9th commission meeting 31 January WORKING DOCUMENT of the Commission for Natural Resources

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1 9th commission meeting 31 January 2012 NAT-V-016 WORKING DOCUMENT of the Commission for Natural Resources LEGISLATIVE PROPOSALS ON THE REFORM OF THE COMMON AGRICULTURAL POLICY AND RURAL DEVELOPMENT POLICY POST-2013 Rapporteur: René Souchon (FR/PES) President of Auvergne Regional Council This document will be discussed at the meeting of the Commission for Natural Resources to be held on 31 January DOCUMENT SUBMITTED FOR TRANSLATION: 3 January 2012 CdR 33/2012 FR/CvL/GW/ms Rue Belliard/Belliardstraat Bruxelles/Brussel BELGIQUE/BELGIË Tel Fax Internet: EN

2 - 1 - Reference documents Proposal for a Regulation of the European Parliament and of the Council establishing rules for direct payments to farmers under support schemes within the framework of the Common Agricultural Policy COM(2011) 625 final/2 Proposal for a Regulation of the European Parliament and of the Council establishing a common organisation of the markets in agricultural products (Single CMO Regulation) COM(2011) 626 final/2 Proposal for a Regulation of the European Parliament and of the Council on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) COM(2011) 627 final/2 Proposal for a Regulation of the European Parliament and of the Council on the financing, management and monitoring of the Common Agricultural Policy COM(2011) 628 final/2 Proposal for a Regulation of the Council determining measures fixing certain aids and refunds related to the common organisation of the markets in agricultural products COM(2011) 629 final Proposal for a Regulation of the European Parliament and of the Council amending Council Regulation (EC) No 73/2009 as regards the application of direct payments to farmers in respect of the year 2013 COM(2011) 630 final Proposal for a Regulation of the European Parliament and of the Council amending Council Regulation (EC) No 1234/2007 as regards the regime of the single payment scheme and support to vine growers COM(2011) 631 final

3 - 2 - I. OBJECTIVES OF THE COMMON AGRICULTURAL POLICY THE COMMITTEE OF THE REGIONS, 1. supports the objectives set out by the European Commission for the future Common Agricultural Policy in the area of food security, agricultural activity across Europe, the competitiveness of European farming and the simplification of the CAP; 2. nonetheless regrets the lack of any reference to the numerous challenges facing agriculture in the coming decades such as the need to increase global food production to address the demographic challenge, the availability of land for cultivation, the increasingly artificial state of soil, the problem of water management and the issue of how to combat and address the challenges of climate change; 3. considers that the Commission's proposals are less ambitious than those outlined in the Commission Communication published in November 2010 and continue to fall far short of the thorough reform of the Common Agricultural Policy which is needed to preserve Europe's agriculture and rural areas; 4. considers that the Common Agricultural Policy should aim to promote agricultural and rural employment in order to provide an answer to the problem of unemployment in the European Union and to ensure the dynamism of rural areas; 5. considers that the Common Agricultural Policy, as provided for under the Treaty on the Functioning of the European Union, must enable the rural population to enjoy a fair standard of living that is comparable with that of the general population. This objective should be supported by market stabilisation measures to ensure stable prices for producers, while at the same time guaranteeing reasonable prices for consumers; 6. considers that the Commission's proposal to rebalance support is a vital step but feels that this rebalancing is insufficient even though it is needed to introduce greater competition at small and medium farms and within areas facing specific natural constraints; 7. considers it vital that the Common Agricultural Policy should be able to promote the quality of its agricultural production more widely, in particular production that has an official agricultural quality label. Accordingly calls on the European Commission to ensure a closer link between the Common Agricultural Policy and agricultural product quality policy. II. MARKET REGULATION 8. considers that the market regulation measures put forward by the Commission are extremely disappointing and represent a veritable step backwards for the development of the Common Agricultural Policy. While market stabilisation is enshrined in the Treaty of Lisbon, the

