Examination of Witnesses (Questions 720
- 739)
THURSDAY 6 DECEMBER 2007
Mrs Mariann Fischer Boel and Mr Poul Skytte Christoffersen
Q720 Lord Cameron of Dillington:
So that is more money to Pillar II again, very good. We approve.
Mrs Fischer Boel: That is why we need more money
in Pillar II.
Q721 Lord Cameron of Dillington:
My longer term question is I have seen particularly the Single
Farm Payment at a flat rate, decoupled, as being a step to much
more market orientation, possibly even complete market orientation,
and yet one of the problems you have to deal with is the ups and
downs of food production in the marketplace, for weather, for
financial reasons, even in Australia or wherever it might be.
All businesses have to cope with risk and you have a big chapter
on risk in your Communication, which is good. Would it not be
better if we could put more of that risk into the hands of the
farmers? Instead of having the Single Farm Payment to support
farmers—I am talking long-term, 2015 onwards—would
it not be better if the EU paid half an insurance premium for
farmers to cope with the risk and then it withdrew, it is the
farmer's insurance policy? The Single Farm Payment seems very
unsatisfactory and I am thinking of ways of giving more responsibility
to the farmers to pay.
Mrs Fischer Boel: The ideas on risk and crisis
management will always leave the responsibility to the farmer
to tackle the normal risks that are in every business.
Q722 Lord Cameron of Dillington:
Not in the wine sector it does not.
Mrs Fischer Boel: Wait and see what is coming
up. I hope it will be positively received. We do not want a European
scheme for crisis management, we want Member States to create
schemes, but we would be open to look at the possibility of co-financing
the premium via the rural development scheme.
Chairman: That is all right. That is
good.
Q723 Lord Cameron of Dillington:
Good.
Mrs Fischer Boel: That could be a possibility.
We cannot prevent farmers from taking certain risks, that has
always been the case. I am not going to try to translate what
President Sarkozy means.
Q724 Lord Cameron of Dillington:
Nor is he, I doubt.
Mrs Fischer Boel: If there should be any expectations
of an income safety net, forget it. This would be a countercyclical
payment, exactly what we are accusing the Americans of using as
the most trade distorting measure. If you hear this idea, please
kill it. It is not "green box" when we discuss the WTO
terms, it is the most trade distorting ever. That simply will
not fly. I think the majority of Member States would not accept
this step back.
Lord Cameron of Dillington: I agree.
Q725 Viscount Ullswater:
There is one thing that bothers me about this shift from Pillar
I to Pillar II because in all our discussions it has been, "Oh,
let's move that into Pillar II" and there seems to be an
endless series of things which qualify for Pillar II, whether
it is co-financing or financing. I was very taken by what you
said about these small farms getting Single Farm Payments and
the cost of the bureaucracy of giving them monies is greater than
the monies they receive. When I look at all the axes and all the
things which are available under Axis 1, Axis 2, Axis 3 and Axis
4, are we not running into that sort of danger again, that the
bureaucracy of administering these schemes in Member States is
going to be so great that most of the financing is going to go
on the administration? Tell me I am wrong.
Mrs Fischer Boel: In this Commission we have
a headline saying "Simplification" and in agriculture
I think we are the winner of the day on simplification. It might
be because there are lots of possibilities to simplify. What we
have done on set-aside, on the reform in fruit and vegetables
where we reduced the number of entitlements and previously we
had an entitlement for fruit and vegetables and for set-aside,
and this can all go I hope. That is the reason why I am looking
forward to a flat rate system because then it will be a simple
system. Cross-compliance has been accused of being very, very
complicated. We had a report the day before yesterday which shows
it is much, much less complicated than it is now labelled. I must
say when I look at the results—it is six different Member
States we have been looking at—they are very different,
which means that there are some Member States that are over-implementing—
Q726 Lord Plumb:
We can name one.
Mrs Fischer Boel: --- which means adding national
things on top of what was the intention. I am really going to
look into this because I am constantly accused by Germany and
it turns out that Germany is a country that made it much more
complicated for their farmers than anyone else. Member States
need to help to simplify things.
