Speech by Commissioner Fischer Boel - Agricultural Reform in a Global Context
Summary: May 13, 2005: Speech by Mariann Fischer Boel, Commissioner for Agriculture and Rural Development, "Agricultural Reform in a Global Context," Schuman Lecture at Oslo University (Oslo)
Agricultural Reform in a Global Context
General introduction
Ladies and gentlemen,
I'm very glad to be with you here in Oslo to deliver this year's Schuman Lecture. I hope to get quite a special perspective on the European Union today by standing outside it and perhaps looking downwards a little to see it!
It was as far back as 1950 that Robert Schuman signed his declaration proposing the merging of the French and German coal and steel markets - the founding act of what later became the European Union, which we celebrated on May 9.
55 years on, the EU is growing up. It's becoming deeper and wider - especially after the enlargement of 1st May last year. This remarkable achievement has particular resonance for those of us who still have faint memories of the war and the appearance of the Iron Curtain. But even the more youthful among us will probably remember the collapse of the Berlin Wall in 1989. What a long way we've come! And what a fascinating project to be part of.
It's also a particular pleasure to join you just a few days before Norway celebrates the 100th anniversary of its full independence. Congratulations. Independence is something that we all cherish. But of course independence today does not mean the same as independence in 1905. While we want to remain ourselves and are proud of those things which make us who we are, increasingly we realise that the management of a globalised world needs strong, democratic and effective international
institutions.
The EU is one of the best examples. The UN, of course, is another - although its effectiveness does not always match its high moral aspirations.
In this centenary year, Norway can be very proud of the contributions it has made to civilisation and the common good in Europe and the wider world. The way Norway promotes democracy, conflict resolution and understanding among people is impressive.
We in the EU also welcome the many ways in which Norway co-operates directly with us - through its participation in the European Economic Area and the Schengen and Dublin agreements, and by generously helping to finance the EEA's enlargement. In you we have a valued partner.
At the same time, you are something of a paradox, though an admirable one. By staying outside the EU, you have no control over a multitude of laws which will apply in your country, and yet you are close to the top of the class when it comes to implementing them.
I don't want to think how the great Robert Schuman would have appreciated that very peculiar situation of Norway. It is perhaps fortunate that he is no longer around to ask! But anyhow your future is, after all, a matter for yourselves alone. However the paradox certainly adds spice to the task of giving a Schuman Lecture here in Oslo.
Thematic introduction
I will concentrate today on a specific policy of the EU rather than try to give the Union as a whole a general health check-up.
Agriculture has been essential to the EU almost from the Union's beginning.
When the architects of the original European Communities sat down to plan a new European order, their motivation was peace.
And today, in a year which marks the 60th anniversary of the end of the Second World War, we pay tribute to the work of those men and to the long decades of peace which they helped to secure.
The CAP has been one of the pillars supporting this peace since it came to life in 1958 with the entry into force of the Treaties of Rome.
Robert Schuman and his colleagues understood well that nations connected by healthy trade relationships are less likely to fire artillery at each other.
It is wheat, butter and other farm goods which have been freely crossing the EU's internal borders since the 1950s - rather than soldiers - and we can all be grateful for this.
Furthermore, the CAP had a resounding success in meeting two objectives: to put food on the table in adequate quantities and to give farmers a fair standard of living.
In 1945, a shattered Europe could barely feed itself. On a continent with some of the richest soils in the world, for many people it was a luxury to know where the next meal was coming from. Broken national farm industries were helpless to respond to the demand from hungry populations exhausted by war.
The CAP has made these horrors a distant memory.
The CAP's changing context - within the EU
But dramatic shifts are underway in the context in which the CAP operates, both inside the EU's borders and beyond them.
To the six founder members of the EU have been added a further 19 Member States. The new entrants have added to the breadth and complexity not only of the EU's geography but also of its political and economic landscape. The fresh diversity is welcome, but for the time being it has widened disparities of income.
Moreover, money is very much at issue. As we consider the Union's financing for 2007-2013, a number of member states wish to tighten their belts, and if they tighten them too hard, our agricultural policy will feel the squeeze.
And the fact that, in 2005, it still accounts for some 45% of the Union's budget testifies to its continued central role in the EU. But the pressure is there to reduce spending.
Another motor of change is - paradoxically - the CAP's success. Measured against the criterion of production levels, the CAP has been almost too successful. You're probably familiar with the crisis of the 1980s - the famous butter mountains and wine lakes. The mountains have generally been levelled and the lakes have partly dried up as a result of reforms. But an awareness of the dangers of overproduction is strongly present in policy-making.