4 - 3 - European Commission has not put forward any effective mechanism for the public control of production; 9. considers that the Commission is making a strategic error by focusing on a posteriori crisis management in place of an upstream regulation that would enable price volatility to be tackled effectively and at a lower cost; 10. urges the Commission to carry out an impact assessment of the effects of the removal of quotas and planting rights; 11. calls on the Commission to safeguard Community Preference Mechanisms 1 (addition of an article to Section II Title I Chapter 1 of the Proposal for a Regulation on the Single CMO ) and to focus on intervention and storage mechanisms (public and private), promoting the development of insurance systems; 12. considers that in order to achieve the food security objective established by the Commission for the future Common Agricultural Policy, a reform of competition law is vital at European level to redress the balance of power within the food production chain in favour of producers; 13. considers that a review of the European Union's trade policy is vital for the agricultural sector, which must not be used as a bargaining chip enabling the development of industry and services in third countries. In particular, the negotiations currently underway between the European Union and Mercosur represent a very real danger for EU producers of meat, sugar, fruit and vegetables. Consequently, the European Fund for Globalisation, which has some EUR 2.5 billion for tackling the economic effects of such bilateral agreements on the agricultural sector (revenue losses for producers could reach a total of EUR 7 billion by 2020 in the case of the EU Mercosur Agreement), is not sufficient. III. DIRECT PAYMENTS 14. considers that local and regional authorities have every right to participate in the implementation of the CAP under the first pillar as the participation of regional government can allow support to be allocated more effectively, in line with the social, environmental and local specificities of the type of agriculture in question and ensure the more efficient use of funds. Convergence 15. welcomes the fact that the Commission's proposal abandons the use of historical references which represented an unequal and unfair system for the distribution of support among farmers; 1 "The future of the CAP after 2013" Committee of the Regions, René Souchon, CdR 127/2010 fin

5 considers nonetheless that the distribution of support proposed by the Commission continues to be too unequal and regrets that the Commission has not specified any deadline for full convergence between the Member States but postponed this issue to the next planning period. Consequently, the differences in the level of support received by farmers in the various EU Member States will continue to persist; 17. hopes that the convergence of the basic payments within each Member State will be carried out on a gradual basis but over a reasonable period i.e. within five years of the reform, in 2019, and that there will be full convergence at European level within a period of ten years after the reform, i.e. in 2024 (Article 22(5) of the Proposal for a Regulation on Direct Payments); 18. considers that it is easier to ensure the convergence of direct payments in the Member States at local and regional level due to the diverse agricultural systems and agronomic potential. Degressivity and capping 19. considers that the capping levels that have been set remain too high and would only enable the redistribution of 1.3 % of basic payments across the whole European Union whereas stricter capping would make it possible to transfer greater funds to support installation and disadvantaged areas; 20. therefore urges the Commission to lower the degressivity threshold to EUR of aid, with a cap of EUR per farm, by subtracting the salaries effectively paid and declared by the farmer and by introducing a criterion of a maximum agricultural area per active farmer, with reference to a regional average agricultural area. (Article 11 of the Proposal for a Regulation on Direct Payments). Decoupling 21. considers that it is vital to retain aid coupling for certain forms of production or in certain fragile regions in order to ensure an adequate level of production and hopes that coupled aid shall be used up to the maximum level authorised by the Regulation for those Member States that wish to apply these rules; 22. urges the Commission to strengthen the rules on coupling in areas facing specific natural constraints and in the outermost regions by taking into account, in addition to the productions already mentioned in the draft regulation, agricultural productions subject to official agricultural product quality labels as well as suckler herds and/or dairy cattle which use dry grasslands or summer pastures (Article 38 of the Proposal for a Regulation on Direct Payments).

