Coveney in Luxembourg as CAP talks enter final stage

Irish Minister for Agriculture Simon Coveney arrived in Luxembourg ahead of talks between EU member states and the European Commission as CAP reform enters its final phase.

The EU Presidency is currently held by the Republic of Ireland and they are aiming to conclude negotiations in Luxembourg on today and tomorrow, discussions of which have been ongoing for the past 18 months.

The Agriculture Council meeting will take place in Luxembourg starting today, under the presidency of Coveney.

He said: "The challenge for the current round of CAP reform is to deliver, in good time, a Common Agricultural Policy that is fit for purpose, that is coherent with the Europe 2020 strategy for recovery and growth and that supports the twin goals of competitiveness and sustainability. In the case of Ireland, we want a policy that promotes sustainable intensification of production, environmental stewardship and a vibrant rural economy and that is consistent with our Food Harvest 2020 strategy.

"The key will be to reach a fair compromise, which levels the playing field without putting productive farmers out of business. As is the case with any negotiation, the final position will be somewhere in between my approach and that of the Commission. I am fighting to ensure that the best possible outcome for all farmers is reached, in a balanced and fair way."

The talks so far have shown that there is wide support in the Council and the EP for the Commission's main concepts, such as the 30% "greening" of direct payments; a fairer distribution of the CAP support both between and within Member States. Nevertheless, there remain a number of difficult issues to be resolved such as the issue of a minimum payment for farmers and the way in which the payment is distributed to member states.

The Commission proposed a system whereby the payments are calculated per hectare, instead of the current method which uses past production.

NFU President Peter Kendall warned that the UK could be allocated the lowest share of the funds with this new system when he made a speech at Cereals 2013.

"In the first year of the new programme, we will see our allocation cut by 16%, rising to cuts of 27% in the final year. That's 22% less over the seven year period compared to rolling on the 2013 budget", he said.

“By 2020, UK farmers will see less money coming back to the UK than they contributed across into the pot by way of the compulsory EU modulation transfers in 2013.

“At the same time as UK allocation has decreased, other countries like France, Italy and Ireland have successfully managed to secure special offerings from Brussels. The French got an extra €1 billion, the Italians €1.5billion and even the Finnish managed an extra €600million.

“What did the UK get? The power to mask these budget cuts by further disadvantaging UK farmers through increased voluntary modulation rates from their current levels of 9% up to a maximum of 15%, with no co-financing requirement. As the former agriculture minister, Sir Jim Paice, said on the BBC last week in reference to this situation “the issue of a level playing field just will not exist”.

“Defra ministers’ persistence in their determination to disadvantage English farmers through maximum voluntary modulation transfers in the next CAP may shore up budgets, but will also greatly exasperate the difference in payment levels between us and our competitors. A Somerset or Shropshire dairy farmer is already disadvantaged to the tune of €235/ ha compared to a Dutch dairy farmer."

Kendall traveled with other farm group leaders to Luxembourg to ensure NFU members views were heard at the top table during CAP negotiations.

“I am fighting for a simpler, more common policy. I want to see a CAP policy that reduces and eliminates competitive distortions and disadvantages on the EU’s common market, not exacerbates them. A policy which continues to allow farmers to make decisions based on the market and that strengthens the position of farmers in the food chain. If we can achieve or take steps towards meeting these objectives, then this CAP reform may not yet be a complete failure.

“Of absolute critical importance to English farmers is ensuring that we are treated fairly both under the European framework, but also at home when it comes time for Defra to implement whatever is agreed for the next CAP."

It’s widely accepted that sugar quotas will end, but the precise date is still to be decided. Of critical importance to sugar beet growers is the contractual and negotiating conditions under which they will operate once it happens.

While British Sugar remains as the sole sugar beet buyer in the UK, Kendall said it was important they have safeguards to counterbalance its market power though a single collective negotiating agreement. For dairy farmers, the NFU leader said he was against any new supply management measures once the dairy quotas end in 2015.

