Report raises pressure for CAP reform

Date: 24/04/1997

By Michael Mann

IF THE Common Agricultural Policy remains unchanged into the next century, the EU could end up with a grain mountain of nearly 60 million tonnes plus over 1.5 million tonnes of beef stocks by 2005.

Agriculture Commissioner Franz Fischler's long-awaited report on the prospects for EU agricultural markets stops short of suggesting policy options for the future, but its conclusions clearly support those calling for further CAP reform.

In drawing up the report on which Fischler will base his policy options later this year, officials worked on the assumption that both CAP rules and the EU's world trade commitments would remain unchanged until 2005, and the rate of cereal set-aside would stay at 17.5&percent;. They also assumed that the ten applicant countries from central and eastern Europe (CEECs) would join en masse in 2002.

The report demonstrates that maintaining the status quo is not a viable option, lending support to Fischler's calls for further price cuts with compensation and payments 'decoupled' from production. It suggests EU cereal production will rise from 98 million tonnes in 1996/97 to more than 115 million tonnes in 2005/6. Beef consumption is likely to stabilise around 1996 levels, but this will see Union stocks rising to over 1.5 million tonnes by 2005. Officials are also forecasting an annual milk surplus of 9-9.5 million tonnes over the next eight years.

Despite this generally pessimistic scenario, significant opportunities will come from the massive growth expected in world trade in agricultural commodities and probable increases in global prices.

The report tries to calm fears in the EU of a flood of cheap eastern surpluses after enlargement, predicting the CEECs will actually become net cereal importers in 2005, although they will have surpluses of sugar, milk, beef and other meat products.