Agri-Fisherie Council: welcomed progress… but still a lot of work ahead

Delegations held an exchange of views on the Presidency progress report. European Agriculture Ministers broadly welcomed the report, saying that it accurately reflects the state of play in negotiations on the CAP reform package, while simplifications introduced for the New Delivery Model (performance clearance & average unit amounts) were going in the right direction. There is still a long way to go in the process with further technical work required over the coming months to improve the system of reliable indicators, performance review, implementation of eco-schemes, control systems & penalties (conditionality for small-holders), definition of eligible hectares, sectoral interventions & voluntary coupled support (level & scope of sectors).

 

full note available on FE Members’ area 

Wine sector: crisis envelopes still insufficient

Wine news continues to be marked in this June by the Covid-19 pandemic and the response at European and national levels to respond to the crisis.

The European Parliament has approved one set of exceptional market measures; the other, slammed before as insufficient, is still on hold.

full note available on FE Members’ area 

THE EUROPEAN RECOVERY PLAN: HOW IT SHOULD BE DESIGNED TO BETTER SUPPORT AGRICULTURE

The European Commission has presented an ambitious European Recovery Plan and a new Multi-Annual Financial Framework for the 2021-27 period.

The new proposals bring in new resources for the agriculture sector as compared to the initial proposal of May 2018, although the total amount of support falls in 2018 constant prices by €34 billion as compared to the 2014-2020 period.

The key elements for the sector are:

  •   “A €15 billion reinforcement for the European Agricultural Fund for Rural Developmentto support rural areas in making the structural changes necessary in line with the European Green Deal and achieving the ambitious targets in line with the new biodiversity and Farm to Fork strategies”
  •   “An increase of €4 billion for the Common Agricultural Policy (…), to strengthen the resilience of the agri-food (…) sector(s) and to provide the necessary scope for crisis management”

The focus of this paper is on putting forward Farm Europe’s proposals on how best this well-needed resources can be put to use.

– The rural development additional resources should be committed between 2022 and 2024. This should be amended to allow the new resources to be committed as from 2021, as the whole point is to without undue delay help the sector to recover from the current crisis and prepare for the future. The new resources should be part of the 2021 budget and not wait for the implementation of the CAP reform which will not occur before 2023.

– The second proposal Farm Europe wishes to make is to dedicate the €15 billion reinforcement to supporting dual-purpose investments in farms. Those investments should reduce the environmental footprint and at the same time improve the economic situation of farmers.

Examples are investments in digital or smart farming tools and systems, and on production of bio methane from livestock effluents. Those investments squarely qualify for the objectives set-out by the Commission to prepare the sector “making the structural changes necessary in line with the European Green Deal and achieving the ambitious targets in line with the new biodiversity and Farm to Fork strategies”.

– Another proposal is to reinforce the co-financing rates for those investments. The Commission reduced the co-financing rates for rural development actions by 10% in its CAP reform proposal. But the dire economic and financial situation of many farmers and countries calls for a higher rate of community financing to make sure the uptake is optimal. Farm Europe thus proposes that community co-financing should raise to 75%.

Those investments should benefit from the bulk of the new resources, and at least €10 billion be ring-fenced to that purpose.

– The new resources should also contribute to further support crisis management tools, like climatic insurance, mutual funds and income insurance. The EU, with very few exceptions, is poorly equipped with these tools, and the new funds could provide the right incentives to bolster the interest of farmers in using the existing legislative provisions. The main obstacle to the development of crisis management tools in the EU seems to be the cost. The new funds could provide the resources to increase community co-financing and thus render these tools more attractive.

– The €4 billion new resources for the CAP Pillar I are clearly earmarked for crisis management. This makes it possible to finally create and adequately fund a Crisis Reserve, as Farm Europe has put forward in previous papers and initiatives, and the European Parliament Comagri has proposed. €1.5 billion should be committed to the new Crisis Reserve as from 2021. The Crisis Reserve should have the

mandate and the resources to quickly redress markets, intervening at early stages and without delay with a wide range of emergency measures.

