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Ministry of Agriculture LATVIA

Agricultural reform in Europe: 2013 and beyond. Ministry of Agriculture LATVIA. May 14, 2008 Tallinn. CONTENTS. CAP in future – Basic principles Vision and objectives Possible policy instruments. CAP in future Basic principles of policy. SUSTAINABLE MARKET ORIENTED

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Ministry of Agriculture LATVIA

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  1. Agricultural reform in Europe: 2013 and beyond Ministry of Agriculture LATVIA May 14, 2008 Tallinn

  2. CONTENTS • CAP in future – • Basic principles • Vision and objectives • Possible policy instruments

  3. CAP in futureBasic principles of policy • SUSTAINABLE • MARKET ORIENTED • COMPETITIVE • REGIONALDIFFRENCES • PUBLIC GOODS

  4. CAP in future VISION • Agriculture – appreciated by general public • Rural economy – economically active and knowledge based. • Viable rural holdings – with or without support • production according to market demand and climatic conditions • increasing added value and shifting from quantity to quality 2

  5. CAP in futureVISION • Prosperous people in sustainably populated countryside of Latvia: • development of capacities of rural people • sustainable management - rural natural resources and landscape • development of rural living environment • Promoting entrance of young farmer in agri-business with a view of improving the aged structure of farm owners 4

  6. CAP in future OBJECTIVES Global competitiveness • Doha Round should not lead to a further reform of the CAP: • Green box provisions shall be retained Asinthecurrentdraftmodalities; • Level of customs tariffs shall ensure farmers competitiveness on domestic market; • Export subsidies and elements with similar effect shallbeeliminated ensuring fair competition in worldmarket. 5

  7. CAP in future OBJECTIVES • Fair, equal conditionsfordirectsupport among all MS: • distribution of financialenvelopesfordecoupledpayments; • new support criteria must reflect actual activities of farmers at present, instead of historical figures; • thesamepossibility to chooselevelofcouplingandhistoricalmodelin transition from SAPS SPS

  8. DP +RD area paymentsper MS 2013(in€/hectare UUAin 2007)

  9. Arable crops reference figures and actual area/yield

  10. Impact to income & efficiency – employed in agriculture and payment for employed/ UUA ha

  11. 4000 3500 3000 2500 2000 EUR/ha 1500 1000 500 0 Land price in reference year , DP = 0 Land price at DP= EUR Land price at DP= EUR 100/ha 300/ha Impact of decoupled support on land market price

  12. Impactofdecoupledsupportonrentpriceof farm land and buildings/ average farm size UUA ha

  13. CAP in futurePOSSIBLE POLICY INSTRUMENTS • “Capped” direct support rate per hectare • support for multifunctional services providing societal benefits State aid - SA Rural development area basedmeasures (RDP) MAX rate = ∑(SA+RDP+DP) ≤ 1000 EUR/ha Direct payments CC includingGAEC (DP)

  14. CAP in futurePOSSIBLE POLICY INSTRUMENTS • An equal support rate per unit must be laid down all over the EU for compliance with the same conditions 50 EUR/ha (for grass cutting) GAEC Direct payment Y EUR/ha Other CC requirements • restructuring of direct payments according to inputs and to avoid “support cutting” • why support for landscape maintenance costs be radically different in different member states?

  15. CAP in futurePOLICY INSTRUMENTS • Modulation • ... must serve as an instrument diminishing the differences among rural areas in the Community • BUT, too much of direct support, based on production criteria in the past, is simply shifted to Pillar II in respective MS- without analysing the rural development needs • LV aboutmodulation principles: • not more than50% of financing modulated to be channeled to respective MS • 50 % - to EU budget and finance distribution based on objective criteria

  16. CAP in futurePOSSIBLE POLICY INSTRUMENTS • Risk management • role of Community risk management tools ? • clearly defined EC and MS responsibilities to ensure transparency • promote motivated participation of producers

  17. CAP in futurePOSSIBLE POLICY INSTRUMENTS • Safety net • income loss compensation mechanism should be introduced in order to allow compensate income losses arising from market fluctuations, natural disasters (animal diseases, crop losses etc.). • Financing from Pillar I (intervention, Article 69) • Strengthened producer organizations decrease risk of hazards due to market fluctuations (Frenchapproach)

  18. Thank you for attention!

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