Examination of Witnesses (Questions 480
- 499)
WEDNESDAY 1 APRIL 2009
MR ANASTASSIOS
HANIOTIS
Q480 Chairman:
There has been some suggestion that, for example, the French,
who have been quite slow in moving to adopt all of the elements
of the current reform package rather like the idea that in order
to achieve the security you could almost go backwards to a more
heavily and centrally subsidised model, the old CAP as opposed
to the reformed CAP. If I have got your drift correctly, what
you are saying is that you now see the decoupled market-driven
form of the Common Agricultural Policy as the platform from which
to go forward, is that a fair assessment?
Mr Haniotis: This is true and
this is what all Member States are doing actually; all Member
States are increasing their level of decoupled support. Where
we do have some questions still relates to this 8% to 10% of the
level of support post 2010-11 that would still be coupled and
linked to specific sectors, and most of these questions and issues
relate to the area of extensive livestock production because there
are certain regions where we do have a big question mark over
what will happen if there is no support at all or if the support
is only in the form of decoupled payments. There are certain Member
States that believe that there are no alternatives in these regions
and production will be abandoned, but when it comes to the overall
bulk of our production, when it comes to what will happen to cereals
for example, or what will happen to the majority of meat production,
there is no question that the Member States accept that they will
move towards more decoupled support.
Q481 Chairman:
I am going to bring Paddy Tipping and Anne McIntosh in in a moment,
but in terms of the work that you have done so far in indicating
that there is more productive potential within Europe's agricultural
model, do you believe that the increases in production which may
be drawn forward by market signals reflecting greater global demand
can be achieved, but not at the expense of sustainability and
not at the expense of increasing but in fact decreasing greenhouse
gas emissions from the agricultural sector?
Mr Haniotis: Yes, we do provided
that we have a policy that will have the basic three characteristics
I have described before, that is that we will not determine what
producers produce—they will determine that—we will
determine a level of public support that will be linked to the
provision of public goods, which we do to a large extent for rural
development, and we will strengthen much more the rural development
component. We are doing that already with the Health Check—the
additional money that goes to rural development goes to new challenges,
specifically to challenges related to climate change. The way
Member States are going to meet this challenge depends a lot on
what they produce, what type of emissions they have right now
and what type of targets they will have to meet, and this varies
a lot from one Member State to the other. There are going to be
some Member States that will face significant challenges more
than the others. It is a small minority of Member States but the
challenges for them are significant. The type of flexibilities
they will have and the manner by which other sectors will play
a role—because these are non sector specific targets—will
determine the final outcome, but we have seen that EU agriculture
has reduced the overall level of emissions since 1995 and we do
expect that this will continue in the future, and here is where
a lot will determine the type of mitigation measures and adjustment
measures, and that is why more targeted rural development to meet
these objectives and more research and development money going
there would play a role.
Q482 Paddy Tipping:
It would be right to say that the move has been to decouple and
to produce public goods, environmental benefits and rural development,
but would it not be the case that if there were issues of food
security there would be a lot of pressure on the Commission to,
say, go back to direct payments, direct subsidies for production?
Mr Haniotis: There has been pressure
on the Commission to go that way and we have not done it. Our
role is to state the facts and indicate that in a situation that
is generally very difficult there are pros and cons in doing one
or the other policy, and overall what we have seen is that the
best way to meet the challenges we have is to stick to the path
we have determined and make adjustments. Clearly there are areas
where we need to make adjustments but one where we do not think
we need to make adjustments is to go back to increasing the level
of support for our commodities. We have seen that this does not
necessarily mean more production because we have basically the
same levels of production as we had before, it means more public
expenditure for the accumulation of stocks, which of course you
have to find a way of disposing of afterwards, and less market
orientation on the part of our farmers. This is a path that more
or less everybody agrees right now, but where we do have some
pressures is whether we need to go to some form of measure like
the counter-cyclical support that American farmers face, but again
clearly in our case apart from the budgetary situation where we
have a fixed budget and you cannot afford the variability, the
fact that only 8 to 10% of our exports are bulk commodities while
it is 40% of the Americans' indicates why that is not a path that
we need to follow.
Q483 Paddy Tipping:
What I am saying is that people agree right now, but things may
change. I believe there will be an issue in the future with population
growth, climate change, fuel rather than food, and there is going
to be pressure on food supply. If that happens there will be an
argument in the Commission which says you are going the wrong
way, if you want to ensure that food supplies are there we need
to go back to direct payments.
Mr Haniotis: Maybe this situation
will arise. The way you describe it, it is one of the possibilities
but again one has to base sound policy decisions on the good description
of what the facts are and if your challenge for the future is
to make sure that the production capacity is there you still have
to ask the same question in the future as the one we asked in
the past. What is the best way to do that, by determining from
the point of view of public administration what producers are
going to do or by allowing producers to find that way themselves?