– The remaining resources should be used to support the sectors that are already suffering from the Covid-19 impact. Support actions should be agreed to swiftly rebalance hard hit markets, e.g. in the wine, beef and sheep and goat sectors.

It is of crucial importance to swiftly mobilize the additional resources as from 2021. It would be unwise and contrary to the key objective of the European Recovery Plan to wait for the adoption of the CAP reform, and the subsequent presentation of the Strategic Plans. That process would mean simply and squarely two years lost whilst the crisis hits harder.

Farm Europe believes that the European Commission Recovery Plan, although still coming short on the budget for the sector, offers a unique opportunity to shape the response to the Covid-19 crisis and prepare the sector for the European Green deal – provided it is well designed.

MEASURES&IMPACTS RELATED TO THE COVID-19 CRISIS: process still ongoing for the wine sector

There is an arm wrestling match between the European Commission and the Agriculture Committee of the European Parliament on delegated acts for exceptional market measures for the wine sector. MEPs objected to one of the acts in order to obtain more ambitious support, notably for the wine and fruit and vegetable sectors. The Commission announced that it would propose a new act “before the summer” and before Parliament takes a final position of rejection (or not) at its July plenary session.

Concerning Covid direct aid which could be financed by EAFRD balances, ComAgri members also voted to increase the funding ceiling for the measure to 2% of the total EAFRD of each Member State, as opposed to the 1% proposed by the EC.

As part of the revival of the agricultural and agri-food sectors, the recovery plan unveiled by the European Commission includes €15 billion to boost the rural development fund, and the revised MFF allocates an additional €5 billion to the second pillar and €4 billion to the first pillar (€2018) that the Commission’s proposal of June 2018. As a reminder, the CAP 2021-2027 budget proposed by the committee shows a slight increase in current euros (and a decrease of 34 billion in constant euros, taking into account the non-integration of inflation).

 

full note available on FE Members’ area 

THE EU NEEDS A NEW AGRICULTURE TRADE POLICY

The impact of the Covid-19 crisis is still unfolding but one lesson can already be learned – we need food security.

In some strategically important sectors the lack of domestic availabilities became quite acute, but fortunately agriculture in the EU assured its fundamental role of feeding its citizens.

It did not pass unnoticed that in the crux of the crisis many countries resorted to export bans and restrictions, including in the agri-food sector. What would have happened if the EU was as vulnerable in food supplies as it was in some medical equipment?

Contrary to countries that have imposed restrictions on their food exports, the EU as a whole ensured also its share of world supplies. This is not a minor or side element, as food scarcity is a real risk in many poor areas of the globe, and first and foremost in neighbourhing Africa.

The time has come to review the EU trade policy, in particular on agriculture, at the light of the past experience and the lessons of the Covid-19 crisis.

In a nutshell the current EU trade policy might be depicted as willing to strike as many Free Trade Agreements (FTA) as possible with as many countries as possible.

The underlying assumption is that the EU, and her trade partners, benefit from freer trade that expands wealth. Agriculture is always part of the FTAs as required by World Trade Organization (WTO) rules.

Another strategic element underpinning the EU trade policy is the belief that freer trade under the umbrella of international rules is a key element of globalization, and a means of reducing strategic fault lines and improving a cooperative approach to planetary issues.

This global approach has resulted in the European Commission (EC) overlooking an in-depth analysis of the impact of each FTA, and failing to decide on its own merits. The EC impact assessments systematically rely on global evaluations and ignore the specific impacts in specific sectors.

This has been particularly acute in the agriculture sector. Agriculture and food security concerns have not been front stage. There has been some recognition that highly vulnerable agriculture sectors (typically beef, sugar, and to some extent pork) should not be fully exposed to outside unfettered competition, but never to the point of stopping short of constantly increasing EU’s market access, or helping those sensitive sectors cope with increased competition. Other sectors, like sheep and goat meat, have been largely left on their own whilst their economic situation has worsened with increased imports.

