But my experience as Commissioner to date has led me to conclude that we need a serious debate in relation to how to keep it truly fit for purpose in the 21st Century.
For these reasons, 2017 has been designated as a year of serious and broad reflection, with the aim of putting forward a Communication on CAP modernisation and simplification later this year.
This process consists in essence of two strands:
My services, working in conjunction with a wide spectrum of stakeholders, are conducting ongoing analytical work.
And as the CAP is a policy for all the citizens of Europe, we held a public consultation which ran for three months between February and May. We received a great response, with 323,000 answers – of which nearly 25,000 came from Spain.
These answers are currently being analysed and their outcome will be presented and discussed at a large stakeholder conference on 7th July in Brussels.
All this preparatory work will ensure that the final Communication is accurate and comprehensive:
It will gather all the available evidence on the performance of the CAP so far;
It will draw lessons from the implementation of the 2013 reform;
It will assess where there is a need for modernisation and simplification;
And it will include policy options drawn up on the basis of sound and reliable evidence.
(CAP Modernisation & Simplification – Content)
Without prejudging the consultative and analytical processes still ongoing, I can say a few words about where I want this journey to end.
We need the CAP to increase its synergies with the 10 priorities of the Juncker Commission as well as implementation of the Sustainable Development Goals (SDGs). In other words, we need to work together on building bridges between the CAP and many other EU policies.
In that process, we need to be ambitious:
The modernisation of the CAP will involve a shift towards greater adoption of knowledge and innovation in agricultural sector and rural areas: we need to address the existing gaps in knowledge; foster R&D and advisory services; turbo-charge investment in the sector; and in the broadest sense achieve better results through smart approaches and policy tools.
The simplification of the policy, meanwhile, involves an improvement in governance; a reduction of administrative burden using new technologies; and the implementation of cost-efficient tools to strengthen the focus on results.
The CAP has served Europe well for over 50 years. Now it is important that we focus on the EU Added Value and identify areas where action is needed at European level.
At this current stage, I see three broad priorities for action:
We must foster a smart and resilient agricultural sector: We need to support viable farm income, increase the competitiveness of the sector, encourage greater use of risk management tools, and improve farmers’ position in the food chain.
We need to enhance environmental sustainability and climate-resilience: this means increasing our climate change action, fostering the sustainable management of natural resources, and preserving our nature and landscapes for future generations.
And finally, we need to strengthen the socio-economic fabric of rural areas, including through generational renewal. We need to foster jobs and growth in rural areas, improve access to infrastructure & services as well as reduce territorial imbalances.
At this point, I want to acknowledge FEFAC’s detailed submission to the public consultation.
This was consistent with your Vision 2030 paper which argues that “the UN Sustainable Development Goals and the objectives of the CAP post 2020 can be achieved in conjunction, as long as there is a consistent legal framework at EU level between the CAP, Climate Change and Circular Economy which could trigger a virtuous cycle favouring a progressive, incentive-based innovation and investment climate for EU feed producers and livestock farmers”.
This echoes my own thinking in many policy areas.
And I think it is also hugely important to acknowledge that we are not approaching this challenge from a standing start. There has been real progress made on many fronts, which help to point the way for the CAP post-2020.
For example, if we look at the question of the EU food chain, a number of clear policy proposals have already been elaborated by the Agricultural Markets Task Force, an independent group set up to analyse the position of farmers in the supply chain and to make recommendations on how to improve that position.
The European Commission is considering further steps to address these issues, along the lines proposed in the report which the Agricultural Markets Taskforce delivered to me last November.
These considerations include taking measures on unfair trading practices (UTPs), improving market transparency and supporting producer cooperation, as well as facilitating the use of risk management tools by farmers.
There is evidence that an EU initiative could help farmers compete more fairly in EU food supply chains.
My services are currently carrying out the necessary work to make sure that any initiative corresponds to the needs and concerns of all stakeholders. This includes a detailed assessment of where EU-level action will bring the most added value.
I can assure you that following-up on the recommendations of the Agricultural Markets Task Force is one of my priorities, and I am grateful to FEFAC for supporting its findings, as well as being consistent supporters of the increased market orientation of the CAP.
It is also important to note that our work is not just for the future. We have already made real progress in developing useful tools to maintain a healthy market.
As you know, in April the Commission published for the first time a comprehensive EU protein balance sheet. This is an overview of total EU production, consumption and trade of all marketable sources of proteins used in animal feed production. It shows the total protein needs in the EU, with EU production of cereals and oilseeds providing the bulk of raw protein requirements.
I welcome the statements from FEFAC and other organisations which indicate clear appreciation for the Commission’s efforts to develop a dedicated, independent tool to monitor the balance of demand and availability of protein crops in the EU. You correctly noted that this will contribute to market transparency and help operators to better understand market developments.