6 - 5 - Greening 23. considers that the Commission's proposals in the area of greening are a step towards taking greater account of the natural habitat and help to ensure the legitimacy of CAP support in the eyes of the European public; 24. nonetheless considers that the Commission's proposals need to go beyond these three measures if agronomics is to play a smaller role in farmers' activities; 25. urges the Commission to ensure that support for greening be rolled out as closely as possible to local agronomic, environmental and socio-economic realities on the ground, by conferring on local and regional authorities the power to initiate and manage targeted environmental measures and allowing them to introduce territorial contracts which are signed jointly with farmers (addition of an article to Title III Chapter 2 of the Proposal for a Regulation on Direct Payments); 26. in particular calls on the Commission to make provision for the implementation of a "protein plan" at European level through the development of oilseed crops in order to ensure greater protein autonomy for livestock farmers, reduce the use of nitrogen fertilizers and improve soil fertility (addition of an article to Title III Chapter 2 of the Proposal for a Regulation on Direct Payments); 27. calls on the Commission to broaden greening to include additional measures in the area of plant protection, effective soil and water management, to move European agriculture towards systems that are sustainable and have a High Environmental Quality 2 (addition of an article to Title III Chapter 2 of the Proposal for a Regulation (direct payments); 28. considers that the 7% threshold for agricultural land that is to be transformed into ecological focus areas, land which is effectively rendered non-productive, may be too high in certain cases, calls on the Commission to make this rate a maximum level and requests that local and regional authorities be allowed to set this rate based on local circumstances (Article 32 of the Proposal for a Regulation on Direct Payments); 29. considers that the development of greening measures is inextricably linked to the legitimate concern of simplifying the Common Agricultural Policy and that agro-environmental measures must be simple and incentive-based; 30. urges the Commission to include greening support in the provisions of the regulation and on capping. (Article 11 of the Proposal for a Regulation on Direct Payments). 2 European Council, Goteborg, 15 and 16 June 2001

7 - 6 - Support for areas facing specific natural constraints 31. considers that the envelope of 5% of the annual national ceilings, as proposed by the Commission, is not sufficient to meet the challenges of developing mountainous and disadvantaged areas in certain Member States, especially as the Commission has made this measure optional for the Member States; 32. calls on the Commission to make this provision compulsory for all Member States and to raise it up to a maximum of 10 % of their annual national ceiling. This provision would constitute a separate third level of aid that could complement the basic payment and greening payment. (Article 35 of the Proposal for a Regulation on Direct Payments); 33. hopes that under the convergence process, the additional funds needed for this increased support will primarily come from areas that have, historically, benefitted the most from the Common Agricultural Policy; 34. calls for the definition of disadvantaged areas to be widened to include territorial cohesion and land-planning criteria so as to take into account factors such as isolation, access to infrastructure and the fragility of particular ecosystems (Mediterranean, coastal, ), in accordance with previous recommendations issued by the Committee of the Regions 3. Installation 35. considers that the Commission's proposal for an additional special form of aid for young farmers that will top up the basic payments is a step in the right direction and represents an innovative measure; 36. urges the Commission to broaden the concept of "young farmers" to encompass the notion of "newly installed farmers," to support all installation projects, whatever the age of the beneficiary (Article 36 of the Proposal for a Regulation on Direct Payments); 37. considers that agricultural demographics will represent a considerable challenge in the years ahead given that only 7% of European farmers are under 35 while 32 % are aged 65 or over 4 and, accordingly, calls on the Commission to adopt a more determined approach to ensure that land freed up by farmers is used primarily for installation and not for increasing farm sizes; 38. urges the Commission to ensure that the 2% envelope of special aid for installation be topped up by funds provided by degressivity and the capping of direct payments (Article 37 of the Proposal for a Regulation on Direct Payments); 3 4 "Aid to farmers in areas with natural handicaps ", Committee of the Regions, Luis Durnwalder, CdR 314/2009 fin Eurostat Farm structure survey 2005

8 considers that the problem of installation is above all linked to a problem with access to land or bank loans and therefore urges the Commission to encourage the Member States to provide land and bank guarantee measures (addition of an article to Title III Chapter 4 of the Proposal for a Regulation on Direct Payments). Active farmers 40. considers that the Commission's intention to only grant aid to active farmers is vital for strengthening the legitimacy of the Common Agricultural Policy yet notes that the definition of active farmers is not broad enough; 41. calls on the Commission to consider as active farmers those individuals who participate directly in the management and work at a farm and, in the case of aid exceeding EUR , individuals whose revenue from outside farming amounts to no more than 75 % of their total revenue. In the case of support of under EUR per active farmer, the Committee of the Regions urges the Commission to not take any percentage figures into account in order to preserve pluriactive farm models (Article 9 of the Proposal for a Regulation on Direct Payments). Small Farmers Scheme 42. considers that the Commission's proposal to recognise the status of small farmers is important since agricultural accounts for a significant percentage of rural employment in several EU Member States and considers that this scheme will help simplify the Common Agricultural Policy; 43. considers nonetheless that the amounts proposed for farmers who opt for this scheme are too low and calls on the Commission to raise the minimum support threshold to EUR 1000 (Article 49 of the Proposal for a Regulation on Direct Payments). IV. RURAL DEVELOPMENT Principles 44. considers that the Common Strategic Framework enables better coordination between the various structural funds, including the EAFRD; 45. considers that the Commission's intention to incorporate rural development within the Europe 2020 strategy represents an opportunity to ensure the harmonious development of rural areas; 46. considers that it is vital for local and regional authorities in their capacity as co-financers to play a key role in implementing the Regulation on Rural Development, given that an