Mr Christoffersen: Just on your particular question,
I heard a suspicion that by saying there are a number of new challenges
which we see and have to solve through rural development that
means we will add a number of new instruments in the rural development
field. But on our analysis thus far shows that we can use some
of the existing possibilities in the rural development scheme
to respond to most of the new challenges. The question is only
to reinforce those particular possibilities financially. We talked
about compensating for the disappearance of set-aside, but we
have plenty of possibilities inside the present rural development
scheme for supporting activities that could do that. Do not assume
that by saying that we have new challenges to respond to that
this means adding new additional possibilities in the scheme,
it could just be about reinforcing the use of some of those that
already existed.
Q727 Baroness Jones of Whitchurch:
That fits very neatly into the question I was going to ask because
you have talked about climate change and indicated that could
be dealt with effectively through elements of Pillar II. Given
the broad spectrum of issues around climate change, not only about
drought, flooding and so on but the need to reduce CO2 emissions
and so on, how would you realistically manage those issues? How
could you do that within the current Pillar II requirements?
Mrs Fischer Boel: First of all, the paper on
energy and transport from the Commission on 10 January this year
gives some clear signals on the reduction of CO2: 20% by 2020
and 30% if we get others on board hopefully at the Bali meeting.
Secondly, by 2020 10% of our energy demand should come from renewable
energies and here agriculture can contribute. In fact, it is the
only one that can contribute in the transport sector. That is
the reason for the clear signals from the agricultural sector
that we will be able to deliver on the reduction of CO2 emissions
via bioethanol or biodiesel but we require that the production
takes place in a sustainable way, which does not mean we will
accept that pastures are ploughed up or forests are cut. We will
put the same requirements on imported energy, be it oil or fuel,
biodiesel or ethanol. We can deliver our part. We can do quite
a lot more within the primary production reducing emissions from
a manure tax to ensure that you do not blow the manure up into
the air but place it on the soil directly, you do not bring it
out in the autumn where the snow absorbs it. There is quite a
lot that can be done. I have flagged up the idea in the Communication
that we do not need the energy scheme that we have at present.
We have the possibility to pay farmers €45 per hectare on
up to two million hectares for growing energy plants, but today
we have a well-functioning market so I hope we can agree this
will disappear and then maybe spend the money in innovation or
the possibilities of developing the second generation of biofuels
instead.
Mr Christoffersen: As the Commissioner has said,
one very typical example of where we need to do more is on manure
because the greenhouse problem from agriculture is not so much
CO2 as the other types of greenhouse gases.
Mrs Fischer Boel: Methane.
Mr Christoffersen: This is a very important
point. We have possibilities in the rural development scheme but
we need to reinforce the use of those possibilities. Another important
part of climate change is the whole water management and water
conservation policy and that is one area where we need to do more.
Q728 Baroness Jones of Whitchurch:
We heard this morning from your finance colleague that because
everybody can see that the environment is a key policy issue coming
up everybody is suddenly adding the environment on to their list
of responsibilities and in the budget round they will be a factor,
they will all be saying, "We can solve your environment problem
out of our budget and our responsibilities". Do you think
there is going to be an inevitable level of duplication because
some of the areas you are talking about do not fit naturally with
the existing farming regime as it stands? We are talking about
quite a big shift.
Mrs Fischer Boel: In which area would you solve
it?
Q729 Baroness Jones of Whitchurch:
By having an almost separate function that deals with the environment
issues rather than trying to fund it out of the existing budgets.
Mrs Fischer Boel: Normally I have a very good
imagination. You might create a new fund to finance investment
in agriculture via the addition of a different budget. I will
not kill any ideas from the beginning but it sounds a bit difficult.
Mr Christoffersen: In general today if you look
at the instruments which the Commission has at its disposal they
can legislate and force Member States to undertake certain environmental
measures but agriculture is the main instrument for the Commission
to do things directly for the environment. The second pillar,
cross-compliance. If you are looking at measures inside the Commission
today which have a direct bearing on the environment most of them
are under your responsibility.
