Franz FISCHLER: "A Future for Finnish Farming" (2)
Ladies and Gentlemen,
Before I left Brussels, I came across a proverb of yours that, when translated into English, apparently means, "When a man remembers the land, the land remembers him". I liked it for two reasons. The first was that it enshrines the sustainable principle at the core of CAP reform, which I will be talking to you about shortly. And the second is that I think it would also provide a good motto for the rural organisation whose anniversary we are celebrating today.
I would like to begin therefore by taking this opportunity to congratulate ProAgria on its 140th birthday, and thank you for inviting me here today. The support and advice you have given to the thousands of rural actors wanting to get the most from their countryside has been invaluable. And, what is more, I know that your role will become all the more crucial in the future as Finnish farmers look to make full use of new opportunities arising from both next year's EU enlargement, and this year's CAP reform.
So let me start by looking at exactly what CAP reform means for Finland.
Firstly, it introduces fundamental changes to the support system, making the policy both simpler and less time-consuming for your farmers to manage, and more sustainable, more market oriented and more in line with your consumer's concerns. It means that the bulk of direct payments will in future be paid in the form of a single farm payment that will be dependent on farmers' meeting mandatory environmental, food quality and safety, and animal welfare standards.
There is still a degree of flexibility however, and in response to some member state concerns, certain elements of support can remain tied to production where there is a risk of land abandonment. For example, an exception was made for the drying aid for cereals, specifically at the Finnish request. Not only did we agree that this support can remain tied to production in the EU's outermost regions, but we also decided to increase the top-up payment by 5 € per tonne from Agenda 2000 levels, to bring the support level up to 24 € per tonne.
The second thing that reform achieves is a substantial boost to rural development support, and it is here that I think Finland can be particularly pleased with the results. For example, simulations so far, based on estimated data, indicate that Finland will have a net return from compulsory modulation of over 120% i.e. you will receive substantially more back as additional funding for rural development each year than you will put in. This will enable you to support new quality and environmental measures, help producers to meet the new standards, and improve investment aid for young farmers.
However, on top of the EU-wide measures that were agreed for rural development, Finland also successfully negotiated the possibility to increase the maximum aid per hectare under the less favoured area (LFA) scheme from € 200 to € 250. Depending on how Finland will use this extra leeway, an additional € 48 million, and possibly more, can be made available for farmers in the South of your country. I am sure you will agree that this is a significant increase, and it will be very valuable in helping them to upgrade their holdings or diversify into more profitable activities.
And now let me briefly come back to the young farmers: reform reinforces our commitment to them and recognises the important role that they play in sustainable rural development. For example, a new recital has been introduced into the regulation that states that support to young farmers "should be considered a priority".
We have also agreed to increase public support for investments into young farmers' agricultural holdings by 5%, meaning that it will now stand at 50% in most regions, but 60% in less favoured areas. Similarly, the new Regulation also includes higher support to help young farmers establish themselves.
Those using the farm advisory services linked to the "setting-up" of their activity will be entitled to up to € 30 000 in support over an initial three year period. It is up to Finland now to take advantage of these possibilities, and make sure that its young farmers can get the most out of this support.
Ladies and Gentlemen,
Now I have outlined, albeit briefly, certain aspects of the reform package, let me put a few things in the balance regarding the 141 negotiations. I am well aware of the great importance that Finland attaches to these talks, and I would like to assure you that I also understand the problems that farmers in Finland face. However, I would also like to explain to you why we are asking you to meet the conditions of Article 141.
Firstly, as I have just mentioned, Finland negotiated a very successful hand in the reform, which won it additional support in two key areas: drying aid and less favoured areas. This increase in support has to be accounted for in the 141 talks. Is it fair that farmers in the two best agricultural regions of your country should receive additional long-term income aid, on top of the generous increase in LFA support agreed in Luxembourg support no farmer elsewhere in the EU can get?
Secondly, you should also remember that Article 141 is a transitional measure that was foreseen to grant temporary support to Finnish farmers, after the full use of all other possibilities, to enable them to cope with serious problems resulting from your accession to the EU. It must be clear therefore, that if support granted under Article 141 is to be continued, it would have to be in reduced quantities and it would have to be restricted to a certain period of time.
On top of this, you also have a number of other possibilities open to you to support farmers in the South that, in my view, you are not being used to their full potential. Take support for investment aid. Here you are only granting support that, in 2002, averaged 25% when, even under normal rules, you could have granted up to a maximum of 50%, or even 75% where environmental protection and animal welfare are concerned. By making better use of this mechanism, you will find considerable opportunity remains open to you.
Equally, the question of agri-environmental support, or 'crop aid' needs to be put in balance this is another important issue on which we need to find some middle ground. Here again, I would like to reiterate that I am aware of, and sensitive to, the difficult conditions that Finnish farmers have to work under. And, because of this, I am prepared to accept that agri-environmental incentives for farmers in Southern Finland could continue to be topped-up, in the future, to beyond the normal EU rate of 20%. Indeed, I am willing to allow Finland to top-up its agri-environment support to a rate of 100%, i.e. double the amount of income foregone. When you compare the EU figure with the Finnish one, I think it becomes clear that this concession is already a very generous offer on our part.
