Home » Agriculture & Environment » Agricultural Policies

AGRICULTURAL POLICIES

The Luxembourg Agreement signed in June 2003 eased the policy’s main measure, the Single Farm Payment (aid decoupled from production). For the first time, Member States had the possibility to adapt the CAP measures to their local context. However, with only two exceptions, Member States kept full decoupling as the main rule for arable crops, and largely used partial decoupling options for animal production.

Although this agreement maintains the 10 percent mandatory set-aside with the possibility to grow non-food crops, the set-aside area has first increased by 0.5 million ha to the detriment of the cereal area. This is caused by the Single Payment scheme, which has generated an important increase in voluntary set-aside lands in the less favoured areas. The increase in set-aside land would have significantly affected fertilizer consumption after 2007, if it had not been for the sudden take off of bioenergy production.
 
Another important development presented in the Luxembourg Agreement concerns the second most important measure: the Cross Compliance principle. The nineteen Directives must now be respected according to the national standards already defined by each Member State; and the Good Agricultural and Environmental Conditions (GAEC), which must now be respected on all lands, have also to be defined according to standards defined on national level.
 
These new features of Cross Compliance bring more uncertainty in the evolution of the crop pattern, and generate a further negative impact on fertilizer consumption, although it is more progressive than the impact of the Single Farm Payment.
 
The new Common Agricultural Policy is now implemented in the EU-27, with 17 Member States already applying the full scheme. However, all Member States which apply the full Single Farm Payment do not use the same modalities for implementation, and no two schemes are identical – therefore, the foreseen impact varies significantly from one Member State to another.
 
Even if it is now possible to evaluate the impact of most of the market measures of the new CAP, including the sugar reform and the new reform for wine, fruits and vegetables, there are three other issues which are still difficult to assess and which will continue to have a major impact on European agriculture. This impact is more important than foreseen in 2005, first year of implementation of the CAP.
 
The three issues are:
  • The implementation of Cross Compliance: Important uncertainties remain on how each Member State implements and controls this second key measure of the CAP, but it appears now that this measure can lead to unjustified restriction on certain farm inputs. As an example, the obligation for Member States to set controls on phosphate levels (according to the Water Framework Directive) has induced unnecessary limitations on P in certain countries, and this situation will even threaten soil fertility in certain situations.
  • Production of biofuels: Since 2003, when the EU strategy and the legal environment has been set, this development is taking a new pace. Ambitious, national action plans are now implemented in certain Member States, and new EU Action Plans are expected by end of 2007, following the publication by the EU Commission of the strategic “Energy package” in January 2007. This development is pushed significantly further when Member States use this new market possibility to fulfill their obligations concerning the Kyoto protocol, and this situation now starts to affect the food area.
  • The WTO Doha discussions: The EU is now in a much better position to negotiate on agriculture as the Single Farm Payment makes most of EU market support and is not trade distorting. However, probability of an agreement has now faded away, and we will see and increased development of bilateral agreements.

 

^ top of page