Farm Europe welcome the vote of the Agricultural Committee of the European Parliament on Unfair Trade Practices. The report drafted by Paolo de Castro is a step forward to improve the functioning of the food chain, strengthening considerably the initial proposal of the European Commission. See our full report on UTPs here.

The third edition of the Global Food Forum (GFF2018), organised by Farm Europe in partnership with Confagricoltura, will take place on the 17&18 September. The French and the Italian Ministers for Agriculture Stephane Travert and Gian Marco Centinaio will contribute to the opening session together with Dacian Ciolos, Former Prime Minister and Commissioner for Agriculture, President of RO+, Paolo de Castro and Michel Dantin, MEPs.

The participants will have the opportunity to actively contribute to the debate during 2 plenary sessions, 2 panel discussions and 10 workshops covering food chain, trade, energy, sectorial strategies, budget and resilience issues chaired by Members of the European Parliament, including Jean Arthuis, President of the BUDG Committee. The work of the Forum will feed a report to be presented to European decision-leaders this autumn, in the context of the thinking process on the future agricultural policy and the Spring 2019 European elections.

More details on the event and press contact :

https://www.farm-europe.eu/evenement/global-food-forum-2018-2/

info@farm-europe.eu

Farm Europe’s Green Energy Platform welcomes the decision of the European Parliament and European Council to reject the Commission’s proposal to phase out all 1st generation biofuels. However, at the same time, the Platform regrets that the compromise still ignores the benefits of EU sourced biofuels for the EU society and for the agricultural sector as it co-generates 52% of all « Made in Europe » proteins and should be further encouraged.

The deal concluded today on the revision of the Renewable Energy Directive (RED2) secures the EU sourced biofuels production at 2020+1% levels or maximum 7% and sets the general principle of a freeze at 2019 levels of those more controversial biofuels that are linked to deforestation and peatland drainage (such as palm oil). This freeze is due to be followed by a phasing out by 2030 based on a report of the European Commission in 2023.

At this stage, it’s impossible to assess the efficiency of the deal as long as key parameters of the regulation are transferred to a delegated act to be adopted by the European Commission in February 2019 at the latest. This decision creates a high level of uncertainty on the real outcomes of today’s political agreement.

At this stage, ILUC models are generating an important scientific debate as the results vary widely by study and on time. Therefore the Platform will remain vigilant and mobilised in order to promote a fact based decision that fully respects the intentions of the co-legislators, and that does not put at risk sustainable EU sourced biofuels directly or indirectly.

EU agricultural sectors have the capacity to co-generate food and energy together, from first and second generation biofuels, which should not be seen as opposed but rather as complementary. The development of second generation should be promoted via a real development of industrial capacity, not by multipliers offering a wrong vision of the reality.

The capacity of  agriculture, in Europe, to produce green energy should be further enhanced for all EU-sourced biofuels and for biogas.

PRESS RELEASE

The European Commission has put on the table all the elements of its agricultural strategy for the period 2021-2027: the budget proposals, presented on the 2^ndof May; and the proposals for reform of the Common Agricultural Policy (CAP) officially unveiled today.

Both proposals would cumulatively result in a drop in European farmers’ income between 16 and 20%. On one hand, the impact of the 12% drop in the CAP budget would lead to a fall of more than 8% on average in the Community, with particularly strong negative effects for the field crops, milk and meat sectors, according to the study presented by Farm Europe on the 2^ndof May. On the other hand, according to the European Commission’s own impact assessment, the reform proposals presented on the 1^stof June would lead to an additional reduction of agricultural income between 8% and 10% depending on the options chosen by the Member States in this scenario of broad renationalisation of the proposed CAP.

Such a strategy, with negative economic consequences and uncertain environmental impacts, would inevitably lead European agriculture towards a massive restructuring, causing the exit of many farmers with the abandonment of certain territories and the intensification elsewhere, as well as a race to expansion of holdings, despite the proposals for degressivity and capping. It would go against the transition of European agriculture towards more sustainable models in both economic and environmental terms. In addition, it would slow down investment capacity and generational renewal, despite the tools for young people that could not offset such a decline in income.