9 - 8 - approach based on regional projects can ensure the more effective and efficient use of EU funds; 47. notes that the six priorities outlined seem to be only very loosely related to one another and that this new structure does not provide any added value compared to the current Regulation, which is structured around four axes; 48. accordingly urges the Commission to establish a European regional development strategy, which may be adapted by each Member State within the framework of the partnership contracts and based, in principle, on the requirement to ensure balanced regional development (article to be added to Title I Chapter I of the Proposal for a Regulation on Rural Development); 49. considers as inappropriate the Commission's proposal to allow certain Member States, in the name of flexibility, to make available as direct payments under the first pillar up to 5 % of the amount allocated to support for measures under rural development programming and urges the Commission to take away this possibility for the Member States concerned, for whom support for rural areas is vital and goes beyond agricultural production alone (Article 14 of the Proposal for a Regulation on Direct Payments). Priorities 50. considers that it is vital for the Rural Development Regulation to participate in introducing more dynamism into non-agricultural employment in rural areas, in particular in those Member States where the structural development of agriculture has involved significant restructuring of the agricultural sector yet is concerned by the developments regarding the support that the European Union has earmarked for these rural areas, which have not been mentioned in the new ERDF Regulation; 51. feels that it is not advisable to include a mechanism for the management of rural development risks and, accordingly, urges the Commission to withdraw this measure from the Regulation by giving preference to regulatory measures in the first pillar (Articles 5 and 37 of the Proposal for a Regulation on Rural Development); 52. urges the Commission to allocate a percentage of at least 15 % to 20 % to the sixth priority of the Rural Development Regulation, i.e. promoting social inclusion, poverty reduction and economic development in rural areas, which is necessary for balanced regional development, and promoting territorial cohesion (Article 5 of the Proposal for a Regulation on Rural Development); 53. considers that there is a need to ensure a closer link between the Common Agricultural Policy and EU agricultural product quality policy and therefore urges the Commission to create a

10 - 9 - separate thematic sub-programme in this area (Article 8 of the Proposal for a Regulation on Rural Development). Governance 54. considers that the implementation of a framework of multi-level governance European, national and regional is a vital condition for the successful reformulation of the Common Agricultural Policy after 2013; 55. nonetheless has a number of questions regarding the implementation of these partnership contracts, which currently require the signatures of the Member States and the Commission only, without any mention of the local and regional authorities; 56. therefore urges the Commission to involve representatives of rural regions in drafting these contracts; 57. considers that the introduction of sub-programmes for specific zones such as mountain areas or for individual sectors represents an interesting proposal but that it will only provide genuine added value if these sub-programmes are put forward by local and regional authorities; 58. calls for a representative of the local and regional authorities to sit on the Committee for Rural Development that will assist the Commission with the adoption of delegated acts. More generally, calls for a review of the composition of the consultative groups at the Directorate- General for Agriculture and Rural Development in order to ensure that these groups are more representative of rural areas. V. BUDGET OF THE COMMON AGRICULTURAL POLICY FOR considers that a stable budget of EUR billion until 2020 will provide farmers with a clearer picture of the situation and ensure the continuation of the CAP's strategic dimension over the medium term; 60. is concerned, however, about the context of the public debt crisis at European level and the possible resulting threat to the budget of the future Common Agricultural Policy. CdR 33/2012 FR/CvL/GW/ms