‘Everything must be on the table’

EU leaders agreed last year on a no-holds barred review of all areas of spending in 2008-09. The UK and other pro-reform countries such as Sweden did not even try to disguise their plans to use the review to launch a new attack on the EU’s system of support to farmers which costs about €60 billion annually. But Mariann Fischer Boel, the agriculture commissioner, is sending a reassuring message to Europe’s farmers that she is not planning another major reform of the Common Agricultural Policy (CAP), only three years after the last set of major changes.

The Danish commissioner says that there is a need for a "health check" for EU agricultural policy to see whether reforms which have only been recently implemented are working. These include the move to decoupling, where the payments farmers receive are no longer directly linked to the amount of cereals they produce or animals they rear but instead act as a sort of guaranteed income, leaving farmers more scope to respond to market signals.

But she rejects suggestions that she is pursuing a "softly-softly approach" compared to her predecessor, Austrian Franz Fischler. "Many people I talk to think I’m very tough", she says.

Fischer Boel says that early indications are that the 2003 reforms have been successful, especially where countries have been ambitious in moving to fully decoupled payments like in Ireland. This has strengthened her conviction that "100% decoupling would be good" for the future evolution of farm policy. In any case, the move to decoupling of farm payments across the EU has been faster than was expected, she says, and has reached an average of around 90%.

But further simplification is need, she argues, saying that in the future "we should discuss flat rate payments".

The commissioner says "we should send clear ­signals that the level of funding [for farming] will not be the same after 2013 as it is now". She rejects ­arguments that moving to a system of co-financing (where member states pay part of the direct payments their farmers receive) would be an easy way to ­resolve the competing ­political demands from countries like the UK for major savings in the CAP budget with the desire of France and other countries to defend the level of ­support to farmers.

Such an approach, which has been long advocated by Germany’s Christian Demo­crats, rather than reducing the level of spending to farmers, would in fact make it harder to cut if national governments were responsible for the payments, she says. She points out that the 2007-13 budget deal will lead to a 7% cut in direct payments as support for farmers in Romania and Bulgaria would be financed from the original budget allocation.

In addition, she says, it would only work if it was compulsory, ie, if member states were forced to make certain levels of payments. This would mean the Commission would be dictating national budget policy to member states, she says, which would be politically unacceptable.

Fischer Boel has said on previous occasions that she would propose reintroducing caps on the maximum amount of funds an individual farm could receive. An attempt as part of the previous round of reform proposals to set a limit of €300,000 was blocked by the UK and Germany who have large farm businesses. But, she says, this time, "we must put everything on the table".

She sees the way forward as increasing compulsory modulation ie, the requirement to divert part of the funding for direct payments into the budget for rural development, which helps rural communities develop economic activities outside farming. Under the current rules, 5% of the budget for direct aid was redirected to rural ­development while the 2007-13 budget deal ­negotiated under the UK presidency allows a ­further 20% to go to rural development.

Fischer Boel sees this shift under the 2003 ­reforms towards rural ­development as a major achievement and one which has helped the EU’s agricultural policy to adapt to society’s increasing ­expectations in terms of ­delivering public goods such as environmental ­protection and animal ­welfare. Cross-­compliance rules, where farmers have to demonstrate they are meeting certain criteria, are also "necessary", she says.

Another key part of her approach to changes in ­policy is discussing whether to scrap production quotas, such as dairy quotas. In her view, they act as a constraint on young farmers trying to enter the business as well as preventing efficient ­producers from boosting their ­output. She points out that in member states such as the Netherlands new dairy farmers have to pay €2.5 a litre for the right to produce milk so it would take ten years to pay off the initial investment. Fischer Boel says there should be a discussion on the future of milk quotas so that farmers could "decide to get out when prices are reasonable".

Overall, the key to her approach is to ensure "predictability" so that farmers can plan ahead for changes after 2013. But given that Franz ­Fischler’s reforms also started life as a routine "mid-term policy review", farmers will no doubt be asking themselves whe­ther Fischer Boel does not have a few surprises up her sleeve after all.

EU leaders agreed last year on a no-holds barred review of all areas of spending in 2008-09. The UK and other pro-reform countries such as Sweden did not even try to disguise their plans to use the review to launch a new attack on the EU’s system of support to farmers which costs about €60 billion annually. But Mariann Fischer Boel, the agriculture commissioner, is sending a reassuring message to Europe’s farmers that she is not planning another major reform of the Common Agricultural Policy (CAP), only three years after the last set of major changes.

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