No guarantees for a simpler CAP, major risk of fragmentation  of the internal market

Despite the warnings, particularly of the Dorfmann report, adopted by a large majority by the European Parliament on the 30^thof May, the European Commission has persisted in its desire to propose a strong renationalisation and bureaucratization of the Common Agricultural Policy, which constitute central elements of its proposal through the “New Implementation Mechanism”.

Of course, the European Commission has finally proposed a common basis for direct aid through the principle of a super-conditionality that would integrate the current 30% of green aid. But the exact modalities of this super-conditionality are largely left to the free choices of the Member States.

In fact, this proposal in no way constitutes a simplification for farmers: everything would depend on the potentially divergent implementation that would be made by the Member States, if this project was adopted as it stands.

Moreover, although seeking to put forward an environmental touch, the proposal offers absolutely no guarantee in terms of the environment, since the key parameters would be defined not at the European level, but at the level of the Member States or even by the regions. This is as well the conclusion of the Commission’s impact study.

Worryingly, such an evolution would put strong competition in the regulatory frameworks of the different Member States with, naturally, advantages in terms of competitiveness for the less-ambitious in environmental frameworks. It should be noted that the “Eco-Scheme” proposed as a “new greening” undefined at Community level is essentially an agro-environmental measure as they already exist in the context of rural development, with the difference that it would be possible for the Member States to make these supports incentive, and not only “compensatory”.

Interesting principles for some economic tools, but mainly as declaration of stance at this stage

On the economic side, the Commission poses three interesting principles: the obligation for Member States to put in place risk management measures, the establishment of operational programs to structure the sectors and the reform of the crisis reserve to make it pluriannual and therefore more efficient. However, these guidelines are at this stage declarations of intent more than real steps forward. No sufficient means are provided for these three tools: either the Member States remain free to mobilize symbolic or effective financing, or the financial proposal limits the effectiveness of the proposed approach as it is the case for operational programs.

Moreover, beyond the fact that the proposal put the internal market at risk as already raised by Farm Europe last November, the new ergonomics of the New Delivery Mechanism, adds a proposal for a shift from the CAP from a “policy” towards a “program” mainly managed technocratically, in a bilateral relationship between the national agricultural administrations and the services of the European Commission. The latter intends to obtain the power to validate all the choices of each Member State and of each region, both for the use of the first and second pillars. The European Parliament and the Council of EU Agriculture Ministers, as institutions, would be deprived of most of their prerogatives. Even the elements adopted in the basic acts of the CAP by the co-legislators would be subject to the approval of the Commission services in the context of its systematic right of scrutiny for national strategies.

Today, the Agricultural committee of the European Parliament adopted the report prepared by MEP Herbert Dorfmann (IT, EPP) on the future of the Common Agricultural Policy. This report is a clear call for a strong common policy framework at EU level, aiming to « secure farmers’ income and more effectively meet the expectations of society as a whole ». The committee emphasizes the needs to secure the direct relation between the EU co-legislators and the beneficiaries – the farmers – and not transferring most of the first pillar management to the Member States.

Securing the direct link between the EU and its farmers, would address to a large extent the concerns expressed by Farm Europe following the presentation, in November 2017, of the Communication on the future of the CAP and the new delivery mechanism by the European Commission.

This would be the guarantee that all farmers are treated equally on the same market, even with an appropriate level of flexibility, for example with maybe different agronomic measures in the details, but with guarantees that these measures have an equal level of ambition to a EU baseline.

