environmental consequences evident, particularly in remote areas. A strong focus on generational renewal, including young farmers, new entrants and qualified farm workers, especially those already working on the farm, as well as on facilitating retirement, are essential ingredients in a reshaped CAP.

3.9

Women play a very important role in the agriculture sector: they undertake a lot of work on farms and carry an increasing share of the bureaucratic burden. In many cases women are under-represented in terms of farm ownership status. Women also make a huge contribution to the viability of the farm enterprise through the income they earn outside the farm, through salaried work or acting as independent entrepreneurs. In cases where both spouses work full time on the farm, this contribution should be reflected and incentivised in farm ownership.

3.10

Farming and the agri-food sector can play an important role in incorporating immigrants into the work force as well as assisting underprivileged groups through social programmes.

3.11

Modernising and simplifying the CAP are essential in reshaping the policy for the future. Previous reforms have identified the need for simplification but the practical reality is that the CAP has become much more complicated and bureaucratic at farm level. This is particularly the case in terms of the inspection and audit process and the application of the eligibility and cross compliance under the statutory management requirements (SMRs) and Good Agricultural and Environmental Conditions (GAEC).

3.12

The EESC recognises the significant benefits and employment created by agricultural trade and exports. However, the challenge arising from globalisation and trade deals could seriously damage agriculture and endanger the EU high level of food safety and quality standards. It is essential that the right balance is found between opening new markets and opportunities, and protecting sensitive sectors and areas as well as EU standards. In addition, the principle of Community preference and food sovereignty needs to maintain a territorial balance (6).

3.13

There is a major imbalance of power in the food supply chain between large retailers and processors and the farmer, resulting in downward pressure on prices often below the costs of production. The farmer’s position in the food chain must be strengthened by means of well-functioning marketing cooperatives. A European legal framework should be put in place to tackle the unfair trading practices of food and retail chains. In addition, with reduced EU market supports and greater exposure to world markets and geopolitical crisis such as the Russian ban, price and income volatility has become a significant challenge for EU farmers. The work of the EU Agricultural Market Task Force in this area is to be commended and must be advanced. Unfair trading practices and below cost selling must be tackled.

3.14

Farming, agriculture and forestry are fundamental to economic and social development in rural areas. They also play an important role in other rural-related economic enterprises and services like rural tourism, employment or cultural activities. A reshaped CAP with a strong Pillar 2 component is essential to tackle the rural development challenges of rural areas and keep farming and agriculture strong in every region of the EU. The objective must be to maintain the maximum number of farmers.

4.1

A reshaped CAP, which strongly supports the EU model of agriculture, must remain true to the core objectives set out in the Common Agricultural Policy laid down in the Treaty of Rome in 1957. New goals involving the commitments under the SDGs and COP21 should be incorporated. Article 39 TFEU sets out the specific objectives of the CAP as:

4.2

A reshaped CAP must also accommodate the critical challenges of environmental protection, climate change mitigation and biodiversity protection.

4.3

These essential objectives are best fulfilled by retaining the current structure of the two pillar model of the CAP, with CAP Pillar 1 based on direct payments to active farmers supported by market management measures and CAP Pillar 2 based on Rural Development measures and adopting the policy to take on board the new demands on the delivery of public goods. Pillar 1 direct payments are essential in terms of supporting farm incomes and assisting with volatility, linked to cross compliance measures on food safety, animal and plant health and welfare standards, and environmental controls. CAP Pillar 2 measures provide essential additional economic, environmental and social support programmes.

4.4

The CAP budget post 2020 must be sufficient to address the additional financial demands resulting from the Brexit decision, farm income pressures and the increase in demand for public goods.

4.5

On the basic payment model, it is proposed that countries that have adopted a model other than the flat basic payment system should be allowed to retain this model post 2020 as it better suits the circumstances in these countries. For some countries, the flat payment model fails to reflect differences in the level of investment, farming activity and delivery of public goods.

4.6

The level of direct aid paid to farmers in the individual EU Member States needs to be further harmonised, to take into consideration differences in conditions and so create a level playing field for farmers in all Member States and to ensure the balanced development of rural areas throughout the EU.

4.7

Direct payments should only be made to active farmers who provide public services and public goods.

4.8

To support and protect strong Pillar 1 direct payments for farmers, under a reshaped CAP an active farmer would work to an annual or multiannual programme, focusing on environment, climate change and biodiversity, which could include a carbon navigator, and nutrient management plan. This annual or multiannual programme would include measurable delivery of public goods and offer more flexibility to farmers. Measurability must build on objective and standardised criteria at EU level.