In the context of all the analysis that we and others have done—and
there is analysis from other international organisations that
indicates that—the real question in the European Union is
not whether we are going to produce overall because with or without
public support we are going to produce, it is how we are going
to produce. That is where the regional balance and the environmental
balance become extremely important.
Q484 Miss McIntosh:
Could you just say a few words about the relationship in the whole
issue of food security, particularly the environmental aspects,
between yourself and the environmental directorate?
Mr Haniotis: Yes. What I could
also say is that environment is one of the areas of policy of
mixed competence. Agriculture is one of the few areas where the
Commission has full competence of the policy, with of course the
Member States voting and implementing it. When we take any decision
nowadays in the European Commission, whoever is the director-general
that takes this decision, there has to be an impact assessment
that would look into what is actually going to happen, and the
best way to explain this relationship, not only with DG Environment
but with all the other DGs is to see what happened in the impact
assessment of the Health Check, which is a very heavy body of
analysis in which 14 directorate-generals in the Commission participated.
In the impact assessment group we had they made their comments
and they contributed to the final outcome, so once you come up
with the conclusions of this analysis, when you make a proposal
it also goes through what in our jargon we call the inter-service
consultation which is the possibility of all the other directorate-generals
to contribute with specific comments. When it comes to agriculture
especially, more and more we see that it is not actually a burden,
it is an opportunity and it is a requirement to focus on what
the environmental aspects of our policy are going to be, because
for us sustainability has three components that move together—economic,
social and environmental—and you cannot have farms that
deliver the public goods if you do not have farms that are there
to produce in the first place, but producing is not enough if
they do not meet the environmental criteria.
Q485 Miss McIntosh:
Would you in your division have a view on the impact of any potential
water shortages or, conversely, flooding on food security, or
would that be environment, in the sense of if going forward there
might be a drought in parts of Europe or floods in parts of Europe.
Do you have a policy view on what the impact of water and use
of water in agricultural production is?
Mr Haniotis: This is one of the
reasons why we put so much emphasis on trying to get a better
grasp of what the potential impacts of climate change are going
to be, because one of the biggest question marks we potentially
face is the big variability in weather patterns and the shifts
in terms of weather patterns within the European Union. In the
context of the Health Check and the move for more money going
into rural development measures water issues have become very
important and that is why we have also introduced it more in the
good agricultural and environmental conditions as a requirement.
We do not have right now a very clear picture of where exactly
the biggest challenges are going to be, except that if you look
on the map clearly you see that in the southern part of Europe
there is more and more competition for water and there is more
and more a need for water monitoring practices that are being
introduced which will look into a more longer term perspective
about the environmental impacts. Where things are more uncertain
is what happens where you do not have too little but maybe too
much water. There are always expert responses that we can provide,
but it is very unclear where exactly you need to target your policy
at this stage.
Q486 Chairman:
Just to follow up the themes we have been discussing, we have
put a lot of focus so far on the agricultural production side,
but it just occurs to me that if I asked a very simple question,
does the European Union have a food policy, what would the answer
be?
Mr Haniotis: It has a food policy
in terms of providing the necessary sanitary and phytosanitary
framework in legislation and it has a food policy in terms of
providing the necessary raw materials, so a food industry, and
it has a food policy in terms of having a very concrete trade
framework that one applies to the food industry. How exactly the
food sector in each Member State evolves and develops is mainly
an issue of national policies or mixed competence, but when it
comes to food safety and when it comes to trade we do have the
framework of a common policy.
Q487 Dr Strang:
The Committee will find what you have said so far most interesting.
You will understand obviously as a UK parliamentary committee
looking at this in relation to Wales, Northern Ireland and Scotland
as well as England we have to think to some extent in terms of
production on these islands but we recognise of course that basically
all the big policy decisions are taken at the level of Brussels
on agriculture and have been for a long time as opposed to here
in Westminster. But if I can just talk about the CAP and its development,
nobody is talking about going back to intervention, that is not
an issue, as I am sure you will agree—we are not talking
about going back to wine lakes and mountains of skim milk powder—but
when you say that the decoupled policy makes it more resilient
and makes it easier for them to expand, I would like to ask you
that in relation to some of the commodities. For example, we have
a decline in certain commodities, probably made worse by the devaluation
of sterling in due course, but take for example lamb production
where obviously, as you may well be aware, the numbers are going
down in Scotland and northern England et cetera; it is quite disappointing
and obviously it takes time to turn that round. The issue I would
suggest to you is what is wrong with production payments? The
point about the decoupled payment is that it is a payment that
the farmer can invest in anything he likes, whether it is food
or agriculture or going on holiday to Bermuda.
Mr Haniotis: Two things on that.