European agriculture is facing common challenges that could only be tackled effectively if Europe stands together, especially when it comes to environmental issues. Excess level of subsidiarity and flexibility, the fragmentation of the policy framework, together with a reduced level of ambition when it comes to the CAP budget, are all elements that could transform the EU agricultural market into a battlefield. Such a trend, which has been rejected by the agricultural committee, would only accelerate the on-going restructuration process of EU agriculture – meaning less farmers – and raise serious question marks on the capacity to deliver when it comes to reducing the environmental footprint of EU food systems.The MEPs adopted instead a balanced approach, calling for a « reasonable level of flexibility within a strong common framework of EU rules, basic standards, intervention tools, controls and financial allocations agreed at EU level by the co-legislator to guarantee a level playing field for farmers ».

Furthermore, Farm Europe welcomes the request of the MEPs to maintain the budget allocation of the CAP in constant prices – this is key to improve and achieve an in-depth revision of the EU policy framework toward a greater resilience of EU farms and enhanced sustainability as requested by the MEPs. Farm Europe is also pleased by COMAGRI’s call for “coherence and complementarity” between the two CAP pillars (Direct payment and Rural development), with a clear baseline of environmental measures in the 1st pillar – driving a common dynamic all across Europe – and tools to foster further green initiatives in the 2^nd pillar.

Additionally, to cope with market uncertainty, the risk management toolbox should become a central feature in the next CAP, as rightly underlined by the agricultural committee. Nevertheless, this should not reduce the responsibility of EU institutions when it comes to crisis management. A strong and effective set of tools at EU level should be kept and strengthen with a proper financial reserve, in order to secure and intervene in case of major crisis such as the ones faced recently by the milk sector. This financial reserve should be able to: (i) strengthen and enhance the risk management toolbox, which was modernized recently via the CAP Omnibus regulation, (ii) trigger when appropriate innovative market measures such as the reduction scheme deployed in 2016 for the milk sector. Complementarity tools for sectorial programmes should be adopted in parallel for the sectors that are in need of new dynamics or facing specific challenges. And, last but not least, the capacity of market observatories should be developed even further in order to speed up policy decisions at EU level in case of serious market disturbance.

Such a common policy framework would offer a truly European added value, and set the foundations of a farming sector that is able to deliver environmental and economic performance.

Updated with final figures presented by the European Commission

The European Commission has presented, today, its proposals for the multiannual budget framework for the 2021-2027 period. This budget project lacks 43 billion (constant euros) in the Common Agricultural Policy (CAP) budget to maintain support for farmers at their current level, 27,4 for the first pillar (direct payments and market expenditures) and 16,2 for the second pillar (rural developpement).

This proposal, if accepted by the Member States and the European Parliament, would reduce the CAP budget by 11,7% over the next 7 years and be a decrease of 16% in 2027.

The impact on the direct payments would be considerable, with a shortfall for farmers of nearly 10% over the period, and about 15% in 2027. For the second pillar, this would be a 21% decrease over the period. The agricultural budget would thus not only assume the full CAP-Brexit bill (18.9 billion). But, in addition, it would contribute 24,2 billion euros to the deployment by the European Union of other policies.

In the end, the CAP would only represent 30.4% of the European budget.

Despite the ambitions displayed, the Commission has decided not to increase the overall scope of the Community budget by limiting the effort required to the Member States to 1.08% of GDP. On the other hand, the proposed cut for the Common Agricultural Policy is much more severe than that announced by the Commissioner for the Budget, Günther Oettinger during these various interventions.

8,15% drop in farmers income

In an uncertain political and economic context – where almost all agricultural sectors are in crisis – this proposal is very worrying for the future of European industries and the economic sustainability of many farms across the European Union.

According to Farm Europe’s simulations taking into account the share of direct payments in final farm income, the Commission’s budget proposal would have an immediate impact with a 8,15% drop in European farmers’ income in 2027, without changing parameters of the current CAP. The decline would reach 26,4% in Denmark and 13% in the Czech Republic – countries where the share of direct payments is the largest. In Germany and France, agricultural income would fall by around 6,5% in constant agricultural policy and by around 3,5% in Italy and Spain.