“There is certainly a lot of really contentious and politically sensitive issues still to be dealt with this week. Whether negotiators will succeed in brokering a political agreement is yet to be seen. Some people have suggested that we must have a deal at all costs. I disagree, what’s far more important is that we achieve the right deal and that Defra then implements that fairly in England.”

Internal convergence is the rebalancing of direct payments among farmers within a Member State as allocations move away from a system based on historical production references (which still applies in most of the EU-15) towards a more even rate per Member State or region.

In broad terms, the CAP reform package covers four different European Parliament and Council regulations – i) on Direct Payments, ii) the Single Common Market Organisation (CMO), iii) Rural Development and, iv) a Horizontal Regulation for financing, managing and monitoring the CAP – proposed by the Commission in October 2011.

Copa and Cogeca Presidents warned EU Farm Ministers in Dublin that if no agreement on Common Agricultural Policy (CAP) reform is reached by June, a deal could be delayed for years, increasing the instability for EU farmers and agri-cooperatives.

The move came as EU Farm Ministers discussed the issue at their informal meeting.

Speaking at the meeting, Copa President Gerd Sonnleitner underlined the need for a final agreement by June to enable the new CAP to be introduced in 2014, albeit with a transitional period. He pointed out that an agreement is important not only for farmers and the agricultural sector, but for Europe as a whole.

“The farm sector has played a very positive stabilising role over the last few years of crisis. We must ensure it continues to do so”. A positive and rapid decision between the 3 institutions is crucial to enable farmers and cooperatives to get on with their production and investment plans.

Cogeca President Christian Pees highlighted the vital need to strengthen the role of producer organisations, pointing out that recent EU Commission reports show that producer organisations, like cooperatives, can help farmers get a better price for their produce.

NFU President Peter Kendall said: "From my perspective, I’ve always felt that this CAP reform has been a missed opportunity. We’ve got just 37 harvests to increase our food production to the level where it can feed 9 billion people and just 12 harvest before another billion mouths need to be fed. We’ve undertaken countless initiatives to cut red tape and bureaucracy and policy makers have spent the best part of the past 50 years trying to keep the policy as common as possible so that farmers are able to compete fairly on the EU’s single market.

"Instead of delivering a genuine policy framework that embraces and fosters a modern, market orientated, competitive farming sector, free of unnecessary red tape, I fear we will be left with a complex mish-mash of competing and contradictory policy components which will leave farmers facing more bureaucracy and more distortions in the market than ever before. But there is still time to sort out some of these concerns, many of which were echoed by the Presidents from the other farming organisations today.

"It is vital that we maintain an EU-led approach to agricultural policy, limiting as much as possible powers to create distortions or renationalising the budget through transfers from pillar one to pillar two. We were all in agreement that if member states insist on transfers, that there must a requirement for national treasuries to provide co-financing of those funds. To do otherwise would be renationalisation of the CAP by the back door."

The Irish Farmers' Association Deputy President Eddie Downey called on Coveney to secure a 70% advance on the Single Farm payment from October 15th next. He said with the severe weather difficulties across Europe this year, the major increase in production costs and the severe fodder crisis, the Minister has a rock solid case to make to the EU Commission for a 70% SFP payment advance.

Eddie Downey said IFA recently met with the Department of Agriculture on 2013 payments and outlined the strong case for a 70% advance case. He said, “IFA made it very clear to the Department that incomes across most sectors are on the floor after one of the most severe fodder and weather crisis on record, and all direct payments must be made on time and within deadlines this year”.

The IFA Deputy President said payment delays under any scheme are not an option this year. “With serious income and cash flow problems and a substantial increase in merchant credit, farmers are in dire need of direct payments as early as possible.”

Eddie Downey said around 130,000 farmers had applied under the Single Farm Payment and other schemes in May. He said 74,000 farmers applied electronically on line, up from 65,000 last year. This electronic application speeds up processing and payment and improves accuracy. 30,000 farmers have submitted maps outlining changes in their areas.