Starting with the holidays to Bermuda, there is some sort of fear
sometimes generated that decoupled support is support for people
to put in their pocket and go to Bermuda; if all the farmers were
going to do that we would have such a change in land prices that
Europe would become the most competitive place in the world. This
is not the case, as you know, but the first one that you raise
is a real issue but it is an issue that is not so much related
to the policy instrument that we have but to long term developments.
You mentioned the sheep sector: with the previous type of support
we had, whether it was product specific, whether it was partially
coupled or fully decoupled, we saw a long term downward trend
in the economic productivity of the sheep industry in Europe,
and the fact that we have seen the same development, no matter
what type of policy instrument we have used, indicates that there
are probably different reasons that explain what is happening
than actually decoupled support or coupled support. It is not
only in this sector but we have seen it not so much in specific
sectors but in specific regions. We have seen it in regions where
there are few possibilities for farmers to switch to a different
type of production and where there is a long term downward trend
in the number of farmers employed and the overall economic situation
of the sector. That is why for us the best way to respond to that
is not to isolate the type of support you give to a farmer and
try to believe that coupled or decoupled support will provide
the solution, but to link it to what is happening with rural development.
This is why rural development in all its three axes is extremely
important. Whether these are measures that improve the competitiveness
of the specific farm, the agro-environmental contribution of the
farm or the overall economy of the region it is extremely important
that farmers live in an overall environment that would provide
to them the possibility not only to market their products but
to also diversify their income coming from this particular sector.
It is at least my view that in cases like that we need to focus
more specifically on what is the overall situation in the particular
region because in the sheep sector we have seen the same trend
whether we have coupled or decoupled support. That probably indicates
that there are deeper reasons in these particular areas where
we have this development.
Q488 Dr Strang:
They are interesting statistics and I am sure the farmers are
actually investing and they are not likely to be wasting these
payments in going on holiday. Just on the general area then of
looking at the land area throughout Europe, you still accept the
principle of less favoured areas where you have got these higher
rates of payment, but on the converse would you have to recognise
that there could be a growing need for let us call it intensive
agricultural production in certain areas of Europe where in fact
we can produce very high yields. Indeed, as you mentioned, you
cannot be sure what is going to happen to yield trends in the
next 20 years and they will not necessarily follow the same pattern
as the last 20 years because an awful lot has to do with the inputs,
the fertiliser and the water et cetera.
Mr Haniotis: It is not that we
do not recognise the need to have agriculture that is more productive,
but when we talk about intensive agriculture first of all we always
need to be aware of the impact this is going to have on the environment.
We are not against intensive agriculture provided that it respects
all of the standards that we have set, but second it is very important,
especially in the context of European agriculture, to move a little
bit away from this tendency that we have sometimes to link productivity
growth with growth in yields because you can have the same level
of yields with lower input use and that increases overall productivity,
so it is a much more complex and mixed area. For example, in wheat
we still have a significant part of our wheat that goes to animal
feed, but if we want to improve the quality of wheat that goes
to food that does not necessarily mean an increase in the overall
yields which are extremely high by world standards, so one has
to look at the specific situation in various sectors. We are for
very competitive agriculture and we do not believe that intensive
agriculture is necessarily one that creates problems, but what
we think is that the overall framework should be one where we
respect the standards that we have set.
Q489 Dr Strang:
You could say that if you can get the production out of certain
areas which are well-informed, with good science, high fertility,
then it means you can perhaps be more environmentally conscious
in some of the other parts of your country.
Mr Haniotis: We do not see a false
dilemma in that only small producers that are very extensive should
be able to cover our needs. Big producers are very competitive
and should also and already do a lot of this.
Q490 Lynne Jones:
Can I pick up on what you were saying about animals? In your submission
you mention that pig-meat would remain the most preferred meat
with a 50% share while poultry would increase its share at the
expense of beef and sheep. Is there not an issue here about a
move from extensive largely perhaps grass-fed meat production
to more intensive meat production that depends upon cereals and
crops like soya? Is that not something that would concern DG Agriculture
if we are concerned about environmental issues?
Mr Haniotis: First of all the
type of demand patterns that we describe there are the ones we
have seen developing in the past, not only in Europe but also
in the rest of the world and we do not expect that we have the
power or even the will to change what consumers will demand. A
lot of the increasing pork and especially poultry production and
consumption has to do with the fact that people tend to eat more
away from home and sometimes eat rather fast, so that explains
a lot of it. When it comes to what you mentioned about more intensive
versus extensive, first of all in the beef sector we have also
the situation of beef coming from the extensive sector and also
beef that is produced intensively, not so much in Europe but in
other parts of the world, so there is an issue there. What is
very important is also if you look at the pattern of developments
even in the pork and poultry industries, pork and poultry production
has to meet the higher standards that we have introduced right
now that imply first of all a less intensive method of production
than before and also a better efficiency in the conversion of
cereals into meat. It is a development that would continue the
path we have seen in the past but does not necessarily imply more
environmental pressures than we have seen, especially because
of the type of standards that have to be met, and it is also one
that overall in Europe does not seem to put enormous pressure
on the environment with respect to the previous trends. There
is a slowing down in the growth patterns compared with what we
have seen in the past.