The equation proposed by the European Commission is deeply questioning the ability of the European agricultural sector to meet growing societal expectations. Even though the establishment of young farmers is a priority, the proposed guidelines would lead to an acceleration of the restructuring of the agricultural sector, particularly in the milk, field crops and beef sectors. This would lead to an expansion of the farms and a search for intensification.

In the context of rising societal demands and the need to invest to ensure the transition of agronomic systems towards more resilient models both economically and environmentally, the decline envisaged by the Commission appears untenable and is the relevance of the CAP reform guidelines presented last November.

At a time when some Member States might be tempted to find direct or indirect measures to compensate for the fall in the European budget, more than ever, the European Union should put in place a genuinely common policy, at European level, allowing to boost the competitiveness of European farms, their ability to invest and transform, avoiding any distortion of competition.

Press Release  

Against the backdrop of the ongoing negotiations concerning the UK withdrawal from the European Union, the European Commission will present on May 2^ndits Budget proposals for the period 2021-2027.

Farm Europe analyzed the financial consequences of the departure of the United Kingdom on the budget of the Common Agricultural Policy and on farm incomes.

The actual net cost of the UK departure from the EU is €2.7 billion per year in constant euros -5% of the CAP budget, and -6.5% if the entire decrease would be affected to the 1^stpillar (direct aid).

With the current Common Agricultural Policy, the immediate impact on European average farm income would be significant. It would stand at at least -3.6%, and with considerable disparities among Member states and sectors:

–      6 Member States would face a decline bigger than 4.5%, including Slovakia and Denmark, which with decreases in average agricultural income of over 10% would be the most affected;

–      14 Member States would face decreases of between 2% and 3.5%;

These average rates of decline in farm incomes, however, mask the disparities between production sectors, with specific impacts, which are concentrated on field crops, meat and milk sectors, and therefore this means much larger decreases for these productions. These sectors, which are already quite weakened today, cannot be able to absorb such declines without major impact in terms of jobs.

Facing a fall in the CAP budget, representing 50% of the net deficit due to the UK withdrawal – an amount of 1.35 billion euro – would already be a challenge in itself, with an immediate impact on the average agricultural income of around 1.8%, again, concentrated on few sectors.

In this context, the challenge of the forthcoming reform of the CAP will be to both: secure its budget, and increase the efficiency of every euro invested in European agriculture, in order to revive the sector and heading it towards a positive, economic dynamic.

This new CAP will have to valorize economic efficiency combined with environmental efficiency, as a key objective. In other words, it means (i) putting the double performance of European agriculture at the core of the CAP, (ii) delivering efficiency for both European farmers and territories, and (iii) firmly rejecting too technocratic systems and projects which go against the European spirit and the European single market.

The full report is available at the following link:

http://www.farm-europe.eu/wp-content/uploads/2018/04/Financial-impact-of-Brexit-FINAL.pdf

Background:

Due to the relevant quantity of parameters to be taken into account, the study developed by Farm Europe was based on scenarios presented by the European Commission and by some Member States. This initial analysis gave rise to the thorough study of 9 different situations. The baseline data refer to the period 2010-2016, covering the specific patterns of expenditure related to the end and the beginning of the EU financial years.

The estimated cost of UK departure from the EU budget results from the following factors:

• the loss of UK net contributions to European budgets (€6.6 billion from the EU budget, and €2.7 billion from the CAP budget; average 2010-16);

• the loss of own resources from UK (customs duties collected on imports to the UK – €2.8 billion/year, average 2010-16), this loss being able to be compensated, at least partially, in the EU-UK negotiations, through a payment by the UK to access the EU27 single market;

• the Commission proposal to finance 20% of the EU’s new priorities (defense, migration, youth mobility, etc.) from existing policies; an issue of €2.5 billion/year, of which €1.2 billion would be taken from the CAP budget);

Given these declines in EU resources and increase in budget needs, three scenarios were analyzed and presented:

• to increase national contributions to the EU budget with the aim to maintain the level of CAP aid received by the Member States;
• to reduce CAP expenditures by 2.55 billion €/yearin constant eurosto compensate for 50% of net deficit caused by the withdrawal of the UK from the CAP budget and to finance up to € 1.2 billion/year of new priorities (EC proposal);
• to reduce CAP expenditures by the total net cost of the UK withdrawal from the CAP budget, i.e. € 2.7 billion/year in constant euros (5% of the total CAP budget, 6.5% of the 1^stpillar budget).