At the same time, general economic change has thrown up new challenges to our agricultural system. In general, people have more money, they want more for their money, and they want better quality.
Bulk commodities still have their place - a very important place - but shoppers in the supermarket expect to be able to buy retail goods reliably marked out by taste, nutritional value, production method and origin.
And need I say it? Consumers certainly don't expect their food to be tainted with harmful bacteria or chemicals. So hygiene and phytosanitary standards cannot even be questioned - neither in Holland, nor in Lithuania.
Furthermore, public opinion is telling us very clearly that it requires farming to look well after Europe's rural areas for the good of all.
At its best, agriculture enriches and protects our environment. It gives us landscapes, recreation, clean air - the sort of "public goods" which our citizens want and which they are prepared to pay for.
At its worst, it spreads pollution and tramples on biodiversity. Here also, the public of today has clear expectations.
The CAP's changing context - outside the EU
If the context for the CAP has been transformed inside the EU, this is no less true in the wider world.
I don't need to remind you of this at a time when the Doha Development Agenda is regularly making headlines, and when individual farm sectors around the globe rub their hands or quake with fear at the opportunities and threats presented by WTO dispute panels.
In general, the food markets of the world are much more open than they were 50 years ago.
Against this backdrop, we see new agricultural giants emerging. Brazil is an obvious example. The country's motto speaks for itself: "Brazil to feed the world"
The momentum towards further globalisation in food markets is strong. Some welcome this; others decry it; but no one denies it.
Meeting the challenges - internal issues
It is against this shifting backdrop that the EU CAP reform has been taking place.
Let me remind you of some of the central planks of recent changes.
First of all, "decoupling" - perhaps the cornerstone of our reforms. This the cutting of the link between direct agricultural subsidies and production.
The resultant decoupled payments will allow farmers to focus on what they do best - farming to meet consumers' needs - and leave behind the habit of hunting for the maximum rate of subsidy.
When the market offers profit for a given product, farmers will be free to respond, safe in the knowledge that an annual cheque for decoupled aid will keep them above the breadline. But they will have a real opportunity to make a difference: to innovate or to shift production.
There was resistance to the concept of decoupling when we debated it in the run-up to the reform deal reached in Luxembourg in June 2003.
But much of that resistance evaporated quickly when farmers saw the benefits of the greater simplicity, flexibility and market orientation which it would bring.
This year, now that decoupling is in force for the first time in 10 member states, the attitude is positive.
I would emphasise that decoupled payments are not "money for nothing".
To get the cheque in the post, a farmer has to respect a demanding range of standards related to the environment and animal welfare. We call this system "cross-compliance".
So - popular images of farmers leaning on their spades while their land goes to ruin - are no more than fairy-tales.
At the same time, we're taking a proportion of direct support for farming and redirect it towards rural development.
We believe that farmers will actually get a return on these transfers as the money gives a shot in the arm to the rural communities in which they run their businesses. We want new agri-food business and agri-tourism to thrive. We want a broadband internet connection for the village. We want the school teacher to stay so that the rural economy can survive.
What should be the impact of all these reforms?
I've already mentioned farmers' new-found freedom to grow for the market.
This should mean we never again see the over-production of the 1980s. But it will also liberate farmers to develop the distinctive, high-quality products so much appreciated by consumers.
And this is a CAP which can now accommodate the farm sectors of 25 member states without bankrupting the EU or laying waste its landscape.
Meeting the challenges - external issues
When we agreed all these changes, of course we had domestic factors very much in mind.
But we also had one eye firmly on the international context, particularly the Doha Development Agenda - which I'll refer to as the "DDA".
Progress in the DDA has been moving at a good pace since the breakthrough agreement of July 2004 on framework agricultural modalities.
Agriculture is so often accused of being the laggard or even the deal-breaker in WTO rounds; this time, it is setting the pace.
As we seek to keep that pace going, today I have a very straightforward, threefold message for you.
First, we want a deal.
EU agriculture has much to gain from a successful outcome to the DDA. Our farm industries are strong international competitors and will prosper all the more if we get the right agreement in this WTO round.
Second, we are doing our part in the agricultural negotiation but this is going to have to be a team effort. When we make offers, we expect to be offered something in return.
No one can seriously deny that the EU has gone the extra mile to keep the agricultural talks on course.