Q491 Lynne Jones:
But a lot of the way we have been discussing these issues today
has been based on food security within Europe and you said, if
you like, that food security globally was a matter for development
policy not a matter for agricultural policy. But with Europe being
a temperate climate with good agricultural production do we not
have a responsibility to maximise the productivity of our land
to contribute towards global security of food and not just see
it in terms of our own security?
Mr Haniotis: We do have this obligation
to maximise our productivity given the constraints we have, and
the constraints we have with respect to the environment in Europe
are more demanding than the rest of the world, not only because
our standards are higher but also because we are a very densely
populated part of the world compared to other parts of the world.
That is what makes a difference between our capacity to respond
to those types of needs compared to the capacity to respond of
other parts of the world, and when we talk about food security
in the context of what the developing countries would require
most of the time we are not talking about what they would import
in terms of meat, it is mainly what they would import in terms
of grains and that is where the big questions are being asked.
In terms of meat, for example, if you look at the overall trends
of demand they have not been as impressive as you would tend to
see in newspapers, in the media, when you look at the numbers,
and what has been much more impressive is the supply response
which is higher than the demand and most of it is coming actually
from Brazil.
Q492 Lynne Jones:
But with climate change we are going to be in a different scenario,
are we not, because it is going to become more difficult for that
marginal land to produce its own and therefore if we are using
our grain production to feed animals for our food that does mean
that there is less cereal and grain available to export?
Mr Haniotis: If we are going to
see a shift towards intensive production of livestock, yes, but
most of the increase in beef production, for example, if not all,
is coming from extensive pasture-based beef all over the world.
Q493 Lynne Jones:
But you said there is going to be a reduction in that kind of
production and an increase in pork and poultry.
Mr Haniotis: In Europe there is
going to be a reduction but not in Brazil and Argentina where
it is also based on extensive methods mainly when it comes to
beef.
Q494 Lynne Jones:
I am talking about Europe here.
Mr Haniotis: If I may add here
do not forget that the overall pattern of food demand for cereals
in Europe is going down, so the additional feed demand could be
covered for pork and poultry from what we produce internally.
Q495 Lynne Jones:
You also said earlier that yield improvements would depend on
research and development, so can you explain to us how research
into food and farming works at the EU level?
Mr Haniotis: Research is an area
where we have contributions both from the Community but also from
Member States and the private sector, so it is an area where there
is an array of projects going on that is simply too long to list
and I would not even know most of them. There are three broad
areas that we are focusing on right now in this research and development
project that I mentioned before at the community level with €2
billion over the next seven years.
Q496 Lynne Jones:
Is that an increase?
Mr Haniotis: Yes, that is an increase.
Q497 Lynne Jones:
From what?
Mr Haniotis: It is hard to say
simply because in the past what we were doing in agriculture was
part of two programmes of the overall package;[15]
this time around with the seventh research framework agriculture
is a part of a specific priority[16]
so you can see clearly what goes to agricultural development and
that is 4% of the overall budget, whereas in the past there were
too many projects lumped together. There are three broad areas:
one is food farm management with a focus on increased competitiveness,
the second area relates to rural development with an objective
to improve the sustainability of our agricultural sector, and
the third area is the area of food safety with the objective of
meeting the requirements and the demands of European citizens.
These are the three broad areas where we have dozens and dozens
of projects that cover these broad areas from different angles.
If you want we can provide you with a detailed list of these particular
projects and which areas they cover—in fact, we follow this
in my unit and we can send you this list.
Q498 Chairman:
Are those programmes complementary to the research programmes
that Member States are carrying out?
Mr Haniotis: Yes, in fact most
of the research in agricultural areas is not coming from the European
Union, it is coming from the Member States.
Q499 Lynne Jones:
You said that there had been a slowdown in research in those countries
that needed it most; you were talking about countries outside
the EU there.
Mr Haniotis: Yes, if you look
at the pattern of agricultural research and development in the
last three decades—and I am familiar with a graph coming
from the World Bank—it is mainly in sub-Saharan Africa that
they have had clearly a decline in agricultural research and development.
There was a decline in the 1980s in almost all parts of the world
but research expenditure picked up in the 1990s in most parts
of the world, especially in the developed world, but this is not
the case in sub-Saharan Africa and also there are some developing
countries in South East Asia that could do with more research.
15 Witness amendment: Namely: Food quality
and safety; and Sustainable development, global change and ecosystems. Back
16
Witness amendment: Food, agriculture and biotechnology. Back
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