The Dutch view on the future reform of the Common Agricultural Policy 

The Dutch view on the future reform of the Common Agricultural Policy

Laurens Jan Brinkhorst, Dutch Minister for Agriculture, Nature Management and Fisheries, addressed an EPC breakfast policy briefing on 19 March 2002, on "The Dutch view on the future reform of the Common Agricultural Policy". The meeting was chaired by Hywel Ceri Jones, Executive Chairman of the EPC. A question and answer session followed. This is not an official record of the proceedings and specific remarks are not necessarily attributable. Agriculture has been a key European policy for years, said Mr Brinkhorst, but its original "core" purpose - guaranteeing security of food supply after the post-war shortages - no longer applied. There was therefore a need to review the CAP, not least in the wake of successive recent food scares, such as BSE, salmonella, dioxins in food and foot and mouth disease.

Why the CAP needs reform

The CAP's first 20 years had been an "enormous success", but society had changed, the countryside had changed and agriculture itself had changed. Mr Brinkhorst stressed he was not arguing for an abandonment of the CAP and said there was "absolutely no reason" to renationalise agricultural policy, but in a Europe of 25 countries, more flexibility over implementation would be needed.

The EU must now move away from a supply-side approach, which focused on financing the supply of food, to a market approach where consumer interests become central. But agriculture clearly had special characteristics, which had a strong public dimension - for example, the issue of food safety, which has become a major concern for the general public.

Another reason for reviewing the CAP was that the EU needed a more integrated policy on agriculture, rural development, food safety, animal welfare and animal health to take account of "societal concerns". "Agriculture has been developing for a long time in splendid isolation," he said.

Finance was also a key reason for reforming the CAP, although Mr Brinkhorst said he believed the EU's current budget was big enough for a Europe of 25 "provided we also add some flexibility."

External reasons for reforming the CAP included pressure from the World Trade Organisation, especially over export subsidies. Mr Brinkhorst said he was extremely worried about the trend towards isolationism in the US, where support for the agricultural sector rose six fold between 1995 and 2000. It was time, he said, for the EU to show leadership in the agricultural area.

He said the Union should "stick to its guns" over liberalisation and, at the same time, take the lead over certain non-trade concerns such as animal welfare and protecting the environment. "We cannot simply look at market forces but must also look at the values underlying the production of food," he insisted.

Effects of enlargement

The final reason why CAP reform was necessary related to enlargement, although Mr Brinkhorst stressed that this was not a condition for enlargement but rather a "logical consequence". If the EU was to keep to its road map of admitting new members in 2004, it must respect two issues: on the one hand, agricultural policy, like other policies, must not discriminate against new members (creating first and second class citizens); but on the other, the financial perspectives had to be respected. He said there was not a single Member State that wanted to change these before 2006.

Commission's mid-term review

Mr Brinkhorst said the proposals, which were now being sketched out by the European Commission for the mid-term review of the CAP, remained "quite modest". They concerned compulsory modulation, the abolition of intervention for rye, reducing support for durum wheat and modifying beef markets to make them less supply-side driven.

He said the European Commission should show greater leadership. The policy should be adapted to new circumstances, it should promote the integration of the agricultural sector into the total economy and society, and it should supply more incentives and more sustainable agriculture.

Proposals for reform

Mr Brinkhorst outlined four further suggestions for the reorientation of agricultural policy:

The EU should apply more degressivity to direct income support to make enlargement after 2006 financially affordable. He said only fairly small modifications would be needed to achieve "interesting" results: three per cent of degressivity of current direct payments from 2004 onwards would achieve a budget-neutral integration of ten countries. The EU should move in the direction of phasing in and phasing out: phasing in the income support to achieve non-discrimination after enlargement and some phasing out of it "on the side of" the current Member States.

An earlier start to dairy reform: dairy and sugar policies were hardly modified in 1999, and 2005 was too late a target date for the proposed 15% dairy price cut now envisaged. A clear policy is also needed for candidate countries. It would also be helpful to become less dependent on export restitutions, which had a direct impact on developing countries.

Strengthen the 'second pillar' of agriculture: currently only 20% of the budget goes towards rural development - 10% from the EU budget and 10% from co-financing by Member States. This should be increased. "We have to move more rapidly in this direction."

Reducing the role of price support: only in extraordinary circumstances should the EU intervene in the market. This was a long-term objective which could not be achieved overnight.

In conclusion, Mr Brinkhorst said: "The policies which I am pleading for, more competition and more attention to the demands of society, including issues like animal health and animal welfare, will serve the consumer and so will also stimulate the farm sector to adapt."

Discussion

Answering questions, he acknowledged that his proposals were ambitious, but argued that the climate had changed since he joined the Agriculture Council three years ago. The Council now spends half its time discussing issues, which have to do with societal changes - such as animal health and EU subsidies to tobacco producers.

On tobacco, he acknowledged that income support for tobacco growers could not be removed overnight; but the agriculture ministers meeting in Brussels on Monday March 18 had decided that the goal of phasing out support for tobacco growing should begin.

There is strong resistance from growers - understandable because in parts of Greece there is not much alternative to tobacco production.

Mr Brinkhorst pointed out that the EU was now a society in which 97% of the population came from a "non-farming background" and it was important to listen to their voice. He said that; whatever the shape of new proposals from the Commission as part of the mid-term review, nothing at all can be decided, including dairy reforms, until the current raft of national elections in some Member States was out of the way.

He acknowledged the importance of "multifunctionality" in farming - the recognition that agriculture has other functions apart from producing food, such as rural development. However, multifunctionality should not become another form of protectionism and the rural aspects of farming had to be secondary to the main purpose of agriculture as a source of production income.

Asked about Poland's response to the EU's agriculture proposals, he said there would be a difficult transitional period for the country; a phase in which alternative work must be found for Poles who cannot make a living on the land. Realism wi ll dawn as the months go by and the EU should not be too influenced by individual reactions at such an early stage. More generally, agriculture policies should never be designed purely to keep people on the land: it was not economically feasible and ultimately would not benefit the farming community.

Questioned on the Convention on Europe's future, Mr Brinkhorst said there was every reason why agricultural policy should be included in the powers of co-decision, and therefore fully involve European Parliament. He would also support the transfer of the FEOGA budget from obligatory to non-obligatory expenditure in the EU budget. The reform of the structural funds was more complicated, and the question of cost effectiveness had to be examined.

Reform of both agricultural policy and structural funds went hand in hand. Rural development was also important but it should not be promoted in a way which led to market distortion.

On the timetable for accelerated agriculture reform, Mr Brinkhorst said the Copenhagen summit at the end of this year will be key, but agriculture policy could not be changed overnight. Reform of the financial perspectives will take place in 2006, and all the main elements; including agriculture, needed to be in place by then.

On US isolationism he said the EU should resist the trend. It would not be wise to emulate America's stance over steel: "Unless we keep a cool head we will get cold feet."

Asked if he was pessimistic about the chances of significant CAP reform he pointed out that the EU had introduced "tremendous" reforms to curb surplus production. The EU was by far the largest importer and exporter of agricultural produce, importing twice as much as US and GATT countries combined. Price support has been reduced very considerably since 1989. Reforms were going in the right direction; but they needed to be stepped up.

On thanking Minister Brinkhorst, Hywel Ceri Jones stressed that the EPC would continue to monitor carefully the future development of CAP and cohesion and structural policies.

The European Policy Centre

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