Introduction

Your Excellencies, Honourable Members of the European Parliament and other EU Institutions, Dr Huang, distinguished guests, fellow participants, ladies and gentlemen, I am delighted to see so many people here today for the second annual Agricultural Outlook Conference. Indeed, the number of registrations was significantly up on last year, perhaps a sign of the standing that this conference has already achieved.

Of course, I am also very grateful to President Juncker for opening the conference. His presence and participation here today is itself a statement of the Commission’s commitment to European agriculture and the agri-food sector.

It is a year since we gathered here and a lot has happened in that year, both politically and economically and there have been some important and positive developments in the world of European agriculture, particularly in terms of some of our important markets.

When we met here last December, we had two days of intense and very productive discussion. We talked about new ways of farming, exchanging knowledge and experience, and identifying win-win solutions for all involved. I have no doubt that this year’s Outlook conference will build on that legacy and be just as inspiring as Outlook 2015.

The theme for today’s conference is: “Climate Change and Resource Availability: Challenges for EU Agriculture.” It reflects our most pressing challenge – ensuring food security and a fair income for farmers while the sector adapts to climate change and a more conscious use of natural resources.

Therefore, I am particularly pleased that, in addition to the President, we are joined today by another two of my colleagues, the Commissioner for Climate Action and Energy, Miguel Arias Cañete and the Commissioner for Environment, Karmenu Vella.

I also want to acknowledge the participation in this session of the conference of Dr Huang Jiangpan, the Honorary Chairman of China Overseas Agriculture Development Alliance. Mr Huang has been a prominent proponent of economic reform in China at a time when that country was opening itself to the outside world. Apart from being the world’s most populous country and, therefore, a sought-after market location, China has also been making great strides in terms of agricultural production and addressing the issues of food security for a country with a population of 1.3 billion people. I am very grateful that Mr Huang has come and I am looking forward, with great interest, to hearing his presentation about “the development of a more sustainable agricultural production in China.”

Market Developments

As President Juncker indicated, the European Commission has not shied away from acting directly and forcefully when the situation called for it in agriculture.

This time last year, the agricultural sector in Europe, particularly in the dairy and pigmeat markets, was experiencing a very difficult time. Since then, the weighted average price for raw milk in the EU fell to 25.68 cent/kilo in July 2016, but has since seen a steady, if fragile, recovery. The most recent data from the Milk Market Observatory shows prices having improved to 28.28 cent/kilo in October and the prospects are good for further price increases when figures for November are available.  The latest data (published on 24 November) showed that EU dairy prices generally increased in the previous week, compared to the previous 4 week average.

More interestingly, the data also show that EU milk collection decreased by 3 per cent in September 2016 compared to September 2015.  The Commission’s voluntary production reduction scheme has played its part and the influence of that scheme seems set to accelerate when delivery figures are available for October and November, with the scheme in full effect.

The Commission was called upon to act and to take its responsibility and it did just that. To paraphrase President Juncker, in his State of the Union speech last September, Europe stood by its farmers!

The pigmeat sector was also particularly badly hit by the Russian ban and the Commission acted decisively to support this valuable industry.  In particular, the Commission was able to provide crucial support while the sector found new market opportunities following the loss of the Russian market. New markets were found, notably in the Far East and South-East Asia, not least in China. The most recent export figures show that, in the twelve month period to September, the export value of pigmeat increased by €1.2 billion or 31 per cent.

This sector has demonstrated great resilience and the recovery in the market is now well established.

All of this demonstrates that, while the CAP continues to move towards a greater market orientation, there continue to be occasions when the Commission has a responsibility to act in solidarity with our farmers, upon whom we depend not only for our food security, but also to protect our farming traditions, which remain the beating heart of rural Europe.

The Future

When I spoke here last year, I stressed that the CAP needs to be “fit for purpose” to meet the challenges of the 21st Century.

I have spent much of the past year reflecting on the early implementation of this CAP and identifying areas in which it could be improved, based on the lessons of implementation and, particularly, the crises in a number of sectors.

As these markets recover, we must apply the lessons learned. In the context of a policy that it is quite rightly more market-orientated, the dependence on public intervention in the market will inevitably become more limited, but should also be more targeted and effective.

All the factors I have mentioned provide us with the building blocks for the future CAP. I am, therefore, especially pleased that President Juncker has this morning confirmed that the Commission will move on the “modernisation and simplification of the Common Agricultural Policy to maximise its contribution to the Commission’s political priorities and the Sustainable Development Goals.” 

His confirmation of a Commission Communication next year reflects the commitment in the Work Programme for 2017 “to take forward work and consult widely” to achieve this overarching goal.

The first stage in the process will be a public consultation, to be launched early in 2017.

In keeping with the undertaking given in the Commission Work Programme, the simplification and modernisation of the CAP will “focus on specific policy priorities for the future, taking account of the opinion of the REFIT Platform, and without prejudice to the Commission proposal to revise the Multiannual Financial Framework.”

Without prejudicing the outcome, I believe that there are a small number of key principles that should inform this important work, which will affect the life of every European citizen.