Farm Europe argues that the time has come to adopt a more balanced trade policy. After Covid-19 we need a change of policy that does not compromise food security. We need a better balance between the benefits of freer trade and its asymmetric negative impacts. We need less of an ideological driven policy and more pragmatism and realism.

Farm Europe is not against trade, nor negotiating FTAs for the benefit of producers and consumers. It must be recognized that FTAs bring benefits that should be cherished. 

The EU is a lead net-exporter of agri-food products. In 2019 the export value of agri-food products came to a total of €151.2 billion, while imports accounted for €119.3 billion. The trade surplus reached an all-time high of €31.9 billion. It is undeniable that trade brings wealth and jobs to the sector.

Isolation within our borders would bring less production, lower farm revenues, less jobs, fewer agri-industries, slower technological progress and innovation spurred by international competition.

Without EU agri-food exports, food security in many countries, and in particular in Africa, would be compromised. As demand for food is raising, the role of the EU as a lead world exporter is paramount.

However FTAs should not compromise the viability of the more vulnerable sectors. FTAs have brought winners and losers in agriculture, and the losers have been basically left alone to cope with the consequences. 

In addition to that, the trade surplus of the EU on agri-food products masks the fact that the EU surplus in raw agriculture products is small, the overall figures are largely helped by the EU export performance on processed products, in particular of high-value.

Whilst FTAs have somehow shielded the most sensitive sectors by limiting free trade under quotas, the accumulation of FTAs, amongst other factors, is leading to shrinking vulnerable sectors like beef and sheep and goat meat.

A new trade policy should pursue the benefits of freer trade whilst either completely shielding vulnerable agriculture sectors, or adopting specific programmes to help those sectors cope (and provide mandatory EU resources to fund those programmes). 

The EC should in its prior assessment to engaging in FTA negotiations carefully evaluate the degree to which borders could be open in key  sectors, and integrate in its assessment as appropriate the design and resources needed to help those sectors cope with additional external competition.

A new trade policy should respect a level playing field between EU and third countries, with regard to environmental, sanitary and phytosanitary constraints.

Whilst it is true that imports into the EU must respect the EU’s sanitary and phytosanitary norms, in many exporting countries substances prohibited in the EU are widely used. The level of controls at our borders must raise to these dangers.

On the environmental field the situation is even worst. Existing FTAs only have some clauses that embed adherence to UN conventions.

The fact is that the EU imports a wide range of produce from deforested areas, from beef to palm oil. This is unacceptable as the EU thus becomes an active actor in deforestation through its large demand for those products. The EU should adopt a clear cut trade policy that bans imports from deforested and other previously high-environmental value areas. The EU has the independent means to control deforestation and identify which products originate in those areas, and should not leave certification of deforested products to third countries or other parties. The EU should establish a clear cut-off date in the past for accepting imports from previously deforested and high-environmental value areas, banning all imports from areas degraded after that date.

The EU environmental constraints are the more stringent in the world. That comes at a cost for the sector, and that cost is not borne by its competitors. In particular the EU should not accept that imports of agri-food products that were produced under significantly lower environmental constraints benefit from tariff advantages.

The level playing field in new technologies is also being turned against EU agriculture. The EU is banning the use of promising techniques that have the potential to increase productivity and reduce the environmental footprint like New Breeding Techniques. By its own doing, the EU is putting the sector at a competitive disadvantage.

On labour conditions the level playing field is all but absent. Existing FTAs only embed adherence to ILO conventions.

Although this is typically a cross-cutting issue that goes further than agri-food trade, FTAs could have provisions to address minimum wage issues in particularly sensitive sectors. For instance, on meat trade the cost of operating slaughterhouses is significant and thus the issue is relevant to establishing a level playing field.