(Research & Innovation)
It is also abundantly clear that backing greater research and innovation in the sector is vital if we are to succeed in these ambitions. Again, we do not need to reinvent the wheel in this respect.
Under the umbrella of the European Innovation Partnership, we have already been tightening the relationship between the CAP and Horizon 2020, the EU’s Research Programme. A number of new instruments are being used to drive the concept of interactive innovation, where we bridge the gap between research and practice.
Take for example the Feed-a-Gene project. This €10 million multi-actor project will develop new and alternative feed resources and feed technologies, better adapted to our animals and production systems.
In this project there are 8 research partners, 9 industry partners and 6 partners involved in extension and management. This way we guarantee that the results are directly applicable and relevant to the sectorial needs.
We are also implementing the “interactive innovation” concept under the Rural Development Programmes. Across Europe we will be funding 3200 operational groups. These are practice-oriented innovation projects, for which the initiative lies with the sector. Again, this approach allows for relevant and well adapted results.
We are proud to say that our efforts to bring research and innovation closer to the CAP have been very well received. This work provides the tools for agriculture and the food chain to adapt to the challenges ahead. That is why we will continue with this approach, starting with the upcoming Work Programme of Horizon 2020, which will be published later this year.
(Investment – FI)
I have also made it quite clear that modernisation and simplification cannot happen at the speed we desire without a revolution in investment for the sector.
Access to finance – and it has to be the right type of finance – is crucial for making EU agriculture competitive and sustainable.
We need to continue the development of smart, tailored financial instruments to provide support to:
farmers investing in modernisation of agricultural holdings, including livestock production, diversification, processing and marketing;
and young livestock farmers through their investment projects or business start-ups.
This is important, because unlike grants, financial instruments can support working capital linked to the investment – up to 30% of the total eligible costs. This is very relevant for the livestock sector.
We have already made some headway: the Commission proposed, as part of the omnibus proposal, simplifying access to finance for rural entrepreneurs and in particular young farmers, as well as regulation to provide for a sector specific Income Stabilisation Tool.
I also want to highlight the large number of activities such as trainings, conferences, and member state visits which spread information about financial instruments and help to build up capacity in member state administrations.
One great example of a successful FI project is in Italy: close cooperation between national and regional authorities, the Commission, and the EIB/EIF resulted in the Italian guarantee fund under the EAFRD.
I want to acknowledge the efforts taken by the Spanish authorities to complete the national ex-ante assessment analysing the needs for financial instruments.
And I encourage Spain and its regions to analyse the possibilities of setting up financial instruments providing complementary support to grants.
Finally, let me say a brief word on Brexit. While we await the outcome of the UK election to get a better understanding of the big picture, let me focus on the interests of your sector.
Whatever the outcome of the Brexit negotiations, the UK will become a third country and, thus, will no longer participate in the internal market. Business should take all the necessary steps to prepare for this scenario.
The impact of Brexit in cereal trade is highly dependent on the terms of the withdrawal agreement and the future trade relationship. In general, trade between the UK and the EU could become more expensive if import tariffs were introduced, or as a result of certain non-tariff measures.
However, we must emphasise that agri-food trade with the UK will not cease. The UK is too dependent on trade and is unlikely to embark on a food self-sufficiency policy.
Cereal and oilseed markets are relatively free trading commodities worldwide. Market access is more about price competitiveness, being able to supply the required specification and technical requirements.
The UK and the EU are both net cereal exporters. The UK mainly exports wheat, barley and oats. Over the last 2 years the EU turned into a net cereal importer from the UK.
In 2016 Spain relied on the UK for 14% of its wheat imports and the Netherlands for 8%. The share for other cereals is lower at 5% and 2% relatively.
The EU is a net exporter for wheat (24 million tons in 2016/17), and barley (7 million tons). Therefore the availability of these products on the EU market is abundant. This should assure the livestock sectors in Spain and the Netherlands retain access to the feedstock they need.
At current price levels, Brexit most likely would not have a significant impact on the EU cereals market.
Besides the trade agreement it will be important to keep an eye on regulatory issues and standards that might affect the cereal trade. When these would deviate from EU regulation trade disruptions could occur. I am hopeful that we can secure a good outcome in the Brexit negotiations for all sides, if talks proceed in a thoughtful and constructive manner.
In conclusion, ladies and gentlemen, I am honoured to be here with you today. This is a challenging time for your sector, and indeed for the EU agri-food sector as a whole.
But I am confident that if we maintain a close cooperation, and work together with other key stakeholders, we can achieve the necessary modernisation and simplification of the CAP. If we succeed in this goal, we can say with confidence that the best days of EU food production still lie ahead. Thank you.