I am convinced, based on our market experiences as well as our international commitments, that the CAP has to ensure:

  • greater market resilience;
  • more sustainable agricultural production; and
  • progress on generational renewal.

Market Resilience

I have always been impressed by the resilience of farmers and their determination to overcome whatever challenges they face. However, despite this resilience, there continue to be circumstances in which it is appropriate for individual Member States, or the Commission, at European level, to intervene to support farmers.

We do so in many ways, the most obvious of which is through direct payments which provide income support for farmers and an essential safety net, without which the survival of many farmers would be threatened.

During the past two years, we have essentially deployed the full toolkit available under the CMO and, I think it’s fair to say, to a positive effect. However, what the last two years have also shown is that we need to reconsider the effectiveness of the toolkit available. Just some of the questions I would pose are

  • do existing tools allow us to intervene sufficiently and quickly enough at a time of crisis;
  • should farmers have greater built-in measures to help them in times of crises on the basis of a risk management approach;
  • do producers and processors have the ability to diversify their markets or to find new markets in times of market loss.

We have to look at protecting farmers in a variety of effective ways. In considering in what ways this could be done, it is my determination that basic income support and an effective safety net will continue as an essential element of any new CAP through a system of direct payments.

The Agricultural Markets Task Force, which reported just last month, made a significant contribution to identifying other ways in which we can support farmers, particularly in terms of achieving a fair return for their product.

I am pleased to have the opportunity today to once again acknowledge the excellent work of Mr Veerman and his colleagues in delivering a comprehensive report to me in less than a year. Their report has been well received and I and my Commission colleagues are giving its recommendations full consideration.

I want to strengthen the position of farmers in the food chain, precisely to strengthen their resilience and give them the possibility to reap the fair benefits of their work. A more resilient agri-food sector within a stronger, fairer food chain will benefit every EU citizen. I look forward to a constructive relationship on this issue with Commissioners Vestager and Bieńkowska.

Sustainable Agricultural Production

A second principle which I firmly believe we must all adhere to is a more sustainable system of agricultural production.

At a time when there is so much debate around climate change, it is more vital than ever that Europe holds the line in this global existential challenge. And, in addressing that challenge, agriculture must play its full part.

We need to move away from empty rhetoric and engage in a meaningful conversation. I am engaged constructively and positively with all sides of this debate – now I want to play my part to bring them together. It is only by joining forces that we will be able to build on our shared experiences and identify appropriate solutions.

In terms of developing a more sustainable system of agricultural production, let me be clear about what I mean. At last year’s Outlook Conference, I spoke about the issue of food security and the challenge presented by a rapidly rising world population. The challenge of food security, like the challenge of climate change, is not going away.

Meeting the needs of that growing world population means producing more food with the limited resources available on the planet. Water stress, soil degradation, reduced biodiversity and air pollution are becoming more and more pronounced and we have every interest to make sure that the status of our natural resources is enhanced.

In order to “produce more with less”, significant investments in innovation and new technologies are needed. New technology can reduce inputs and avoid nutrient leakage from fields. Investments in new machinery will improve air quality and reduce GHG emissions. There are many other examples I could give here.

But, more importantly, we need to exchange knowledge and best practice and engage with all actors to identify the best and most appropriate solutions for sustainable production.

Nobody doubts the need to protect the rural environment and, without farmers, who is going to do that? As I have said on many occasions, farmers are our “boots on the ground” to get the job done. If we are going to make increasing demands of farmers, as I believe is justified, then they deserve to be rewarded for the costs associated with the provision of those public goods, from which all of society benefits.

We have the tools at our disposal, and multiple EU research, innovation and advisory bodies are working together to ensure that we deliver those public goods. However, this will not happen unless farmers are incentivised and rewarded for playing this crucial role on our behalf.

Generational Renewal

Coupled to this issue is the need to bring in a new generation of young farmers and agri-entrepreneurs to take forward the baton. The issue of generational renewal in EU agriculture is one that has been debated long before now.

In 2013, of the 22 million farmers in the EU, only 6 per cent were younger than 35, while more than 55 per cent were aged 55 or over. Only two MS – Poland (12.1 per cent) and Austria (10.9 per cent) – recorded more than 10 per cent of farm managers aged under 35.

Generational renewal is an issue that goes far beyond a reduction in the average age of farmers in the EU. It is about giving an opportunity to a new generation of highly-qualified young farmers, who might more accurately be described as scientists and innovators. If properly supported and incentivised, they have the capacity to bring the full benefits of technology to support sustainable farming practices in Europe.

Young, highly-skilled farmers can bring the latest developments in innovation and technology from the classroom, the laboratory and the R&D department to the farm. They can give real effect to the idea of precision farming.

The benefits are there for all to see – it enhances competitiveness and our competitive advantage comes from reducing inputs and increasing yields but it also has potentially huge environmental and climate benefits in terms of reduced dependence on fertilisers, pesticides, and improved animal husbandry practices.

There is no shortage of young people who want to get into farming, but many of them face imposing obstacles. I want to focus on those barriers which hinder young people from taking up agricultural activity, and identify better ways to remove those barriers.

