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“CAP health check and the
future of milk quota”
a Dutch perspective
Tallinn, 8 February 2008
Roald Lapperre
head of Common Agricultural Policy division
Ministry of Agriculture, Nature and Food Quality
The Hague, Netherlands
0
Lay out of presentation (1)
•Facts and figures NL agriculture
•Health Check
•Future of dairy quota system
1
Relevance of agriculture in NL
• Agriculture is a pillar of the NL economy
• 10,4 % of total employment
• 10,1 % of total GDP
• Second biggest agricultural exporter in the
world (aim to become no. 1 this year)
• Flowers and food most competitive sectors
of total economy
• Agriculture covers 70% of NL land surface
2
3
Farm numbers 1990-2015
Number of farms
1990
2004
2015
% change
1990-2004
2004-2015
Total
124.900 83.890 59.170
-33
-29
dairy
39.550 22.280 13.820
-44
-38
arable farming
16.260 12.630 10.540
-22
-17
combined farming
14.790
7.770
4.690
-47
-40
pig and poultry
12.590
6.700
4.360
-47
-35
glass horticulture
10.240
6.390
4.240
-38
-34
9.990
6.680
5.020
-33
-25
open air horticulture
4
Expectations for the future
• Best market expectations for horticulture
• Positive outlook for dairy sector; however
declining EU-support and rising environmental
standards factors to watch
• Difficult times ahead for pig and poultry;
production will continue however, albeit at lower
output levels
5
Lay out of presentation (2)
•Facts and figures NL agriculture
•Health Check
•Future of dairy quota system
6
Gemeenschappelijk
Landbouwbeleid
Pijler 1
Markt- en
prijsbeleid
€ 450 mln
Directe
inkomenssteun
€ 850 mln
Pijler 2
?
Plattelandsbeleid
€ 70 mln
7
Big changes in policy environment
• Continuous CAP reform: MacSherry 1992, Agenda
2000, MTR 2003, Meditterranean package 2004, Sugar
2005, Fruits and Vegetables, Wine 2007, HC 2008, etc.
• More member states: from 12 to 15 to 25 to 27 (and
30?) with unchanging budget; 5 mio farmers in EU-15
in 2004 and 15 mio farmers in EU-27 by 2007!
• Increased diversity; more changes to come
8
Key elements “Health Check”
1. Changing modalities of direct income support
2. Scaling down remaining market/price policies
3. How to deal with modulation/new challenges?
4. Let’s not forget simplification!
9
Govt coalition agreement
NL priorities in CAP domain:
• Better linking of income support with public goods
delivered by agriculture, such as food safety, food
quality, food security, rural landscape, environment and
animal welfare
• Financing of CAP within Community framework
• Stick to 2005 budget agreement for period 2007-2013
• Gradual approach
10
Direct income support
NL priorities:
• Linking direct income support to public services delivered by agriculture in cases
of market failure
• NL wants to move from the present historical model to a regional model of income
support
• EU wide flat rate not a good solution!; a “flatter rate” at regional level to be
preferred
• A more flexible article 69 can be a helpful tool
• Full decoupling of all income support should be end goal
• Continue but further simplify cross compliance
• Sympathetic towards towards upper and lower limits in direct income support
• Sympathy for wish EU-10 to keep SAPS
11
Market and price policies
NL priorities:
• Phasing out export refunds by 2013 (parallelism!)
• Scale down remaining intervention policies to a genuine
safety net mechanism
• End milk quota system by 2015 and agree on soft landing
• Keep set aside as a market instrument, albeit at 0%
• Give special attention to potential negative effects of scaling
down market policies for nature, environment and
biodiversity (set aside, milk quota enlargement)
12
Modulation
NL priorities:
• Not in favour of 8% extra modulation
• Addressing new challenges can better be done in first pillar!
• More flexible article 69 better alternative to modulation
• If modulation were to take place, flexibility needed in
choosing destination of money and no upper or lower
spending limits
• Finding means for national co-financing not an easy task!
13
New challenges
NL priorities:
• Sympathetic to Commission ideas to focus on
climate change, water management (and add animal
welfare to list)
• Hesitant to include bio energy and risk and crisis
management to list
• Let’s not forget simplification!
14
EU agricultural support
History
Future?
40
Targeted
payments
Payments
based on
historical
entitlements
20
Payments on
area,
livestock
10
Price, output,
input support
20
20
20
15
20
10
20
05
20
04
20
01
19
96
19
91
0
19
86
% PSE
30
15
Lay out of presentation (3)
•Facts and figures NL agriculture
•Health Check
•Future of dairy quota system
16
Future of dairy quota system
NL priorities:
• Clear signal quota system will end in June 2015 as foreseen
• Soft landing very important from Dutch perspective because of high
quota prices
• Total debt to banks for quota loans amounts to EUR 7 billion at
present
• Farmers need time to write down these investments!
• Very much in favour of enlarging quota with 2 - 3% this year
17
Options for soft landing
NL priorities:
• Enlargement of quota by e.g. 2% per year first choice
• Lowering super levy could help, but difficult to control because
of lack of predictability
• Skipping present fat correction factor positive option for NL, but
only useful for limited number of other Member States
• Tradability of quotas between member states acceptable for NL,
but unlikely to be acceptable in EU-perspective
• Ready to accept call for accompanying policies for less favoured
(mountainous) production areas
18
Thank you for your attention!
19