Examination of Witness (Questions 60-75)
10 MARCH 2004
MR KAROL
ZIMMER
Q60 Diana Organ: Notwithstanding the
vagaries of the weather, flood and drought, after accession what
do you think will happen to agricultural production in Slovakia?
Mr Zimmer: I wish I could tell
you. The thing is that it is really hard to predict. We spoke
about this with the people from the acceding countries, the original
members, the 15, people from the Commission and everybody is just
guessing. I think the best example of this is that the farmers
in Bratislava or Slovakia are scared of the Austrian farmers.
At the same time the Austrian minister would tell you that the
Austrian farmers are scared of the Slovaks going to the Union,
so the fear is on both sides. What we predict is that the amount
of the production in the country will not change radically all
the time and we believe that there will be some reshaping of the
agriculture trade but within the accession countries. There will
be some changes in the share and flows of production between Hungary,
Poland, Slovakia, Slovenia but not really with Austria, Germany
or these other countries. We believe this first shaping will be
like that. To give you a figure here, one third of the agricultural
trade, of the imports to Slovakia is from the Czech Republic,
so that is our main trading partner and the other third would
be from all EU-15. The importance of trade with the EU-15, for
all EU-15 is on the level of the Czech Republic.
Q61 Diana Organ: If you had to look across
your sectors after everything has been adapted to the conditions
in the CAP which sector would you feel most concerned about and
which sector would you think is going to do the best?
Mr Zimmer: I am afraid that the
pig meat sector will be the loser and the poultry sector as well.
Unless some new investment comes there I am really afraid for
the farmers that do this. The reason is that they are not efficient,
proportionately they are not efficient. I believe that is partly
due to the fact that these two sectors were well protected over
the period. So they have got some pillow but now we will take
the pillow from them and I am afraid that they will fall down
heavily. On the other hand, I believe we have good conditions
for milk production and beef, sheep and goats. These may be the
winners, and of course also some cereal productions, crop production
may be winners. As I mentioned the dual character of farm structure
in Slovakia, it is also the same with the soil. The south of Slovakia;
it has really low lands and the cereal production can be very
good down there. On the other hand, the rest, two thirds of the
country is hilly or mountainous, you will not get much maize there.
So we believe that the south may improve their crop production
and the north may improve milk and beef, maybe sheep and goats.
Q62 Diana Organ: So the sectors that
you think may be putting in extra production and might be faring
very well, such as you said beef, milk and others, do you see
that increase, and the way they do things, will that go into meeting
increased consumer demand, or is going to be all exported? You
talked a little bit about your net balance in agriculture and
food products, and it is a situation that you touched upon with
your trading with the Czech Republic, where do you think this
extra production is going to go?
Mr Zimmer: I think mainly it will
stay in the country. The trade deficit with products that are
produceable in the country is still quite large. It is not just
that we are importing pineapples and bananas, we do produceable
things in country, so if the production is improved then I believe
that most of it would be used in country and, of course, I mentioned
the inflation figures and the unemployment rate, so I believe
that this will also get better in the future and that will of
course mean an increase in domestic demand.
Q63 Diana Organ: I will ask this one
question, if we were looking out for something what you would
consider your very best product that we might look for to purchase
and to consume and to enjoy?
Mr Zimmer: I am happy you raise
this question because I must admit when Mr Iztok Jarc was talking
about their catering he was right. I do not know if you could
get better pizza as you get in Slovenia anywhere in Europe, maybe
including Italy. My colleagues told me the two lunches they had
there were the best ever had. The wine is really good there and
I think that he was supposed to tell you that they had great prosciutto—very,
very juicy. However, let's go back to Slovakia.
Q64 Diana Organ: What is in your basket?
Mr Zimmer: I will go back to Slovakia
but via the capital of Slovenia, where a Slovak white wine won
the World Championship Medal last year; so we have good white
wines. We have great cheeses, both from cows and from sheep and
goats, and we have some good meat products as well, but really
if I may advise you try some good Slovak white wine and eat some
cheese with that.
Diana Organ: It sounds like a cheese
and wine party.
Chairman: We are salivating at the thought,
it sounds very good!
Q65 Mr Lazarowicz: We are talking about
changes in prices after accession but how will accession affect
the incomes of farmers when you take into account the direct payments
and the market support mechanisms?