Our internal reform has allowed us to cap domestic support in a way which would previously have been unthinkable. Now that a huge part of the subsidy in the EU has little or no distorting effect on trade, thanks to decoupling, cuts to the more trade-distorting categories of aid can be swallowed much more easily.
Moreover, our provisional offer to phase out agricultural export subsidies marks a genuine sacrifice. Export refunds have been a central tool to our farm policy for years, but we are willing to do without them, on certain conditions, for the sake of overall success.
It was our move on this point which oiled the wheels of negotiation in May 2004 when these had almost stopped turning.
And now we have provided fresh impetus with our initiative presented this month in Paris to the rest of the "Five Interested Parties" - i.e. the US, India, Australia and Brazil. A clearly structured approach to domestic support and export competition as well as market access has much to recommend it.
But while we keep re-opening the dancing, our trading partners seem reluctant to join us on the floor - which won't make for much of a dance.
If we propose concessions, then I want equivalent concessions from the other WTO players.
Our export refunds are not going to vanish into history unless disciplines on more subtle forms of export subsidy are tightened up.
Other concessions may have to come in sectors other than agriculture. That's fine with me - as long as we have a balanced deal that is fair to the European farmer.
This brings me to my third point - the need for a comprehensive deal. Yes, agriculture is important. But the DDA will hit a brick wall unless our partners take a broader view.
Great military minds have told us that "an army marches on its stomach". But I'm afraid it takes more than just food to run a global economy.
The EU has legitimate interests in areas such as industrial goods, services, investment and government procurement. If our trading partners are serious about getting a result at the mini-ministerial meeting planned for December in Hong Kong, they should listen to the arguments made tirelessly by my colleague, Trade Commissioner Peter Mandelson.
What the future holds for agriculture in the EU
Now I would like to say a few words about the medium and long term for the EU's agriculture sector.
Essentially, I think that farming in the EU will be able to stand tall in the coming years, fulfilling its role well within the Union and outside it.
The reforms of 2003 and 2004 leave it in a much fitter state to meet the demands placed on it by consumers and society in general, while also positioning it well to compete with the rest of the world.
But more change is probably ahead, and there will be several drivers for this.
First, there will have to be some fine-tuning. Member states are only just beginning to implement some of the key elements of the recent reform, especially decoupling, and the new systems will take time to bed down.
Second, we need to bring some sectors of our agriculture into line with the rest. Wine, fruit and vegetables, and especially sugar have not yet been smoothed out and this work is under way. Indeed, we very much hope to have political agreement on a new-look sugar regime by the end of November this year.
Third, international influences will obviously play their part. I can only hope that we have a gentle ride once the DDA is concluded, but we cannot rule out the occasional bilateral WTO challenge.
Fourth, there's the draft constitutional treaty. As I speak, politicians in many countries of the Union are working around the clock to convince their citizens to say "yes" to this document - which also has implications for the rural world.
If the treaty is approved, for the first time the European Parliament will have a full say in all agricultural policy, not merely an advisory role.
Finally, just two years from now Bulgaria and Romania - both big agricultural producers - are likely to join the club.
And the presence of Turkey on the waiting list could have profound implications. This country, with is large peasant population, low average incomes and huge tracts of rural land, could ask some big questions of EU farm policy.
Conclusion: confidence for the future
But overall, ladies and gentlemen, I am very optimistic for the future.
I have a vision of a new and younger agriculture focusing on speciality and quality products, linking up with agricultural and commercial schools, using the internet to penetrate the market for direct delivery - and welcoming the urban dweller in their thriving rural environment for rest and adventure.
And whatever challenges may lie ahead, and whatever our responses to them, I am confident of one thing: Agriculture in the EU will remain recognisably European.
More freedom may come to our market, but a free market will never operate in isolation.
Policy has in some sense been "liberalised", but we will not cease to have a policy - one which aims at the best outcomes for farmers, society and the environment.
And although many of our farms may grow, combine and change, we will fight to make sure that Europe's green fields, so beloved of our poets, will always be there. There will also remain many goats, many olives, many mountain farmers.
Even if they are not squarely "profitable" in the market sense.
As I said at the beginning of my address, it's for you alone to decide whether or not to weld your future to that of the EU. But if you were ever to embrace EU membership, we believe that with us your farmers would find a home to their liking.
Thank you for your attention.
- Ref: SP05-260EN
- EU source: European Commission
- UN forum:
- Date: 13/5/2005
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