SVENSKA LANTBRUKSPRODUCENTERNAS CENTRALFÖRBUND SLC r.f. Sida 1(5)

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1 CENTRALFÖRBUND SLC r.f. Sida 1(5) Consultation on the The reform of the CAP towards 2020 impact assessment Svenska lantbruksproducenternas centralförbund (SLC) has taken part of the document and gives the following statement on the document. The central union of Swedish-speaking agricultural producers in Finland (SLC) has members. The farmers are located primarily along the southern and western coast of Finland. Questions (in the same order as they are lined in the consultation) 1. The scenarios? All presented scenarios are of importance to show the need for a common agriculture policy that support the basic production and the measures that should be taken by agriculture to improve environment and climate. The refocus scenario could be more focused on just the II-pillar and there could be a scenario just focusing on first pillar payments. There should also be a refocus scenario where the SPS-system is not phased out but changed to be production cost related. In this scenario there should also be an evaluation of the measures in the II-pillar. 2. Are there other problems? There should be an accurate analysis of the effect of production linked support. The support linked to the production is crucial for certain sectors and regions. If the production decreases as a result based on abolishment or a decrease of the production linked support the full effects should be analyzed. The production depending on support keeps up the biodiversity, the rural areas etc... These issues should also be given a thought when the structure of the CAP post 2013 is discussed. There should also be an analysis on the effects of the changes taken by the EU in the CAP policy to put the CAP inline with WTO. These changes are going further than what WTO has demanded. Also the effects of producing with high animal and environmental standards with an increasing import to the EU should be analyzed. High standards should also be recognized in the policy and in the producer prices. 3. The evaluation of policies?

2 CENTRALFÖRBUND SLC r.f. Sida 2(5) The scenarios are well suited for describing the problems and challenges of the sector. The scenarios are though focused on three main objectives: food production, energy production and rural development. There should also be a focus on new elements in the agriculture. The agricultural sector will in the future become producers for elements to the biochemical sector as an example. 4. The impact of the scenarios Re-focus scenario In this scenario rural areas with high cost of production will not be compensated by direct support and this will lead to a decrease in production. The decisions taken earlier on high EU-level about keeping the agricultural production going in all areas will not be fulfilled. This scenario will lead to a decreasing food production in the EU and that the EU is coming more depending on imports. The price of the import will fluctuate according to the prices on the world market. This will not benefit the European consumers. For the Nordic countries with a climatological handicap this scenario will lead to a very small production and the measures through the rural development measures will not be adequate. This scenario would also most probably lead to an increasing production in the most competitive regions in the EU but at the same time lead to environmental difficulties in these areas because of the increasing amount of production and factors linked to this. This scenario would also lead to a renationalization of the agricultural policy in the EU that would have a distorting effect on the production. The direct support measures in the re-focus scenario should also consist of measures that are linked to the production. This production linked support is of big importance for certain areas in the EU and direct support measures should be included in some scenarios. Status quo An analysis of what has happened after Agenda 2000 and the CAP reform 2003 shows that the measures taken then has not fulfilled. One of the main goals in these reforms has been to decrease the farming sectors dependence on support. During the last years the farming sector has become even more depending on the support due to the increasing price fluctuation and the crash in the food market due to the economic crises. This shows that there is a need to change some of the elements in the present common agricultural policy and also to look at other related issues at EU-level as the competitions rules and the allocation of research and development funding to the agricultural sector. 5. Strengthening of producer and inter-branch organizations