4.9

Pillar 1 direct payments should be capped at a fair and reasonable level for individual farmers, (e.g. equal to the comparable income of a qualified worker). Adjustments should be possible and account should be taken of partnerships, cooperatives, companies and the number of employees requiring insurance.

4.10

Coupled direct payments should be focussed on vulnerable sectors and regions. They should both prevent land abandonment and protect biodiversity, mainly by retaining livestock farming and sectors in decline.

4.11

In the current CAP, 30 % of the payment in the 1st Pillar is linked to greening and 70 % to 15 Statutory Management Requirements and five Good Agricultural and Environmental Conditions that have to be met to qualify. In order to facilitate a real simplification of the CAP it would be preferable to link the full Pillar 1 payment to the delivery of public goods. To achieve this goal, it is necessary to make the right evaluation of greening and the Statutory Management Requirements in order to keep the most efficient and achievable measures and also to introduce new targets, such as climate change and the need to increase carbon sequestration in soil.

4.12

These cross compliance SMR programmes would involve measurable deliverables around environmental protection, climate change mitigation and biodiversity protection based on the relevant current cross compliance implementation.

4.13

A reshaped CAP should embrace the concept of Smart Farming, which provides the double dividend of improving farm returns while delivering environmental benefits. It would involve using knowledge transfer and technology to aid precision farming with the aim of lowering inputs of water, energy, industrial fertiliser and other inputs such as pesticides, especially fungicides and insecticides.

4.14

Market measures including intervention and Aids to Private Storage (APS) should be retained. It is essential that the trigger levels for these supports are set at realistic levels so as to provide meaningful income support to producers when required.

4.15

The most effective protection against income volatility is secure and adequate Pillar 1 direct payments and market management instruments. However, in times of extreme price volatility, other tools are required and should be considered, including schemes aimed at reducing production. The option of using Pillar 2 funds for measures such as voluntary insurance schemes should be facilitated.

4.16

For the last 140 years, producers’ cooperatives have clearly demonstrated that they are more resilient to turbulence in the agricultural markets and help avoid relocation of food production. Therefore further, even stronger, sector and region oriented promotion of cooperation between producers and existing cooperatives and POs, especially small ones, is vital. In particular, specific emphasis should be put on those sectors and regions where cooperation is low.

4.17

The key elements identified in the EU Agricultural Markets Task Force of improving the position of farmers in the supply chain, increased transparency, mandatory price reporting, risk management measures, addressing unfair trading practices and other issues all must be advanced. Regulations across these areas must be adopted and fully incorporated in a reshaped CAP. It is proposed that stronger regulation would be adopted to outlaw unfair trading practices, ban below cost selling and introduce mandatory price reporting covering producer, processor and retail levels. In addition, the position of farmers must be strengthened by supporting the establishment of strong producer organisations.

4.18

Maintaining an effective and properly functioning EU single market must be at the core of a reshaped CAP. The recent trends of renationalisation across the single market are a cause of great concern and resulting in greater price and market divergence. It is also essential to introduce rules, where they do not exist, on mandatory labelling of the origin of agricultural products and foodstuffs, something that is necessary to prevent fraud and enable consumers to make informed choices precisely so that such rules do not undermine or inhibit the free movement of goods in the EU single market.

4.19

Brexit is a major threat to the EU and will have a significant impact on the CAP and the single market. Any CAP budgetary shortfall as a result of Brexit must be made up in full by Member States. In addition, it is essential that the tariff free trade for agriculture products and food is maintained between the EU and the UK and equivalent standards on animal health, welfare, and the environment as well as the application of Common External Tariff for imports to both the EU and UK.

4.20

A fundamental objective of the CAP has to be Community Preference, with EU food for EU citizens. A key principle of this policy must be the maintenance and protection of EU standards on traceability, food safety, animal and plant health controls and environmental protection, as well as full protection for Protected Geographical Indications (PGIs). In any trade policy negotiations, it is essential for EU consumers that the EU requires that all imported food meet these same standards. In addition, in any future trade negotiations it is essential that the EU maintains strong and adequate tariff protection for sensitive sectors and vulnerable areas.