Ladies and Gentlemen,
The issue at hand is not about "eliminating subsidies," as I read in your paper, the Helsingin Sanomat two weeks ago(1). It is about making the full use of the other support possibilities open to you. The Commission has put some concrete and very reasonable measures to Finland in an effort to help these talks progress, and now it is up to you to show some flexibility and compromise if you would like to see this support prolonged, albeit under restricted circumstances.
Ladies and Gentlemen,
There are of course other discussions that require a little more flexibility and compromise, which brings me onto the state of play in the WTO negotiations.
There were no two ways about it. The EU went to Cancun with a strong hand, and we went there meaning business. We had an extensive reform package under our belt that enabled us to bring our agricultural policy more into line with the aims of the WTO. We had a string of preferential agreements in place with the developing countries, and we had negotiated a compromise paper with the Americans in order to help the discussions on agriculture advance. What proved to be a much more important ingredient however, was not so much what we had achieved prior to Cancun, as it was going to the talks with the right attitude. Whilst the EU went there flexible and willing to compromise, too many others did not, and this was ultimately what proved to be the sticking point. The result, unfortunately, was that everyone lost out, missing a prime opportunity to reform the ills of the world trading system.
Let me remind you of how our offer stands at the moment. We have said that we are prepared to reduce trade distorting support by up to a massive 60%, cut export subsidies back by up to 45%, and scale back agricultural tariffs by an average 36%. Similarly, we offered to eliminate export subsidies and expand tariff quotas for an agreed list of products. This offer remains on the table and we will now continue working with our partners to try and help the talks proceed.
'Can they proceed?' is the question that many commentators are asking. I am not as pessimistic as some. The gaps on trade liberalisation have started to narrow down and, with a little more flexibility and realism from other players, there is no reason why we can't reach an agreement on the agricultural modalities in the future. The EU remains committed to helping these talks progress, and we remain committed to defending what we believe to be our farmers' rights and obligations.
For the time being however, we will focus on the process of internal agricultural reform, making our support to farmers more efficient and effective, more comprehensive, less trade-distorting, and more in line with the broader requirements that our society has of agriculture.
Ladies and Gentlemen,
To this effect, you will know that we have recently presented a communication for the second part of the reform process, this time covering the olive oil, tobacco, and cotton sectors, as well as a set of options for the future of the sugar market organisation. Again, supporting sustainable development and quality production is the common aim, and, continuing on the path we began with the first part of CAP reform, we intend to decouple the majority of payments in these sectors from production.
Why only options for the sugar sector? Because, with so many complex issues at stake, it is important that the implications of all future options are investigated thoroughly before we put forward some concrete proposals. Several scenarios are foreseen:
Maintaining the status quo, which would mean opening the EU market to import quantities agreed under the various international agreements, reducing customs duties, and adapting production quotas in light of market evolution.
Reducing internal EU prices, which would mean phasing out quotas once production and imports had stabilised; or
Completely liberalising the current regime by abolishing the domestic EU price support system, and removing quotas, import tariffs and quantitative restrictions on imports. For both this option and the one before, we would of course also have to find ways to ensure income support for beet growers to cushion the reduction in EU prices.
Whatever conclusions are reached however, one thing must be clear reform of the sugar regime must bridge the gap between domestic and world prices and support will have to be decoupled from production. Similarly, we will have to ensure that any reform we undertake is able to offer all those involved in this industry a fair deal and a secure future.
Ladies and Gentlemen,
Speaking of a "fair deal and a secure future" brings me back to my original point of what CAP reform means. It is about providing farmers with a better hand: one that supports them more comprehensively in the many varied roles they play. It is about providing them with a clear perspective and the necessary planning security in which to make their future business decisions. It is about providing them with new opportunities to expand and diversify their enterprises. And it is about making our agricultural sector sustainable one that builds on the experiences of past generations, and gives new opportunities to future ones. We know that farming needs this planning security and, with expenditure on agriculture clearly determined until 2013, CAP reform ensures that EU farmers will be able to make efficient and effective use of the funds available to them. This will not be compromised.
You in Finland quite rightly take pride in your natural environment and rural areas. Under the new CAP you have a range of possibilities available to help you maintain, preserve and develop your rural regions, and support your farmers in upgrading or diversifying their holdings. It is up to you however to capitalise on all these chances. You should not compromise them by relying too heavily on transitional measures that were only intended for accession.
And it is here, in helping farmers to take advantage of opportunity, that the role of advisory centres such as ProAgria is, and will remain, so important. I think your motto, 'opportunities for success' is very apt and I conclude by congratulating you, once again, for the work you have done over the past 140 years in advising Finland's farmers and rural actors how to get the most from the support on offer.
Thank you for your attention.
(1)30 September 2003