The EU a gro-food system in transition Linking the Common Agricultural Policy (CAP), r esearch and innovation Bologna 18

1. The EU agro-food system in transitionLinking the Common Agricultural Policy (CAP), research and innovationBologna18September 2013 Pierluigi Londero DG Agriculture and Rural Development European Commission

2. Outline • 1. Main drivers of world and EU agriculture 2. Structural change vs. productivity • 3. Linking the CAP, Research and Innovation

3. The shifting balance of constant needs… Food Population, income and demand drivers Policy challenges in globalised markets Fibre Fuel Supply constraints and productivity Feed

4. … and the new realities of agricultural markets Macro linkages (GDP, interest rates, exchange rates) Macro linkages (GDP, interest rates, exchange rates) Domestic and trade policies (from G-2 and 3 pillars to G-20 and export bans) Domestic and trade policies (from G-2 and 3 pillars to G-20 and export bans) Weather variability increased due to climate change Weather variability increased due to climate change Food supply and demand interaction Energy links (high energy prices, biofuels) Energy links (high energy prices, biofuels) Financialisation of commodities

5. Long term commodity price trends Source: World Bank..

6. 2.Impact on structural change and productivity in EU agriculture

7. The agricultural area has stayed stable Source: Eurostat, Farm Structure Survey

8. … but the number of farms in the EU continues to decrease EU-27: -3.7%/year Source: Eurostat, Farm Structure Survey

9. And agricultural* employment is still declining, but at a lower rate * Branch A of NACE R2: agriculture, forestry and fishing; employment in number of persons Source: Eurostat, National Accounts

10. And labour use in agriculture is declining … Source: Eurostat, Farm Structure Survey

11. In countries most affected by the debt crisis, people try to hold on to their farms Source: Eurostat, Farm Structure Survey

12. Farms that remain are bigger in both ha UAA/farm… EU-27: +3.8%/year Source: Eurostat, Farm Structure Survey

13. … and in economic terms (Standard Output/farm) Source: Eurostat, Farm Structure Survey

14. …but slow down in labour productivity* growth * Labour productivity index, 2005=100, 3 yearmovingaverage, 2011 = avg(2009,2010,2011), calculationbasedmainly on the EAA

15. …while most TFP gain comes from labour productivityand capital productivity decreases in the EU-15 2011 = avg(09/10/11)

16. …yields are already very high in the EU-15 t/ha Cereals t/ha Milk

17. Still some large margins of improvement of TFP in the EU-N12

18. And already a higher TFP growth in the EU-12…

19. …mainly driven by an increase in labour productivity

20. 3. Linking the Common Agricultural Policy (CAP), research and innovation

21. Fromlinear to complex innovation systems • Old linear model of science push: basic science leads to applied science which causes innovation and wealth – popular approach in post second world war years. This approach established a link between the flow of new knowledge and economic innovation • However, innovation often does not come straight from science. Actually, sometimes it comes before science (steam engines and thermodynamics) • Innovation uses a vast pool of existing knowledge, recent or old, whether it is with scientists or practitioners or in other places • In this context, Research and Development should not be seen as a process of discovery that initiates innovation but as a problem-solving activity within already-existing innovation processes • Hence the linear model has to be replaced by complex innovation systems implying a variety of actors interacting in networks • In agriculture this implies to recognise the importance of various actors, to acknowledge the importance of tacit knowledge, the importance of networks, the role of facilitators of innovation (brokerage activity) and the importance of putting (part of) agricultural research into a problem-solving mode

22. Research Farming Practice European Innovation Partnership (EIP) Closing The Innovation GAP Interaction 22

23. EU research in agriculture • EU fundedresearchrepresentslessthan 10% of agricultural researchdonedirectly by the Member States • About €2 bio spent on agriculture and forestry, foodchain and biotechnologies in 2007-2013, of whichroughly €700 mio for agriculture and forestry • Proposal by the Commission for 2014-2020 to double the aboveamount (€4.7 bio for the Societal Challenge 2)

24. Framework Programme for Research and Innovation Europe 2020 Priorities European Research Area International cooperation Shared objectives and principles Tackling Societal Challenges • Health, demographic change andwellbeing • Food sec., sust. agri., mar. res. & bioeconomy • Secure, clean and efficient energy • Smart, green and integrated transport • Supply of rawmaterials, resource efficiency and climate action • Inclusive, innovative and secure societies Creating Industrial Leadership and Competitive Frameworks • Leadership in enabling and industrial technologies (Biotechnology,…) • Access to risk finance • Innovation in SMEs EIT will contribute to addressing these challenges Excellence in the Science Base • Frontier research (ERC) • Future and Emerging Technologies (FET) • Skills and career development (Marie Curie) • Research infrastructures Common rules, toolkit of funding schemes Coherence with other EU and MS actions Simplified access Horizon2020

25. Horizon 2020Societal Challenge "Food security, sustainable agriculture, marine and maritime resources & the bioeconomy" Sustainable agriculture and forestry Sustainable and competitive agri-foodsector for a safe and healthydiet Unlocking the potential of aquatic living resources Sustainable and competitive bio-basedindustries Cross-cutting marine and maritime research

26. What's new with Horizon 2020? • Coversresearch and innovation • Largertopics, more challenge-based and less prescriptive • SME instrument • Financial instruments • Rules for participation: • 100% of direct costs, 20% of direct costenvelope to cover indirect costs • Up to 100% co-funding in case of primarilyresearch, up to 70% whenitisprimarily innovation activities • One project = one rate of funding • All entitiesparticipatingrefundedat the samelevel (NGOs, Research Organisations, SMEs, big businesses, farmer organisations, Universities, etc.)

27. Fostering innovation with the EIP • Rural Development programmes • Cooperation (Article 35), including pilot and demonstrationprojects "OPERATIONAL GROUPS" • Knowledgeexchange, training and advisory services • Business development • Investments in physicalassets, qualityschemes, etc. • European Union Researchpolicy (Horizon 2020) • Basic and appliedresearchenhancing the knowledge base • Close-to-user activities (farmexperiments, demonstrations and pilots) • Collaborative projectswith a "multi-actorapproach" and networks

28. Someconcludingcomments • Challenges (to be) faced by agriculture call for ambitiousresearch and innovation at national and EU levels • The new CAP and Horizon 2020 are comingwith instruments and resources to contribute to thisendeavour • Innovation is a priority in the new rural developmentpolicy. Due attention to the relevant measures by MS isnecessary (in particular Article 36 on cooperation) • AGRI willbedirectlyinvolved in management of part of the resources of Societal Challenge 2. "Phasing in" in 2014 and 2015

29. Thank you for your attention!