4.21

Generational renewal must be a key feature of a new reshaped CAP. It is proposed that the existing increase in CAP Pillar 1 payments to young farmers under 40 years of age should continue. It is proposed that the 5-year rule be re-examined to remove the inflexibilities denying young farmers access to higher payment levels. In addition, it is proposed that higher payment rates for young farmers under the general RDP scheme measures should apply. Payment levels for structural grant aid programmes for young farmers should be increased to 70 %. Such support should also be made available for young farmers and young professionals in partnerships, cooperatives, and companies. An effective national reserve to allow young farmers’ and new entrants’ access to supports on an ongoing basis is very important. The option to implement an effective retirement programme under Pillar 2 should be available. Member States should have flexibility to introduce additional measures for young farmers, especially women. A strong focus on education and improving skills is essential. To enhance the position of women in agriculture, similar incentives as those available to young farmers should be available to women to ensure equal access to land, credit, training and status.

4.22

Positive simplification under cross compliance/GAEC and SMRs could be introduced for farmers by moving away from the audit/inspection approach and adopting greater use of technology. The system should be adopted with a check list involving positive and negative points for compliance. Applicants who meet the main critical requirements and amass a threshold number of points would be cleared for payment without any penalties. This would be an extension of the new yellow card approach already introduced. The number of cross compliance and SMRs should be reduced by removing some SMR measures that are no longer appropriate or relevant. A good example of this would be to remove the necessity to check animal identification on farms and undertake the checks using technology at points of sale such as meat plants, assembly points and livestock marts.

4.23

The inspection regime under the cross compliance requirements should also provide a right to rectify in a close out approach within a designated time frame, without penalty. A more proportionate and fairer approach regarding penalties and tolerances should apply. Simplification should not bring about a decrease of the ambitions, especially not in environmental protection (greening) or SPS.

4.24

Inspections should not hold up payments and a policy of applying any penalties in the following year for all eligibility and cross compliance/SMR should apply.

4.25

A strong enhanced and more effective Pillar 2, which meets the economic, environmental and social demands of regions, is critically important to a new reshaped CAP focusing on rural viability, vitality and job creation. This should be based on the objectives set down in Cork 2.0. In addition, it is important that Member States adequately co-finance all RDP measures, including ANC payments.

4.26

With the increased challenges of meeting Europe’s commitments set out in the UN SDG and COP21 targets, there is a need to expand, target and pay for increased environmental measures under CAP Pillar 2. While respecting the present budget allocation under Pillar 2, to allow for this, it is important that the future budget distribution between Member States reflects this ambition.

4.27

Increased CAP Pillar 2 environmental, climate change and biodiversity measures and payments could be targeted at the delivery of enhanced ecosystem services by farmers focused on the following:

4.28

Payments under the ANC scheme are critical to farmers in the poorer and more isolated regions of the EU.

4.29

The provision of low cost finance is essential to drive growth in the agriculture sector, and especially to assist young farmers who are critical to generational renewal.

4.30

A reshaped CAP should be complementary to a comprehensive food policy bringing together sustainable agriculture, balanced territorial development, healthy diets, employment and trade. The importance of a healthy diet for consumers and the associated benefits to society in terms of quality of life, healthy living, tackling obesity and reduced health cost cannot be overemphasised. Increased resources and programmes are required to communicate this message to consumers along with programmes to eradicate food waste and encourage recycling.

4.31

To achieve the EU target of increasing the use of renewable energy to at least 27 % by 2030, measures to ensure stability and legal certainty should be adopted. Payments targeted at supporting investment in solar, biomass and wind power and energy efficiency and saving programmes must be adopted.

4.32

To maintain competitiveness, it is vitally important that the agriculture sector has the latest research and innovation and that this is made available at farm level. Effective knowledge transfer, education, best practice and advisory extension programmes and services must be available and supported.

4.33

With the increased use of technology in agriculture and particularly for smart farming and assisting simplification, broadband coverage is vital for all rural areas.

4.34

In the new smart farming economy, with greater use of technology, the protection of the farmers’ individual data and confidentiality is very important. In addition, it is essential farmers retain full ownership of all the individual data held in respect of their business.

4.35

The circular economy can play a major role in reducing waste in all sectors. Traditional farming models are the epitome of zero waste, resource-efficient, circular economies. Agriculture has a positive role to play in the reuse, recycle sector, including the economical management of soil, water and air.

4.36

There is a need for a reasonable transition period from 2020 for the introduction of a new reshaped CAP, particularly to take account of budgetary issues around Brexit and other political decisions (7).