Another cross-cutting issue is competitive currency devaluation. There is a strong case to insert clauses in FTAs that counter competitive currency devaluations. A currency devaluation has quite often a larger impact in trade terms than tariffs, and monetary policies that intentionally devalue a currency should be countered by counter-measures, e.g. by giving the other party the possibility to raise tariffs.

The trade policy changes that Farm Europe puts forward should be seen in the context of reforming the EU trade policy in agriculture towards a more pragmatic and realistic course.

The new policy should bring coherence and a holistic view of trade costs and benefits. On agriculture, it should be in phase with the model of agriculture pursued in the EU, largely based on medium sized family farms operating under their own limited capital resources, on and how the EU is prepared to support this model.

Agri-Fisherie Council: a much requested impact assessment

After a presentation of the Farm to Fork and Biodiversity strategies by Agriculture Commissioner Janusz Wojciechowski and Health and Food Safety Commissioner Stella Kyriakides, agriculture ministers held an exchange of views on these two strategies of the Green Deal.

As the Council Presidency explained in its information note, “the Commission highlights the relevance of the agricultural and fisheries sectors in contributing towards the objectives of both strategies. It is also clear, however, that the implementation of these strategies will have a deep impact on the European agriculture and fisheries, and specifically on their environmental and economic sustainability”.

In particular, ministers exchanged views:

  • on the main challenges and opportunities in achieving the strategies’ targets (question1);
  • on the additional measures suggested by the Commission to make the implementation of the future CAP more efficient in order to help achieve the ambition of the Green Deal (question2);
  • on whether the new proposal for the EU budget 2021 – 2027, including the new European recovery instrument(‘Next Generation EU’), is adequately designed to fulfil the ambition of the Farm to fork and the Biodiversity strategies (question 3).

 

full note available on FE Members’ area 

Negotiations for the EU budget: a downward CAP proposal

The month of May was marked by the unveiling of the new Multiannual Financial Framework including the stimulus package. Although this package improves the 2018 budget proposal, it represents a reduction of €34 billion for the CAP compared to the current programming period (-8/9%).

 

 

full note available on FE’s Members area 

Negotiations on CAP reform: start of trilogue’s negotiations on the transitional regulation

May was marked as follows:

  • At the level of the European Parliament, the Agriculture Committee’s mandate for the transitional regulation was adopted by the plenary and trialogue negotiations have started.
  • The European Commission presented its Farm to Fork and Biodiversity It described them as “compatible” with the 2018 CAP reform proposal. ComAgri has asked for shared competence on these strategies’ proposals, which will interfere with the legislative work of CAP reform.

 

full note available on FE Members’ area 

New Breeding techniques: UK Parliament & USA go forward

In May, the European Union unveiled its Farm to Fork strategy, the agri-food component of its Green Deal. Genetic engineering is timidly included, with reference to the European Commission’s ongoing study on the potential of new genomic techniques to improve sustainability throughout the food supply chain.

In the United Kingdom, the Parliament is lobbying the Secretary of State for the Environment to introduce an amendment stimulating genetic innovation in the post-Brexit Agriculture Bill.

In the United States of America, government has enacted a major regulatory change which will exempt – as of 5 April 2021 – certain genetically modified plants from government oversight, and will allow automatic approval of variations of established types of genetically modified (GM) crops, thus facilitating their placing on the market.

full note available on FE Members’ area 

Wine sector: EU & national measures to cope with the crisis

Wine news continues to be marked in this May by the Covid-19 pandemic.

The European Commission published on the 4th of May a package of exceptional measures announced on the 22nd of April, notably to help the wine sector. On the 2nd of June, the Agriculture Committee of the EP have rejected one of related delegated act (considering these measures to not enough ambitious) to put pressure to the European Commission to increase the level of flexibility.

France and Italy announced some national measures to further support the wine sector as well.

full note available on FE Members’ area