Fischler cultivates rural policy vision

Date: 27/02/1997

By Michael Mann

AGRICULTURE Commissioner Franz Fischler faces a monumental conundrum which is unlikely to be solved before the end of his time in office.

Whether they admit it or not, everybody knows the Common Agricultural Policy needs to be reformed to meet the challenges of the next century. The trouble is that nobody agrees on how this should be done.

Fischler has pinned his colours clearly to the 'rural policy' mast, spelling out his vision of the way forward in last November's Cork declaration for 'A Living Countryside'.

Fischler favours an extension of the existing CAP into a more holistic rural policy, providing support for a range of activities.

The European Commission points out that farmers now account for a minority of rural employment and argues that such a shift would put a brake on the continuing exodus from country areas. It would also remove the public relations problems caused by the EU electorate's continuing perception that CAP payments are being wasted on unwanted agricultural surpluses.

But many wonder precisely what is meant by a rural policy.

In his introductory speech in Cork, Fischler pointed to the variety of Europe's landscapes as one of the continent's major strengths. But he insisted this advantage could only be utilised if the countryside became the base for a range of economic activities: not just agriculture and forestry, but also small businesses, tourism, the service sector and for producing renewable energy.

Fischler also called for the countryside to remain a healthy and attractive place to live and for the “maintenance of biodiversity and the ecological equilibrium”.

Models already exist for the distribution of EU money to non-agricultural rural projects, not least through the Leader programme and a series of Community initiatives under the structural funds.

Structural funding in the Highlands and Islands of Scotland, for example, has concentrated on the development of business, tourism and local heritage, environmental improvements, investments in food industries and the enhancement of service networks to help local enterprises.

Similar funding in Germany has been used for such diverse projects as generating gas from agricultural waste, restoring ancient buildings and paying for the creation of more holiday beds for tourists.

Encouraged by Fischler's apparent commitment to extending such initiatives, a coalition of environmental groups has called for a 'new vision' - one which places nature, the environment and cultural heritage at the heart of rural development - as the “only way to ensure a healthy, vibrant and living countryside”.

Unfortunately for them, Fischler's ideas suffered an unexpected knock-back almost as soon as the ink had dried on the ten-point declaration. Led by Germany and France, a powerful bloc of member states refused to endorse the Commissioner's request for the declaration to be included in the December Dublin summit conclusions.

The big players in farm policy remain very defensive about any perceived threat to their still- powerful agricultural lobbies.

“Germany and France blocked Cork basically because they were afraid they would end up with less money. They are already under pressure since finance ministers agreed to strip away 1 billion ecu from the budget this year,” explained a Commission official.

Member states appear to have judged the mood of the agricultural lobby correctly. Reacting to the Cork declaration, the EU farmers' umbrella body COPA/COGECA deplored “the impression given that agriculture and forestry no longer play an important economic role and that their main impact is on the character of the landscape”.

Stressing that rural policy must not replace current Union farm policy and that it could not therefore be paid for out of the existing CAP budget, COPA/COGECA insisted additional funds were “necessary”.

Privately, Fischler's officials argue that the protectionists have missed the point. The Commission believes a rural policy could be the only way to protect EU farm policy from attack in the next round of world trade talks on agriculture, which are due to begin in 1999.

The infamous 1992 CAP reforms awarded farmers compensation payments for reductions in the guaranteed prices they received for their products. These aids, dubbed 'Blue Box' payments, are likely to fall foul of calls for further liberalisation from the US and the countries which make up the 'Cairns Group'.

If aid to farmers could somehow be moved into the 'Green Box' - those payments adjudged to have no effect on production - they would be protected from attack.

“The rural policy idea is a way to hold on to the money and get it into country areas under Green Box measures, making it safe from future attack,” said a Commission official.

The first stage is for Fischler to sell this idea to sceptical governments, while at the same time presenting it as a commitment to the rural population.

As a long-term goal, the Commissioner would like to see the introduction of a single premium for all farmers, regardless of what they produce, based on the fulfilment of specific environmental or social functions.

In CAP parlance, this is the concept of 'decoupling' support from production. Unfortunately, nobody has yet come forward with a convincing set of criteria by which such payments could be made.

But the progress this type of thinking has made is demonstrated by the fact that even advisers to the German farm ministry have suggested payment of a single cheque per hectare, independent of which commodity a farmer produces.

This would give farmers greater leeway to react to market demand in choosing which products to grow and allow the EU to defend itself in trade talks, particularly now that the US has removed the link between support and production in several sectors.

While a potentially neat solution, such an outcome remains a pipedream. “Such a thing is simple to imagine, but would be impossible to get though the Council of Ministers,” said a Commission official with experience of the last CAP reform.

In the meantime, officials in the Directorate-General for agriculture (DGVI) now at least have some sort of a timetable to work to.

In theory, they are due to deliver market situation reports on the beef, dairy and cereal sectors next month, to be followed shortly afterwards by an analysis of likely future problems.

But only once Commission President Jacques Santer has launched his financing package for the Union for the first five years of the next century will Fischler be able to bring forward policy options for the future of the CAP. An options paper is expected in the autumn.

In the beef sector, the Commission cannot continue to prop up prices by slaughtering new-born calves indefinitely. It would prefer instead to encourage extensive production, but faces fierce resistance from the major producers.

In the milk sector, it is unlikely to have much joy in trying to phase out quotas. A gradual reduction in prices is the most likely scenario.

The cereals market is the key to the future. Fischler wants to slash compensation payments and limit the amount each farmer can receive. But the big grain producers are unlikely to approve and despite the obvious long-term pressures for change, there is a growing feeling that it is still too early to force anything upon unwilling member states.

Former Agriculture Commis-sioner Ray MacSharry was able to use the imminent conclusion of world trade talks to concentrate minds on the 1992 reform.

Certainly there are similar pressures in the pipeline. But unless a crisis is just around the corner, farm ministers will hold off from anything drastic.

But reformers have taken heart from looming budgetary tension, triggered by the news that farm spending cannot rise by more than 0.5&percent; in 1998, despite the continuing strains caused by the beef crisis.