Mrs Fischer Boel: They are coming from agriculture.
I think it would be difficult to find another financial donor.
Mr Christoffersen: We are actually saying we
are prepared to finance this by moving more money into the second
pillar.
Q730 Baroness Jones of Whitchurch:
But presumably by increasing. You are not saying you are going
to do it on a—
Mrs Fischer Boel: Not increasing.
Q731 Baroness Jones of Whitchurch:
You are going to do all the climate change stuff within the existing
budget?
Mrs Fischer Boel: The budget for agriculture
will not be increasing after 2013. We will have lots of different
challenges but we have not asked for more money. We will simply
try to reallocate within our budget from the more traditional
direct payment into the rural development policy.
Q732 Earl of Dundee:
You mentioned that there will not be an increase in funds to the
CAP from the EU budget and you also suggested that compulsory
modulation should be accompanied by decoupling. Is this not a
recipe for distorting competition within the Single Market given
that there really is so much variation in different EU States
in their political priorities as well as in the relative strengths
of their farm lobbies?
Mrs Fischer Boel: First of all, I think the
discussion on financing for agriculture will be negotiated together
with the British rebate. It is always a French/English discussion.
Q733 Lord Cameron of Dillington:
And the other rebates.
Mrs Fischer Boel: You get the biggest ones.
That is the reason for not expecting any higher budget in the
future. Personally, I know those of you who are close to farming
society know that farmers would love to make their income from
their production instead of from payments. If this is what we
can see on the horizon and hopefully this is where we are heading,
higher prices, I am very happy to see the price increases in agriculture
because for 15 years we have been in a decreasing situation. Those
who are complaining about milk prices, as long as they never complain
about buying a litre of Coke, which is sometimes more expensive
than a litre of milk, I could not care less.
Q734 Lord Greaves:
Water, never mind Coke.
Mrs Fischer Boel: I have carefully looked into
the prices of water and unless you are going for a very special
one it is still cheaper than milk, but Coke is a different matter.
Q735 Chairman:
Finally, I think something that has underpinned a lot of our discussion
is to identify what aspects of the CAP it is essential to keep
common across all Member States and what aspects you can allow
to have greater variability in the context of particular problems
of Member States. Have you got a thought on that, what is absolutely
essential to keep hold of across the board?
Mrs Fischer Boel: I want to keep a certain level
of direct payment co-financed exclusively from the Commission.
We all know going from the northern part of Finland down to Sicily
that there is a huge difference and that is the reason why we
have introduced the possibility in the rural development policy
for Member States to make their own programmes tailor made for
the challenges they face in their specific regions. This must
continue because you can never make a one-size-fits-all programme
in rural development. Those are two huge differences between the
direct payment and the rural development policy. I am sure we
will have a discussion raised by the new Member States as to why
their direct payment is lower than that of the old Member States
because of the history of the direct payment which originally
was a compensation for the drop in prices in the McSharry Reform.
As this can no longer be the only explanation I am sure you will
see a queue of new Member States saying, "We need a flat
rate but this has to cover the whole of the European Union".
That is going to be a very, very difficult discussion. If this
happens then you will see a severe or huge reduction in the old
Member States and an increase in the new Member States because
the levels are completely different. This is for the discussion
that will take place. It is a fantastic job I am in, you can imagine.
Q736 Lord Cameron of Dillington:
Article 69, which seems to be pretty important, do you have support
for your desire to relax the rules in Article 69?
Mrs Fischer Boel: I do not know yet because
we have not started the discussion.
Q737 Lord Cameron of Dillington:
That is going to be quite important, is it not, particularly all
this talk about more rural development?
Mrs Fischer Boel: Why should Member States be
against it?
Q738 Lord Cameron of Dillington:
I do not know, but I never understand what Member States do.
Mrs Fischer Boel: If it is voluntary why they
should they block the possibility for those who want to use it
to make it much less complicated.
Q739 Chairman:
Thank you very much indeed. We look forward to the outcome on
wine.
Mrs Fischer Boel: Really. The most important
request from the UK is to increase the de minimis.
Chairman: Thank you very much indeed.
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