Minister: CAP has image problem we must fix

MINISTER MAKES ROBUST DEFENCE OF CAP AT OECD CONFERENCE

THE following is an abridged version of Agriculture Minister Michael Creed’s address to the OECD CAP conference in Paris held last week:

“This is a complex, but critically important issue for the future of the European Union. Against the background of the broader political challenges which face the Union at present, the provision of adequate funding for this common policy is more important than ever. The CAP binds the members of the European Union in a collective commitment to food security, environmental sustainability, and the protection of farm families and rural communities. Without adequate funding the CAP is an empty vessel!

With that in mind, it is important to remind ourselves of what CAP does for EU citizens:

It guarantees food security for over 500 million European citizens; It maintains 10.8 million farms on 48% of European Union land; It helps to ensure that rural areas that are home to 55% of EU citizens are economically viable, and are not abandoned;

It underpins employment for 44 million people within the wider food sector; It delivers the standards of food safety and animal health and welfare that EU citizens have come to expect; It protects water quality, biodiversity and landscape and provides tools to help farmers to mitigate climate change.

In Ireland, CAP supports an Agri Food sector that employs more than 173,000 people.

This is 8.6% of total employment.

The Irish Agri Food sector accounts for 7.6% of GDP. Indeed, it is Ireland’s largest indigenous sector, contributing some €26 billon in turnover.

It is vital to the survival of rural and coastal areas where alternative employment opportunities do not readily exist.

So while even in Ireland, the CAP is not immune from criticism, we have good reason to value its contribution to the lives of our people and to the economy generall

This does not mean that we should be afraid to critically analyse the CAP, to face up to its deficiencies, and to improve it. Indeed it is our obligation as public representatives to do so. We are at the beginning of such a process now.

In my view, the Commission’s CAP Communication of 29th November is a very good place to start.

I would like to mention some of the important elements in the communication from an Irish perspective.

Direct Payments

Let’s start with direct payments. I welcome the strong commitment to them in the communication. They are crucial in providing income support and stability, and are a major element of family farm income. Of course they are often criticised because they are not responsive to market volatility. However, they have a value that goes beyond that, because farm families know that come what may in the market place, they will receive their basic payment every year. This is invaluable!

What is also very clear from [both today’s discussions and] the Agri Fish Council last week in Brussels, is that Member States are not in favour of co-financing of Pillar 1 Direct Payments. This would be a retrograde step which could undermine the “Single Market” and lead to “nationalisation” of Agricultural Policy. The communication proposes better targeting of Direct Payments through exploring a variety of options, including capping.

Ireland availed of the option under Article 11 of Regulation 1307/2013 and since 2015 has already put a cap of €150,000 on payments under the basic payment scheme. This means that no farmer in Ireland can receive more than €150,000 under the Basic Payment Scheme annually.

I am glad therefore that the communication refers to capping. However, my view is that any policy to apply a lower cap should be voluntary. Conditions are not the same across member states. For example there are very large farms in former Eastern Bloc Member States, in receipt of large direct payments, that support many families and employees.

So while the common narrative of 80% of payments to 20% of farms is emotive, and can be damaging to reputation of CAP, member states are best positioned to assess the reality on the ground.

Simplification and Subsidiarity

The big themes of this CAP communication are simplification and subsidiarity. As a proponent of subsidiarity, I am glad that this features in the communication in a significant way. The proposed new delivery model, with member states proposing measures within a framework laid down at EU level, can work for member states and farmers.

There are risks with it, however. We will have to work very hard together, to ensure that this does not lead to further complexity, and that integrity of the single market is preserved.

For example, given the experience with the approval of Rural Development Programmes after the reform in 2013, will European Commission and member state administrations have the capacity to develop and approve National Strategic plans without delaying payments?

Simplification is something we must continue to work at. It is much easier to say than to do, however. We need to make sure that schemes are straightforward to administer and control, and easy for farmers to understand. This way the administrative burden will be reduced for all, and the taxpayers and citizens of Europe will receive better value for money.

Simplification should also assist in reducing the error and non compliance rates. If schemes are too complicated, with too many detailed specifications and prescriptive actions, they become difficult to administer and control.

Environmental Public Goods

The environmental ambition of the CAP must be increased. CAP must help member states to meet their climate change and environmental obligations. However, if we expect farmers to deliver public goods, they must be remunerated for doing so.

Risk Management and Income Volatility

In recent years agricultural markets have been characterised by extreme volatility. We need better tools to manage risk. Agriculture is more vulnerable than any sector to the impacts of climate change and more regular extreme weather events, which appear to be increasing in prevalence. The “European model” of farming has many advantages, but it also means that we must provide a safety net for farmers, whose scale inevitably makes them vulnerable to market shocks.

Extreme market volatility is an increasing factor in managing farm enterprises. It is critically important that we have a flexible toolbox to deal with issues as they arise and to provide an effective safety net.

Existing EU instruments can still make a vital contribution! Instruments such as intervention and the new more flexible exceptional measures provided for under the Common Market Organisation Regulation have proven their worth. They must be retained as options.

And we also must explore the possibility of supporting income stability instruments, insurance, and mutual funds. We must learn the lessons of the past however. It is clear that most member states chose not to use these mechanisms in the current CAP, largely because they were too rigid in their application.

In that regard, the changes in the recent Omnibus Regulation around risk instruments are welcome. Ireland like a number of other Member States has yet to utilise these tools, however we will consider them again, in the context of CAP post 2020.

These tools should however, remain voluntary for Member States. There should also be an increasing role for the private sector in managing risk. In Ireland, our dairy co-operatives have developed a number of new instruments, including fixed milk price contracts and fixed margin schemes. While the challenges are different, I would like to see other sectors make an effort to insulate suppliers from price volatility in this way.

Conclusion

The CAP has an image problem. If we are to fix it, we must ensure that it is seen as a policy of the future rather the past. Its value in underpinning investment, research, and innovation, and its practical application at farm level, must be appreciated.

We must also explain to citizens how it helps to improve competitiveness and resilience in the face of economic and climate challenge. We must explain that it underpins the production of food, using the highest standards of quality, safety and animal health and welfare in the world.

We must explain how it helps farmers to contribute to a better environment.

From Ireland’s perspective, I will be arguing for as strong a budget for the Common Agricultural Policy as possible. I look forward to working with the institutions of the European Union..to deliver the best possible CAP for the citizens of the European Union into the future.