Crisis of the Agricultural Markets: Don’t be afraid of using the crisis reserve!

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In his speech to the COMAGRI members on 7 March in Strasbourg, Commissioner Hogan noted very clearly the parameters of the possible emergency responses to crises which, to date, have not been curbed or mitigated, and which have severely affected the European agricultural sector.

While the challenge today is to quickly break the downward spiral in which all of the agricultural sectors in crisis find themselves, all of the tools that the Commissioner has asked his expert services to appraise converge on one prerequisite: funding requirements.

So far, all measures which have been taken to address the crises in recent years, including the €500 million package put on the table last autumn by Commissioner Hogan, have been funded by budget margins available within the framework of the CAP.

Today, for the first time, it is no longer possible to finance in this manner crisis measures which would be commensurate to the damage suffered in the sector.

It seems equally implausible to expect a contribution from the EU budget beyond the CAP headings in the current economic circumstances, and in view of the other challenges which the European Union is facing and for which it is currently seeking funding as well – notably the refugee crisis.

Therefore, the equation has been clearly defined by Commissioner Hogan in Strasbourg: the use of the reserve crisis appears to be the only way to secure funding within the framework of the CAP in order to allow concrete action.

The question is whether the will is there to use such a reserve: on the one hand, the political will of the co-legislators; on the other, the conscious choice of the agricultural profession to use this tool as a financial arm of solidarity among the agricultural sectors.

As for the political side, the choices of both the European Parliament and the Council of Ministers during the negotiations of the last CAP reform were extremely clear. This tool was adjusted and fine-tuned at the request of the co-legislators, precisely in order to permit the Commission to intervene quickly, with flexibility, and with the financial means to act in the absence of other financial margins within the CAP budget.

The money from the crisis reserve is money belonging to the farmers, drawn as it was from the farmers’ direct aids. Thus, the so-called ‘reserve’ was designed, desired, and assumed upon the adoption of the CAP reform by the co-legislators.

One argument raised variously in recent months against activating the crisis reserve has been that since European agriculture has more or less suffers every year from a crisis in one sector or another, to start using the reserve crisis would open the door to its recurrent use.

An original argument, if there ever was one. In other words, they would avoid using a tool because it risks being efficient, and may therefore be employed again in the future.

However, this tool, useful and to be used, should not be confused with a source which it is possible to draw on without limit. If the amount of €400 million is by no means an intangible ceiling, each use must be carefully justified regarding the measures proposed for financing and their effectiveness.

It should be possible to demonstrate to each of the European farmers who have indirectly financed these measures that they are able to respond effectively to problems, that they can provide a comprehensive response to stop the haemorrhage affecting – directly and indirectly – the entire European agricultural sector, and that they are by no means financed by yet another thinly spread policy.

Confronted with an economic crisis of vast magnitude, it is economic measures, rather than ‘political’ ones, which are anticipated and hoped for, and it is only in this – economic – context that the use of the crisis reserve will make sense and will be understood and accepted.

And, in this context, a complementary ‘political’ measure might be to increase the crisis reserve for next year, in addition to its deployment this year.