Mr Zimmer: With the direct payments
phased in we believe that the sector should stay in profit after
the accession, at least on average. As I mentioned, in the last
15 years there were only two years of profit in sector, that was
the years 2001 and 2002. Unfortunately, the restructuring the
sector has undergone has been very hard to bear and I have mentioned
the bad weather conditions already. When we have increased direct
payments from the Union the situation should change and the farmers
should make profits, but we still believe that in the next couple
of years without the direct payments the sector as a whole would
be making a loss.
Q66 Mr Lazarowicz: We had evidence from
Professor Tarditi from Sienna University, of which you may be
aware, which suggested that the increase in Slovak farmers' revenues
could be around 148%. Do you think that is too optimistic? What
do you think the likely range might be?
Mr Zimmer: I am afraid this figure
probably comes from our Slovak figures. It is the only thing that
will change it from total loss to total profit and that is where
the recalculation is quite difficult to measure so the revenues
will not change that much. No way. It will just change the usual
loss up to a slight profit in the sector in the medium term.
Q67 Mr Lazarowicz: Okay. On that basis,
how far do you think that the income gains, wherever they are,
will be captured by the largest sectors of the industry and how
far will the gains be concentrated in that sector of farming?
Mr Zimmer: This is a very difficult
question to answer. I mentioned that the co-ops are mostly on
rented land or on somebody else's land. With single area payments
the connection between the land and the payment is very strong
so this may lead to the result that most of the money would be
captured by the landlords and not by the farmers but we cannot
predict that. Still the analysis of the CAP say that at least
50% of the payments go to landlords not to the farmers under the
current CAP. With decoupling this may go further.
Q68 Mr Lazarowicz: I missed part of your
evidence at the beginning for which I apologise and this question
may have been asked or may have been covered, but how far do you
expect there to be a substantial increase in foreign investment
in the farming industry in Slovakia? In particular will there
be any increase in land ownership by foreign companies?
Mr Zimmer: There is some inflow
of direct investment from abroad even in the agriculture sector
and that is mainly the Danes or Dutch coming in, but for most
of the accession countries it is a condition of the Accession
Treaty that we may ban foreigners (physical persons) from buying
the soil, and there will be some kind of regulation that the soil
would not be easily bought by foreigners, at least physical persons.
There is a possibility of course for the legal person to come
in. I cannot predict how many investors will come to the country
but I cannot say that there are queues at the border just waiting
to get in and buy up the land. I do not think that is going to
happen.
Q69 Alan Simpson: Can I just follow that
line. You are not having other queues, are you, where big agricultural
companies are seeking to lease the land if they cannot buy it?
Mr Zimmer: They lease. They have
contracts for the land and most of the land is leased in the country,
that is true.
Q70 Alan Simpson: Okay, so really what
I want to focus on is environmental impacts because one of the
things we came across when we went to Poland was a recognition
that the government appeared to have no particular competences
at holding the big agricultural producers and pig meat producers
to account for the environmental damage that they were doing within
the country. Are your mechanisms going to be any better?
Mr Zimmer: As I mentioned, we
have opted for the Single Area Payment Scheme and that is, I believe,
even more environmentally friendly than the current system in
the EU-15 because the Single Area Payment Scheme can only go to
land that is in good agricultural condition, so the paying agency
will have to check this, whether the land is suffering from erosion,
things like that. So, yes, the Single Area Payment Scheme will
be quite favourable towards environmental protection and once
we get to Single Farm Payments, as you will, then the cross-compliance
will hit the country as well, so the paying agency and the delegated
bodies will be forced to check that and enforce the regulations.
Q71 Alan Simpson: Okay, but when the
European Commission set up their network of independent agricultural
experts, one of their comments about your country was that Slovakia
"had a problem of unsustainable structure of agricultural
production in less favoured agricultural areas from an economic
as well as an environmental point of view." This was their
concern about the less favourable areas and your ability to control
the environmental impact of changes there. Do you think that is
a fair criticism?
Mr Zimmer: I think I would need
more circumstances as to what they meant by that. I know in some
accession countries there was a lot of land abandonment where
the people would leave the land and let it go to bushes or trees.