At EU level, there are a number of steps we can take. These include improving access to credit, providing a stable and predictable working environment and reducing bureaucracy and red tape.

With regard to accessing credit, I am greatly encouraged by the significant increase in the number of managing authorities which are in the process of or seriously interested in providing for financial instruments. Loan funds are up and running in Estonia (for €34 million) and Germany (for €10 million), while Romania is close to signing an agreement for an €87 million loan fund. Meanwhile, the first French region to establish an FI is about to be joined by a second.

The simple fact is that if we can mobilise financial instruments of the right type and the right quantity, we can dramatically enhance the capacity of our farmers and agri-businesses to innovate, grow, export and create employment. The European Investment Bank, whose vice-president Pim Van Ballekom will participate in this afternoon’s session, has a vital role to play. While the EIB has taken a number of positive steps, I believe that they can do more and I will only be satisfied when they are fully on board. However, 2017 will see a suite of new and positive developments in financial instruments.

Based on my recent engagements with the bank, I am increasingly confident that the EIB is ready to make that step change. I am proposing changes in legislation to help the EIB and DG Agri devise new financial support for farmers and agri-business.

As regards reducing red tape, you are well aware of the progress that has been made over the last two years in terms of my simplification agenda and further proposals have been made to amend the basic acts in the so-called Omnibus Regulation, which I hope the co-legislators will pass quickly to enable simple rules to become reality.

Next year’s Commission Communication will have at its heart the modernisation and simplification of the CAP, with a particular emphasis on simplification for the beneficiary. While simplification can benefit all of us – Commission, paying agencies and beneficiaries – my clear determination is to prioritise beneficiaries and I expect Member States to support that approach to the benefit of our farmers.

The forthcoming public consultation on the Communication provides  an ideal platform for debating all issues relating to the CAP, including generational renewal which is not so much a policy option, but is rather a policy imperative. The clock is ticking and we need smart solutions now.

Challenges/Opportunities

While the last couple of years have been challenging, they have also shown that there are opportunities for European farmers and agri-businesses.

Yes, the CAP makes great demands of our farmers when it comes to maintaining food safety and quality standards. We have the most stringent requirements of any agri-food system on the planet.

And that will not change. If anything, the expectations will only become greater. Put simply, the new CAP will have to have a higher level of environmental ambition. And that is because it is the right thing to do.

Our farmers and related actors will have to focus on the challenge and innovate as never before.

But this challenge also provides huge and unquestionable opportunities for our producers. Because when they start to lead from the front in terms of sustainable intensification, they will be delivering products of the highest quality with impeccable environmental credentials. That’s what the market wants.

Innovation leads to even greater levels of quality, which is our key selling point abroad. I mentioned earlier the noteworthy success of European agri-food exports in recent years. We have a huge opportunity to build on this in the coming years.

Success abroad means success at home: As President Juncker pointed out, every €1 Billion of exports generates 14,000 jobs for our people. Given that, in the period October 2015 to September 2016, EU agri-food exports reached a record value of €129.9 billion, we can say with confidence that a smarter, climate-friendly agriculture can deliver even more vital jobs for our rural communities.

Major gains were achieved in agri-food exports to the United States (+9 per cent) and China (+13 per cent).

The monthly value of EU agri-food exports in September also reached a record level of almost €11.5 billion, exceeding September 2015 by about €500 million. The highest increases were recorded for the United States (+€129 million) and Japan (+€99 million).

In fact, as we speak, Commissioner Malmström and I are working hard to complete a Free Trade Agreement with Japan, which will provide a good opportunity for agriculture – and we must make the best of that opportunity.

Meanwhile, our export surplus for the year to September 2016 was more than €17.6 billion – a major achievement in spite of the Russian embargo, and a figure which proves the value of our business missions.

Consumers and taxpayers are also influencing the agenda like never before, becoming more discerning about the origin of their food and more demanding about the use of their tax euros.

We – stakeholders and policymakers – have to respond to that influence. We have to ensure that food is produced more sustainably. We have to encourage smart farming that can, for example, make the best use of chemical inputs, contributing to soil and groundwater protection and air quality, while increasing production efficiency.

The next generation of farmers can be the one to drive this agenda towards the greater use of precision farming, from which we will all benefit in terms of increased competitiveness and an improved rural environment, with our natural resources protected and improved.

I will never deviate from my belief in the justification for a strong CAP, one that supports European farmers in the maintenance of high standards and the production of some of the safest, highest-quality food in the world.

The EU stands for high quality and high standards and this is a principle on which we should never waver. There can be no question of joining any race to the bottom.  Our standards are our reputation.

Conclusion

In modernising and simplifying the Common Agricultural Policy, we have an opportunity to shape a policy that meets the challenges of today and tomorrow. It is a challenge to which I invite you to join.

The European Commission does not have a monopoly of wisdom about the ideal policy for the future. We want your input and active and constructive engagement, beginning with the public consultation, which I expect to launch early in the New Year.

Thank you all for being here in such large numbers to help map out the future for the Common Agricultural Policy.