Impact of enlargement on CAP reform

Background

 

Enlargement is expected to create
great imbalances in the EU's agricultural market and pose
a heavy burden for the EU budget under the current rules.
The EU believes that the CAP as it is would not be
suitable for the enlarged Union, and that support for
rural development should play a much greater role than
market measures in the future.

The agricultural sector in most of the
Central and Eastern European countries is more
fragmented, inefficient and traditional than in the
current Member States. However, smaller family farms that
practice more organic farming, for example in Poland,
have experienced less problems in the area of food safety
and health than the EU's industrial-scale farming that
has led to such epidemics as BSE and foot-and-mouth
disease.

The candidate countries reject the
EU's position that their farmers should not be
immediately entitled to direct income support. They
object to any radical CAP reform before enlargement,
which would exclude them from the process of
decision-making on future agricultural policy. The EU
will partially revise its CAP in 2002, as decided at the
Berlin European Council in March 1999. Agenda 2000,
adopted at the Berlin Summit, does not foresee a
fundamental reform before 2006. However, it also excludes
the possibility that future Member States would receive
full CAP payments prior to that date.

Nevertheless, the ten Central and
Eastern European candidates will receive 520 million euro
per year in the seven year period from 2000 to 2006 to
prepare for full participation in the CAP through the new
Special Accession Programme for Agriculture and Rural
Development (SAPARD).


Main Policy Options
 

The main policy decisions facing the
EU in the area of agricultural negotiations are:

  • Whether to gradually phase in direct farm payments
    to the new Member States while they adapt their
    agricultural and rural development policies to the EU
    or whether to apply the CAP to the new members
    immediately.
  • Whether to reform the Common Agricultural Policy
    before extending it to the candidate countries or
    not.

 

Issues

The EU has opened negotiations on
agriculture with Cyprus, the Czech Republic, Estonia,
Hungary, Latvia, Lithuania, Poland, Slovakia and
Slovenia. Negotiations on agriculture with Bulgaria,
Malta and Romania have not yet started.

The Belgian Presidency of the EU will
organise negotiations on the veterinary and phitosanitary
issues in agriculture in the second half of 2001.
Negotiations on other agricultural issues, including the
controversial direct payments to farmers, will start in
the first half of 2002, under the Spanish Presidency

Positions

 

The EU

is expected to adopt its common positions on agricultural
issues, in particular veterinary issues, phytosanitary
issues and transition measures, by the second half of
2001. Common positions on those agricultural issues that
have not been solved and in particular issues of major
importance such as direct payments and quotas, should be
adopted in the first half of 2002. The 2002 elections in
France, the largest beneficiary of the CAP funds, will be
decisive for the final EU position on agricultural
negotiations.

The EU

does not want the candidate countries to receive direct
payments immediately after they join the Union. However,
all
the candidate countries

demand equal treatment with the current Member States. A
report by Poland's government says that Polish farmers
would suffer from unfair competition in liberalised
agricultural trade if they are not eligible for EU farm
payments.

The Danish Agricultural Council

called for the delay of the enlargement until 2006 to
avoid cuts in farm support to existing Member States. In
a position of April 2001, the Danish farmers' association
said that a two-year delay of enlargement would give the
EU time to finish the CAP reform, making enlargement
affordable.

The ten Central and Eastern European
candidates

demand full incorporation into the CAP in their
negotiation positions on agriculture.

Poland's government

requests incorporation "into the full range of CAP as
well as structural instruments, including the
participation of Polish farmers in benefits provided by
price, income and structural mechanisms". It insists on
the right to direct payments to Polish farmers after the
accession. Poland, the candidate country with the largest
farm sector, requests production quotas "at the level of
natural potential for environment-friendly agricultural
production on the one hand, and ensuring maintenance of
stable income sources for agricultural population on the
other".

The Polish government

has published a study claiming that Polish agriculture
will not be too big a burden for the CAP budget.
According to officials, Poland expects to receive 3
billion euro per year in direct payments for its farmers.
The report says that Poland's farms will not cost the EU
much because direct payments are linked to the size of
farms, yields and number of animals, and not to the
number of farmers. Poland has one of the highest numbers
of farmers in Europe, but Polish farms are very small on
average.

The European Landowners' Organisation

(ELO) wants to "steer the CAP towards a more integrated
rural policy which acknowledges and supports the food,
forestry, energy, recreational, s ocial, environmental
and cultural landscape roles of land management in a more
balanced way". It says that this can be characterised as
"a switch in emphasis from producers to land managers".

The Deutsche Bank Research

says that the enlargement requires a reform of the CAP.
Its report, "EU agricultural policy: a plea for real
reform", says the prospects for a reform are "better than
ever before because, in actual fact and in the eyes of
the politicians, the public purse is empty and, like it
or not, taxpayers cannot be squeezed for any more taxes
or social-security contributions". It adds that "the time
is ripe for agricultural reform, since the economic and
ecological indeed the moral damage of former policies is
very much in evidence". The study expresses hope that
"the developing and agricultural economies as well as the
EU accession candidates will pressure the Union to
denounce the old-EU lobby for current subsidy policy so
as to erode its political clout".

Euronatur

, a joint platform of German environmental, agricultural,
animal welfare and consumer associations, has called for
a "rigorous reorientation" of the European Union's
agricultural policy. Euronatur says that the primary
objective is no longer a continuous increase in
productivity. It lists new priorities, such as:

  • production of quality food,
  • protection of consumers' health,
  • protection of nature and environment,
  • farm animals welfare,
  • demonstrating economic prospects for farmers and
    the rural areas.

Timeline

 

The Swedish Presidency intends to open
negotiation on agriculture with Latvia, Lithuania and
Slovakia by the end of June 2001. The opening of
agricultural negotiations with Bulgaria, Malta and
Romania has not been foreseen yet.

The EU has not yet defined its
negotiating position on agriculture. However, it made
clear in the Agenda 2000, adopted by the Berlin European
Council in March 1999, that potential new Member States
would not be eligible for direct payments to their
farmers until 2006.

The financial framework of the CAP for
the period 2000-2006, reached in Agenda 2000, foresees a
revision in 2002. No major reform has been foreseen
before 2006.

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