Actually that did not happen much in my country. I know that the
level of environmental protection was lower in most of the ex-Communist
countries than it was in the Union so this may come up from that,
but we are in line with the regulations needed in the EU so I
really cannot answer you now. I know that this does not look very
nice that I am leafing through this book but I am searching for
a figure that I saw here and I am sorry, I cannot find it. If
I may, I will distribute this to you. It is a report on the Slovak
agriculture and food sector. I was having some comparisons about
the level of fertilisers that we use and that of the European
Union average and I think we were something like at one third
in the fertiliser usage per hectare.
Q72 Chairman: Do not worry, you can always
send us the information afterwards if you cannot find it at the
moment.
Mr Zimmer: I love figures, that
is why I am leafing through it. I will quit now.
Q73 Alan Simpson: I will chase it in
the report you give to us. One final question in two parts. The
first is a very straightforward point: do you license GM crop
production? The reason I ask that is one of the problems we are
also trying to focus on is the ability of accession states to
be able to monitor and deliver on traceability standards that
the EU is going to require and it is whether you have the infrastructure
to deliver that.
Mr Zimmer: GM crops is a big issue
in my country as well regarding the traceability. The conditions
from the European Commission to the laboratories and the work
of the laboratories in this field were very strict and the demands
were very heavy and we fulfilled them so, yes, we are able to
trace that.
Q74 Mr Drew: You probably heard what
I said to Mr Jarc about the relationship to the Common Agricultural
Policy. Just to summarise it, I would welcome your views on this,
that you are joining, receiving lower direct payments and presumably
Slovakia would feel somewhat aggrieved about that, notwithstanding
that your agriculture seems to be reasonably successful from all
you have been saying to us. I am interested in the politics about
who you are going to be talking to to try and get greater fairness.
The final question I put to Mr Jarc was this one about renationalisation.
Is that something that you would welcome or do you see that as
completely against why you are joining the EU?
Mr Zimmer: Regarding renationalisation
of the CAP, we would not favour that. We would not favour a national
agriculture policy, we prefer a horizontal one. On the other hand,
we really welcomed the reform that was passed in June. We believe
that the CAP should be changed and should be focused more on competitiveness
rather than just keeping the production going on and on and on.
I can be very honest now, when my Minister goes to the Council
of Ministers one of the persons they listen very carefully to
is your Minister because we sometimes share the view that says
that although agriculture needs protection it should be given
under more competitive pressures, if this helps you.
Q75 Chairman: Can I just conclude by
ask you asking you in terms of the Commission's Comprehensive
Monitoring Report they highlighted a number of areas for further
work both in terms of systems like the paying agency and in terms
of adapting your national law, as we were discussing earlier,
to EU requirements. Are you going to meet those deadlines?
Mr Zimmer: We certainly hope so
but I must admit that I was waiting for this question because
I am kind of proud about what I can tell you now about that. We
had a meeting about this Monitoring Report I think it was at the
end of January and after a presentation the last statement from
the Commission towards the paying agency and the IACS system was,
"You have confirmed and we are really confident that you
will make it by 1 May." We had three points, one was paying
agencies, one was IACS and the last one was food safety, so at
the last meeting with the EC they were confident we were going
to meet the two. Yesterday we had a meeting with the chiefs of
SANCO[4]
which cares about food safety. If I may quote—and my Minister
was even blushing over how nice they were to us because we have
done a great job, and I believe that we have done a great job—the
chief of SANCO was saying that, "If there is any country
among the acceding countries we do not have troubles with in food
safety now, it is you." So I was really proud. The lady mentioned
things like if they search for experts in the field of the establishment's
food safety, she would definitely recommend somebody from my country.
So I think that we have done a very good job in that field.
Chairman: On that very positive note
and indeed underpinning the wholesomeness of the food from your
country, we will draw our questions to a conclusion. May I thank
you most sincerely for the time and trouble you have taken to
prepare for this and for so candidly answering our questions not
only with good facts but also with good humour. We wish you well
in the remaining months and weeks that lie ahead and hope you
will enjoy your full membership of the European Union. Thank you
very much for coming to see us.
4 Direction Ge«ne«rale Sante« et Protection
des Consommateurs: (Director-General for Health and Consumer Protection).
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