SAF-Agriculteurs de France June 2003

For a new substainable CAP,

supporting the entrepreneurship

1. The Common Agricultural Policy (CAP) which had been put in place 40 years
ago is no longer adapted to the current situation. The objectives which were
defined in article 39 of the Treaty of Rome, were:

- to increase the productivity of agriculture,

- to ensure an equitable standard of living to the farming population,
- to stabilize markets,
- to guarantee food safety,
- to ensure reasonable prices to consumers

They no longer correspond to the level of development of the European

agriculture, nor to the expectations of the society at large, in particular from
the view point of sustainable development.

2. The construction of the CAP and its implementation within the Member States
was made gradually by a series of additions of regulations and measures. At
the origin, the instruments put in place matched perfectly one to the other,
with a clear to the overall measures. With the various ad-hoc adjustments
made over the years and, in particular, in the aftermath of the reform of 1992,
significant cracks appeared here and there in the building and resulted in a
gradual overall incoherent system. At the same time it was adding a rather
impressive administrative burden on farmers. The objectives initially posted to
the CAP and its actual consequences became incoherent: for instance, a
significant preference for EU products was expected but it was more profitable
to buy maize in Ukraine! Similarly an equitable standard of living for the
farmers was expected while a new panel against for the interprofessions (also
called “product councils”) was launched. Or, to give one among numerous
examples one announce that prices should clear agricultural markets, when
the world price for corn became higher than the European price, the
Commission started to tax exports.

3. In short, at this time of enlargement of the European Union, it is urgent to

clarify objectives and improve the overall coherence of the CAP by reforming it
in-depth and by giving it a new focus. If the choice of the calendar can be left
to policy-makers , such a reform should not be done in a rush. It should start
with a clear political announcement on the role and the place that agriculture
must occupy in the economy of the European Union. As we speak this political
aspect seems rather absent leaving the place to technical discussions on
such or such mechanism. This situation is likely to have a negative impact on
the agricultural sector.

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4. It should be necessary to associate the Central and Eastern European

countries to this process. Indeed how one could adopt a programme which
would have a mid- to long-term impact without inviting a large part of those
who are going to be the actors? Making them passive spectators of the
reforms, in the long run, is likely to create frustration and later this could
question major options which today are shared by a vast majority of the 15
member states (such as the dairy quotas).

5. Whatever the final orientations , competitive farmers will be able to take up

the new challenges. They do not feel weak, especially in France. But
confidence is not guaranteed, in an economic activity like agriculture, in
particular due to the possibly unclear impact of future rules and regulations
over the medium and long term.

6. Beyond the aspirations of the society at large, the agricultural project for the
European Union will have to better take into account what will facilitate the
initiative of, the decision-making process by and the development of
competitive farmers . Farmers have experienced significant progress since the
Sixties. They are much better educated and informed. They are part of the
world of Internet and the marketing of quality products. They are full-fledged
entrepreneurs. It is necessary to give them the keys to more competitive
markets instead of passive participants to a world of candidates to subsidies
and premiums in the middle of a forest of administrative constraints. The CAP
must be more simple and more effective.

7. From this last point of view, one must emphasize a positive element, namely
the fact that the agricultural budget has been designed until 2013. However
the actual allocation of expenses remains to be determined over the period
2006 - 2013. In any event, the agricultural budget must keep its mandatory
aspect. It is also necessary to ensure that these expenses are not allocated
outside agriculture. In particular, it must be clear that expenses in favour of
rural development cannot be considered as benefiting the agricultural sector.
New requests expressed by the civil society in areas such as environment or
animal health care, will have a cost which should not be underestimated.

8. In this context, the initiative of the European Commission has the merit to
push for real thinking. But the proposals by Franz Fischler i) do not bring
necessarily the right solutions; ii) are incomplete, and iii) do not ensure a clear
legibility on the overall objectives on medium or longer term. They should be
considered as just proposing a working base, a necessary step, but not
sufficient as it should be completed without delay in relation with a strong
political project.

9. Franz Fischler’s proposal of total decoupling, in theory, seems to go towards

simplification. But, at least in the case of France, if implemented as
announced, it is not appropriate. This measure, in its actual form, generates
too many inequalities and complexity in its administration. Moreover, if the
distribution of the volume of assistance allocated among farmers is not
identical among Member states, this instrument will generate important

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distortions. Lastly, total decoupling is, in the long term, not easy to justify.
Decoupling the way it is currently proposed needs to be seriously amended.

10. If decoupling is decided however, it should be only partial. The direct

payments should be linked to the hectarage, the only way to simplify their
administration and their transmission, even if this system results in a de facto
creation of an extra land revenue. They could be subjected to a conditionality
according to the society demands: i.e., safeguarding the environment,
landscape, biodiversity... It is the best way of justifying and explaining this
direct payment on the long term. The determination of conditionality criteria
must be made with a sufficient attention paid to the details while it should be
as simple as possible. Indeed, these obligations will generate costs. These
new principles incorporated in this conditionality should not be transferred to
third countries who do not recognize them, like developing countries: it should
not encourage the transfer to third countries of negative impacts on
environment of current or future technologies that our European society
refuses.

11. In addition we do not need a total deregulation and full liberalisation of the
entire CAP. The sector would surely loose! It is necessary to keep a minimum
of regulation tools for all our market, and this is not incompatible with the
enterprise development. Safety nets like the market intervention system or
minimum of trade barriers are to be preserved to be able to react to
unexpected catastrophic market situations

12. At the same time, the private management of agricultural risks must become
part of the future CAP. Private risk management instruments are to be
developed like new insurance contracts, mechanisms like the financial
reserves, already proposed by the SAF-farmers. Options markets as well as
over-the-counter tools are to be developed. If they do not constitute full safety
nets per se, they make possible the management of price risks by farmers
and other participants to the food chain. Education on the above would also be
needed and would play a determining part.

13. At the national level, this movement must be accompanied by legal, tax and
social adaptations for the competitive farms. It is the object of the SAF
current undertakings. Indeed, all the necessary conditions which will make the
above possible have to be created .

14. Inevitably the coming years will be transition years towards a new positioning
by the agricultural sector. As transitional period it will be accompanied by a
necessary reorientation for a lot of competitive farms. So it will be necessary in
France and in Europe to encourage this repositioning strategy

15. To refuse any change of the agricultural policy, is simply not realistic. This
would mean to accept a silent reorganization with its procession of human
dramas. A new CAP amending and modifying the Commission proposal
European is absolutely necessary to be an actor of its destiny, it is a deal for
its future, it must offer the maximum of chances of success for all, whatever
can be the strategies developed by the various individuals in the sector.