3.1. The content of agricultural policy reform 2004-2013 and its importance for the future European agriculture
a. Characteristics. The new reform is based on the general objectives of Agenda 2000,
regarding the competitiveness strengthening of agriculture in internal and foreign markets and promoting decent living standard for farmers’ community, formulating an improved policy on rural areas and integration of environmental policy, improving food quality and security, legislation simplification and decentralized application of Community rules. The measures proposed by the European Commission in Agenda 2000, have been negotiated in Berlin in March 1999 and revised in 2002 by Midd Term Review. These measures were proposed by the European Commission and Council of Ministers of Agriculture in January 2003, and reached in this form an agreement on fundamental reform of the Common Agriculture Policy, in the following stages:
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Fig. 1.1. The stages of the Common Agricultural Policy
Source: Dirk Ahner, The Future of European Agricultural Policy, Sofia, 2004
The aim of this reform is to create a more stable policy framework for European agriculture policy, in terms of EU enlargement, with another 12 countries.12
The main features of the reform are:13
the orientation of the community agricultural policy towards the consumers’ and taxpayers’ interests, especially the support of farmers;
introduction of the unique payment scheme14 as a new way of payments distribution; protection of the rural economy and environment;
maintenance of stabile budgetary costs;
negotiations with World Trade Organization on an agreement on agriculture, to satisfy the agriculture needs to meet the needs of each country in the European Union;
simplify the CAP mechanism;
supporting agriculture in the new Member States; ensure food safety standards.
12
J Malone, The Common Agricultural Policy and Enlargement, Conference PAC Sofia, 14-15 March, 2004
13
Dirk Ahner, The Future of European agricultural Policy, Sofia, 2004
14
The future of rural areas (2004-2005) CAP reform: measurements package (2005) CAP reform: 2 measurments packages (2004) 1 measurements package (2003) Mid-Term Review (2003) Agenda 2000 Agricultural markets
WTO Doha Round
International commercial relations EU Enlargement - EU25, - EU27, - EU…
b. The purpose of reform is to achieve a more dynamic and competitive European economy through: sustainable agriculture development and expansion of the European model of agriculture which involves: the diversification of production systems, environmental protection and food security. The integration of southeastern countries of Europe has introduced new gaps between countries. Thus France with the largest share of agricultural (more than 23%) of agricultural products of the total European Union, Poland as the first largest producer with over 52%, required measures to limit surplus production of some countries, as export subsidies and stocks required large expenditures. Differences occurred in the income of farmers and called for measures to eliminate the oscillation of the real income between countries. Thus, in 2002, farmers' incomes fell in Denmark with 24%, in Poland by 26%, and in England increased by 71% and 11% in Slovakia and Latvia.
c. Reform Objectives 2004-2013. Common Agricultural Policy has formulated objectives and
priorities to be supported by individual farms and established the connection between environment, rural development and sustainable agriculture as follows:
• Better targeting of agricultural farmers towards market, so that they become
competitive on the EU market and the world. In this regard, agricultural policy will not connect direct payments to production, but will provide income stability for farmers and increase their capacity to produce according to customers requirements. In order to do this, farmers must: obtain rewards for agricultural activities carried out by environmental criteria, to produce high quality food, and to develop diversified activities in various regions of the European Union, to develop rural areas and to maintain the essential characteristics.
• Market and price policies. In almost all the stages of reforming the Common Agricultural
Policy, the management of agricultural markets policy has undergone many changes. However, the mechanisms used did not solve unequally market imbalances and establishing farmers' incomes. The essence of the reform for the 2004-2013 phase is the market liberalization determined by agricultural development and the pressures of the World Trade Organization, regarding the imbalance of the reduction and eliminating export subsidies and the quantities of subsidized agricultural products.
• Institutional prices, even after the 1992 reform, through their mechanism remained
complicated. Agenda 2000 brought more substantial changes, by the measures taken by the cut in intervention prices and reduction of the number of products that practice price interventions.
• Compensation payments have become the main mechanism of action on which farmers
receive compensation in the form of payments per hectare and per animal. Compensation payments are conditional on the withdrawal of cultivated areas, number of animals on a farm and system of cultivation and animal husbandry.
• Market support in made by the granting of state aid for transformation (processing) and
commerce, export restrictions, intervention stocks, guidance bonuses, withdrawals and assimilated operations, consumer aid, etc.
The essence of market reform is:
grant access to markets through internal measures and reduction of customs tariffs;
reduce national support to eliminate hard marketable surpluses hard to sell and increasing competitiveness in the market;
reduce subsidized exports and other trade-distorting forms masked (export credits, food aid etc..);
reducing and eliminating export subsidies.
European Union supports basic update of the rules given by the World Trade Organization and strengthening of international trade as an important tool of development, with measures of generalization of trade preferences with more than 120 developing countries and elimination of customs tariffs for over 300 products. European Union uses the Common Customs Tariff which provides a complete integration of member countries in the single market by the free
movement of goods, persons and capital, combined with the harmonization to the Community legislation.
* Single Area Payment Scheme
In the new phase of CAP reform, single area payment scheme was introduced and its generalization in all sectors of agriculture. To do this, Member States have limited some elements coupling the production to direct payments, per hectare and per animal. The grant was made by single payment obligations in respect of the beneficiaries and will be managed and monitored at national level and Community funds will be controlled by the European Commission. Application of the single payment is made according to following rules:
* Setting the right to receive payments;
* Titles of payment may be transferred between farmers in the same state, with or without land (lease, concession, and rental) they have the obligation to maintain the land under appropriate conditions both in terms of agriculture and the environment.
Due to the single payment scheme, the farmer can choose how to use the land, crop structure, and also ensure the necessary conditions for agricultural technique and the environment protection.
3.2. Rules of conditioning or cross-compliance
Application of single payments enforce binding rules for all farmers receiving direct payments. These rules are included in a list of priorities, summarized in 18 European standards in the following areas: environmental protection, food safety, animal health. Any failure to comply with these requirements entails penalties for farmers. These rules related to all support for farmers aim to promote the implementation of efficient agricultural practices, including regulatory rules.
3.3. Measures to strengthen rural development
Rural development policy aims to strengthen and diversify so to restore agricultural sector, so as to ensure overall development of the countryside, to reduce dependence on subsistence of the agriculture sector and creating alternative employment and the economy rural communities through integrated multilateral approach to the countryside: Member States must focus their actions towards the rural population, rural development policy complements market policy, accompany and promote the multifunctional character of agriculture and as part of regional policy, ensure territorial harmonization and expansion of social – economy. In the new reform stage it becomes important the unified approach of the two pillars of the CAP, namely, market policy and rural development policy. The accomplishment of the rural development policy is linked to the regional policy and adds the new orientation towards the development on a multifunctional European agriculture.