The study also details the consequences of the scenarios analyzed on the average farm income of each of the 27 Member States, one by one. These consequences are, in fact, quite similar in the case of Scenarios 2 and 3.

Finally, it is relevant to note that any changes in the CAP budget must be evaluated in constant euros. This is the only credible position, which could ensure the financial value of commitments that policymakerswill take with respect to the economic sectors concerned. The decision to reduce the CAP budget by 5%, in current euros, corresponds in reality with a 20% decline of CAP aids budget in the next budget period, which would be strictly unsustainable.

Press release – Brussels, 26^th March 2018

Despite 30 years of efforts and no less than 5 “protein plans”, the European Union still suffers from a considerable chronic deficit in plant proteins: more than 30 million tonnes of soybean crops were imported during 2016-17. This figure comes under the spotlight in the analysis presented today, with a report entitled: Proteins and Renewable energy – One and the same challenge together with Farm Europe’s Protein Independence indicator.

The review of all policy measures adopted by the EU since 1992 to reduce its dependence on imports of animal protein from Latin America, shows that two measures have had a significant impact in recent years – measures on which the protein independence of the EU depends today:

• On the one hand, the development of the biofuels sector. Thanks to the co-generation of 13 million tons of Protein-rich products per year, it is the largest “protein plan” in terms of its size and capacity to reduce substantially European dependence on soybean imports. Specifically, Farm Europe’s Protein Independence Indicator highlights that biofuels produced in the European Union have increased the level of EU independence from 18% to 34% over the period 1994-2014.

• On the other hand, more recently, the greening of the 2013 CAP and in particular the measure authorizing nitrogen-fixing crops on the so-called Ecological Focus Areas (EFAs) doubled the volumes produced in Europe of field peas, broad beans and soy beans (+40%), this represents 2,3 million tons of protein rich products, “Made in EU”.

It is however unfortunate to note, that these positive dynamics, which are able to reduce the plant protein dependence of the European Union, are yet both challenged by recent initiatives already discussed or being currently negotiated by the European institutions.

On one side, as part of the recast of the REDII Directive, the European Union proposed a “phasing out” of the so-called first generation biofuels, without taking into account the fact that part of the production, coming from European raw materials, contributes to about 52% to the EU’s protein independence. The co-generation biofuel/protein and the link with industrial activities make a single chain. The protein production activity would not withstand a lower European ambition for biofuels. This is confirmed already by the negative evolution of the Protein Indicator which went down from 34% to 31% between 2014 and 2017. The positive dynamic has been stopped by  the reduction of 2.2 million tons of colza production due to the fierce competition of biofuels produced from palm oil since 2012-2013. This competition showed that less biofuels from oilseeds means less proteins for Europe.

On the other side, to give pledges on the greening the CAP, the decision taken by the Commission to abandon flexibility in the use of pesticides on Ecological Focus Areas is likely to have environmental counterproductive effects, by reducing the areas devoted to EFAs and particularly for protein crops. These effects are indeed likely to be felt from the next sowing.

It is therefore urgent, in order to develop a real European protein strategy by 2020, to build on the efforts made in recent years, not by destabilizing the European biofuel sector but, on the contrary, enhancing and valuing the protein dimension of the co-generation of green energy by taking the opportunity of the ongoing RED2 review. Moreover, it is necessary to re-establish at European scale, a solid and coherent green architecture for the future CAP combining environmental and economic sustainability.