3 CENTRALFÖRBUND SLC r.f. Sida 3(5) In Finland we have around farms and the retail sector is run by four companies and two of the retailers have together a market share that is around 85 %. For all agricultural businesses it is very important to have a good relationship with the processing industry and the retailers. The power in the food chain is not evenly distributed and there is a need to strengthen the farmer s position in the chain. Some EU-countries has tried to use the possibilities with producer and interbranch organizations. There are positive and negative experiences to be found. The strengthening of the farming sector cannot just be done by doing some changes in the agricultural policy. There is also a need for changes in related policies. SLC is supporting the suggestion to change and broaden the legislation for producer and inter-branch organizations. Concerning risk management tools SLC would like to underline that the present market measures that the commission can use should be kept and strengthen. The risk management tools should be a tool that the agricultural cooperatives could use as a part of their risk management. In the Nordic countries the cooperatives process and collect a big part of agricultural products that the farmers produce. The risk management tools in the farmer s hands will not be used in an effective way and the present risk management tools are not developed for the family farmers in Europe. 6. Environment and climate-change measures in the pillars The main environmental and climate-change benefiting measures are done in the second pillar, therefore it of most importance that the structure of the present II-pillar is kept. The measures taken in the I-pillar streamlines the environmental and climate-change measures between member states and raises the awareness of the measures taken in the agriculture sector to improve the environmental and to tackle the climate change among consumers. 7. Changes in the rural budget The allocation of the money for the second pillar is based also how the money from the first pillar is divided between member states. True the second pillar member states with natural handicaps have managed to keep the agricultural production. The tools in the II-pillar have been adjusting the stiffness in the I-pillar and for these countries the II-pillar is of very big importance. The use of the tools in the II-pillar is though depending on co finance from member states. This means that member states with natural handicaps or with a very big interest to use tools in the second pillar to develop their agriculture has done it according to their needs. For these countries the tools and the financing of the II-pillar is very important. The tools and the funding in the second pillar have to level the issues that cannot be leveled within the first pillar. For some member states the flexibil-

4 CENTRALFÖRBUND SLC r.f. Sida 4(5) ity in the II-pillar has to increase from now because the changes in the I- pillar will not take into account these country s needs. Therefore an increase in the budget of the II-pillar is positive. This should not be done by lowering the budget level in the I-pillar. One of the issues targeted in the question is about strategic targeting. There are still three main areas that should be targeted. They are 1) areas with natural handicaps, 2) environmental issues and 3) rural areas. The fourth element that also the commission suggested is also supported by SLC and this is the market element. The problem for targeting is that the circumstances are so different in the member states and there has to be flexibility for member states to direct the tools in the II-pillar according to the need in different areas. At the moment the flexibility with the axis in the IIpillar is in some way restricting the member states use of the possibilities in the II-pillar and some of the money reserved for rural development is not used. The strategic targeting is also done with regulations if the regulations are excluding farmers to enter programs in the II-pillar. This should also be taken into consideration. 8. Effects of no policy scenario In this radical scenario there would be no agricultural production in many parts of the EU and the European consumer would be more depending on the import of products to the EU. If there are no drivers, true a policy, for environmental and climate change measures there is now measures either taken to improve these elements in the agriculture. The aim of the agriculture in this scenario is to keep up the production to low costs and in this scenario there is no room for measures outside the general line. The diversity of agricultural products will also be decreasing and this will affect the public health and well-being. 9. Administrative burden and costs A stronger greener element in the first pillar will most probably also mean an increasing administrative burden. The cross-compliances last introduced to the CAP have been bureaucratic and also lead to some costs for the farmer. Therefore should the present cross compliances be analyzed and the controls eased. The greener elements in the I-pillar should be on a basic level. The suggestions lined by the commission should be voluntary for the member states and some of the measures should be moved to the II-pillar. 10. Indicators to be used Several reforms on the common agricultural policy have had as a goal to increase the income from the market and make the agricultural sector less depending on support. Therefore an indicator should be linked to farm in-

5 CENTRALFÖRBUND SLC r.f. Sida 5(5) come from the market and true support. This indicator should also give an indication on how the farming sector is doing in relation to the income development in the community in general. One indicator that shows if the policy is working is how the age structure of the sector is developing. If there is a positive trend in the agriculture this should also show in the age structure. More young people should get involved in food production if the sector is interesting and you can make a living on it. Because one of the main goals with the EU-agricultural policy is to supply the European consumers with food there should also be an indicator that follows how the agricultural production is developing and if there a big change in the degree of European self-supply in agricultural commodities. In the CAP post 2013 there should be a scheduled review of the policy so it is in line with the aims of the policy taken. 11. What are the uncertain issues? In this stage all analyzes are based on assumptions. Figures on the size of the budget, the size of the budget for rural development and other economical figures could better show the effects of the scenarios. The figures could have a negative impact on the discussion of the CAP post 2013 but they are of big importance. The general lines in the scenarios are that the productions costs will stay at the present level. This assumption is probably wrong because the cost of production will increase at all levels. Because of this there should be a production cost related scenario where the supports in the pillars are adjusted to the costs of production. Svenska lantbruksproducenternas centralförbund Jonas Laxåback Secretary General