AGRICULTURE IN EUROPE: 2013 AND AFTER

1. AGRICULTURE IN EUROPE: 2013 AND AFTER Laimonas Čiakas Director EU Affairs and International Relations Department Ministry of Agriculture of the Republic of Lithuania

2. AGRICULTURE IN EUROPE: 2013 AND AFTERINTRODUCTION • Year 2003- it was proposed (F. Fischler reform) to decouple direct support by granting: more flexibility, more responsibility to the farmers to meet markets challenges in the future. Decided- it is too early to make this important move and support for the cereals and meat sectors were left still partly coupled. At the same time it was agreed on some rather complicated scheme - called SPS. • The other important element of the CAP reform was Cross-compliance (CC) (NMS were exempted form CC). It is a combination of bigger responsibility and greater quality, according to which, farmers applying for the direct payments directly responsible for complying with the EU standards (environmental, animal and plant protection, food safety). By implementing CC requirements farmers gain public recognitions of better food quality and environmental protection.

3. INTRODUCTION (2) • New element - Modulation (not yet applicable for NMS). This is transfer of money from the I-st to II-nd Pillar by once again underlining the importance of rural development; • Market issues: some of them were revised (mostly milk and cereals sectors), for the others EU Council committed to do it in the Mid-term review of the reform (which was late renamed as Health check); • Today we have “Health check”, where all above mentioned issues are listed. Climate change is slightly new thing, but related with environmental issues. • In addition, food prices and self sufficiency becoming an issue.

4. INTRODUCTION (3) The importance of EU agriculture and rural development after a year 2013 is related toessential and arising functions : • The most essential function of the CAP is the further guarantee of food security in EU member states as a one of substantial elements of common security of member states, together with Energetic security and safety; • Arising functions are related to challenges of our days: - EU agriculture plays an important role as a guarantee of a common EU-wide standard of food safety and quality, cross-compliance etc. and surveillance of its implementation; - Another challenge is the implementation of the EU Energy Strategy in sustainable way with an important role of renewable energy resources, including usage of energy crops and forest plants for production of biofuel; - Agriculture of the EU must play a role on mitigation of climate change; • Agriculture of the EU retains its relevance with a growing importance of rural development, ensuring the development of rural areas and rural employment. Rural areas play a very important role in preserving the heritage, culture and traditions. Agricultural activity is a cornerstone of socio-economic development of rural areas.

5. INTRODUCTION (4) Situation in 2013 and after will depend on many factors, some of them being: • The agreement on the “Health Check” of the CAP reform ant its results; • The success of implementation of national Rural development plans. Will they reach the planned results? (What kind of new measures will be implemented through the Rural Development?) • The results of 2009 EU Budget Review. How will this effectfunding and priorities of the CAP? • The results of WTO-DDA negotiations. • The situation in EU and World agri-food markets: including both prices and accessibility of food products.

6. LITHUANIA`S VISION OF THE CAP AFTER 2013 (1)I. LEGAL BASIS AND OBJECTIVES The objectives of Article 39 of the new Lisbon Treaty (which is in the process of ratification) retain their importance: • to increase agricultural productivity by promoting technical progress and by ensuring the rational development of agricultural production and the optimum utilization of the factors of production, in particular labour; • thus to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture; • to stabilize markets; • to assure the availability of supplies; • to ensure that supplies reach consumers at reasonable prices.

7. LITHUANIA`S VISION ON THE CAP AFTER 2013 (2) These priorities of EU agriculture and rural developmentremain important: • EU agriculture is competitive, capable of facing the challenges of globalized world; • Sustainable development of EU agriculture, aimed at implementation of public expectations; • EU rural areas with developed economic, social and environmental potential.

8. LITHUANIA`S VISION ON THE CAP AFTER 2013 (3)II. COMMON AGRICULTURAL POLICY CommonAgricultural Policy • The CAP must remain a Common Policy, funded from the EU budget, i.e. it should not be (re)nationalized. Having in mind the inertness of the sector, further reforms and changes should be consistent and gradual. CAP instruments provides with a flexibility to adapt to changes.

9. LITHUANIA`S VISION ON THE CAP AFTER 2013 (4)II.1. DIRECT PAYMENTS • Direct payments remain as form of support; • Direct payment scheme is simplified. It is administered in line with the same principles in all the EU member states; • Full decoupling, with exceptions of crucial/sensitive sectors, which retain a small part of coupled support. Maybe instead of coupled support, some targeted money from rural development; • Flat-rate direct payments in all EU member states. Direct payments have new justification, new basis/calculation methodology or specific eligibility criteria. Direct payments are based on implementation of cross-compliance requirements, they are a price for the creation of public values;

10. LITHUANIA`S VISION ON THE CAP AFTER 2013 (5) II.1. DIRECT PAYMENTS The support in form of direct payments should be allocated only to such farmers, who are actually involved in agricultural production, i.e. crop growers, livestock farmers, who receive their income from agricultural sales; (The objective of direct support is to ensure the income stability of agricultural producers and to motivate them to continue the production. Support for keeping land in good agricultural and environmental condition is allocated from II-nd Pillar, and for actual production – by direct payments from I-st Pillar);

11. LITHUANIA`S VISION ON THE CAP AFTER 2013 (6)II.2. COMMON MARKET ORGANIZATION Review of market intervention measures • To avoid market disruptions and to ensure proper functioning of the EU market and to enhance the competitiveness of EU production, ineffective market regulation measures have been abolished. It's also important that farmers have an effective safety net that will be helpful tool in hard situations, but does not interfere if markets functions well; (What does the “Safety-net” imply? Is it an insurance against business risk and natural disasters or a compensation to producers for ungained income, or support for temporary withdrawal of products from the market (where private sector takes responsibility for storage and selling of withdrawn products?) • Quota system is abolished or is at the end of existence; • Dominating exports and positive trade balance; • Imported products to the EU are in line with EU quality and safety standards; • In the EU, usage of GMO products is acceptable inproduction of products intended for industry and fodder (?).

12. LITHUANIA`S VISION ON THE CAP AFTER 2013 (7)II.3 RURAL DEVELOPMENT Importance of rural development is increased. However, funding of rural development measures is oriented towards public projects (beneficial to a group/community/society). Optimized activities and clear division between rural development and other structural funds (for example – Cohesion Fund). Lithuania, following the implementation of Rural Development Plan for 2007-2013, sees 2013 with such indices: • Average farm size –20 ha, agricultural employment makes 5,7% of overall employment, together with forestry and hunting –10%, 20% of farmers are younger than 40 years old, organic farms take 5% of overall agricultural area, sustainable cultivation of energy plants in area of 130 thousand ha (comparing to 50 thous. ha in 2004-2005), rural areas give 20 thousand working places, 99% of rural population have access to Internet, a difference between rural and urban income is only 15%.

13. LITHUANIA`S VISION ON THE CAP AFTER 2013 (8)II.4. NEW CHALLENGES • CAP gives effective response to climate change, preserves biodiversity, has instruments, enabling to ensure efficient risk and crisis management. These instruments receive sufficient funding; • Measures, aimed at reduction of climate change receive sufficient funding, as well as water management and preservation of biodiversity, new mechanisms to stop global warming are being developed; • Common EU-wide risk and crisis management system, based partly on private responsibility and partly on governmental support has been developed; • Area of agricultural land is limited. To ensure food self sufficiency and reasonable price, more resources allocated to the research and technology development to increase yields per unit of land; • All these measures facilitate sufficient supply of high quality production, prosperity of rural areas.

14. THANK YOU FOR YOUR ATTENTION!