Examination of Witnesses (Questions 780
- 799)
THURSDAY 6 DECEMBER 2007
Mr Beniamin Gawlik
Q780 Lord Plumb:
So market prices have risen by what sort of percentage?
Mr Gawlik: It varies from market to market.
In the case of sugar beet the rise in prices was close to 50%
and there was also similar rise in the sugar prices for the final
consumers. After accession sugar beet production became one of
the most profitable types of agricultural activity in Poland.
A growth of producer prices that was also the case for beef production
and pork production. In certain types of production, like pork
or poultry, there was an increase in prices immediately after
accession but in the case of poultry, for example, there was a
drop back to the levels before accession just after these problems
with avian influenza at the end of 2005, beginning of 2006. The
market for pork is very volatile. Prices rose just after accession
but then they dropped once again to the levels noted before accession.
In the case of milk there was a rise in prices but that is more
a European-wide phenomenon, not only connected with our accession,
the increase in demand for milk and milk products on the European
and international markets.
Q781 Chairman:
Looking at the Health Check, various elements within the Health
Check, do some cause you concern or do some give you optimism?
What is your view on the various elements of the Health Check?
Mr Gawlik: Our concern is the possible implementation
of the intervention measures. That is the biggest concern. We
think that will lead to a further decrease in prices. There is
no space for discussion about diminishing the direct support because
right now it seems there will be no additional compensation for
the price drop. That is probably the most important concern. There
are a couple of things which seem to be positive. For example,
the Commission seems to see that our simplified system of direct
payments, so-called SAPS,[2]
is quite efficient. It is appreciated by the farmers. It is also
quite easy to manage for the administration. The Commission considers
that it is worthwhile to discuss the prolongation of this type
of system of direct payments up to 2013. It is quite a positive
signal for us but we are rather disappointed that the Commission
would like to leave it for discussion in the mainstream Health
Check discussion and then we could expect a decision about the
prolongation of SAPS at the end of 2008. Right now, this is a
good occasion to discuss the prolongation of the system because
there is a proposal concerning the simplification of the cross-compliance
discussed in the Council and within the framework of this discussion
on simplification we presented our request to prolong the system.
It is hard to understand why the Commission cannot agree to our
request. It is not only a Polish request but a request from many
of the new Member States who apply this system. Why should we
wait for the end of 2008 to possibly have a positive result from
the Health Check discussion on the prolongation of SAPS? As a
positive signal we see the possibility to discuss the so-called
"fatter" rate payment in the case of direct payments.
We apply flat rate payments and, in fact, we have only a couple
of markets where we have higher and differentiated support but
mostly due to the so-called complementary direct payments from
the national budget. It is just for a couple of products where
in the past support in the EU was quite high and it would be discriminatory.
for our farmers if they were not paid at a level a little closer
to their colleagues from the EU-15 can get for tobacco production,
hops or potato starch production. We think the Commission could
be more ambitious because, as it is presented in the document,
it will be a possibility to have a "flatter" rate payment
but only at the Member State level. We think we might be more
ambitious and start to discuss "flatter" rate payments
within the European Union.
Q782 Chairman:
The philosophy behind much of the reform recently, and even going
forward into the Health Check, is very much to get European agriculture
more market-oriented moving away from product subsidies, direct
subsidies generally, and the farmer getting a greater return from
the market and if that means structural change in agricultural
industries then so be it. Is Poland comfortable with that approach
or is Poland really looking to defend its direct income?
Mr Gawlik: We would definitely like to retain
the direct income support if there is any change in the price
level. For us, there is no room for discussion about the level
of direct payments, especially as we are still waiting to get
full direct payments. At the time when we reach this full direct
payment level, for us it might be the time to be on a level playing
field with everybody else within the EU. In relation to your question,
at least in the case of Poland, and probably in the case of many
new Member States, when we apply this simplified system, and there
is single support or a single rate of support for one hectare
of arable land we think it leaves farmers with the possibility
to adjust to market signals.
Q783 Viscount Ullswater:
The 2003 reform made the receipt of SAPS, in your case, dependent
upon cross-compliance. I am wondering how that cross-compliance
was implemented in Poland. The Commission in the Health Check
are proposing some amendments to that, and you have mentioned
those already and said you are in favour of them, but could you
say what changes particularly you would welcome and the arrangements
around cross-compliance.
Mr Gawlik: In the case of Poland and the simplified
payment system, right now we apply good agricultural and environmental
condition,[3]
It is implemented now and respected by the farmers and controlled
during the checks connected with the direct payments. In relation
to cross-compliance, the provisions on which cross-compliance
is based are fully implemented in Poland but cross-compliance
as such will start to be implemented from 1 January 2009.[4]
Right now there is discussion in the Council on the proposal from
the Commission to implement this cross-compliance in new Member
States in three stages, as in the case of the old Member States,
starting from 2009 with a part A of these cross-compliance requirements
from Regulation 17/82/2003.[5]
These are environmental requirements. From 2010 these are health
and sanitary requirements which should be respected and from 2011
animal welfare requirements. We agree with starting the implementation
of the environmental requirements from 2009 but we think the new
Member States should have the possibility to implement cross-compliance
in the longer term. We agree with the three steps approach the
Commission has proposed but we propose two year-intervals between
each step so full cross-compliance will be implemented from 1
January 2013. It will be the time when our farmers will receive
full direct payments. Why would we like to see such a longer period
for the implementation of cross-compliance? First, it will be
quite a task for our administration to implement this. Most of
the administrations, even in the old Member States, have had problems
with the implementation of this. As far as I remember from discussions
at the Council level there was the issue of the 1% of farms which
should be checked for the cross-compliance and different requirements
are controlled within the Member States by different inspection
bodies, so there is this problem of co-ordination. Even old Member
States have problems with that. We will have to control 15,000
farms as far as the environmental requirements are concerned.
Viscount Ullswater: Quite a vet!
Q784 Chairman:
Would it be a good thing to have fewer farms?
Mr Gawlik: I thought that might be your next
question! As far as the animal welfare requirements are concerned
we think that even though the law is implemented it might be the
hardest part for the farmers to adjust to fulfil these requirements.
Q785 Viscount Ullswater:
Will that be because of investment?
Mr Gawlik: Exactly.
Q786 Viscount Ullswater:
Investment rather than cultural?
Mr Gawlik: If you take into account that right
now there are about 600,000 pig producers and they will have to
adjust to the stock density requirements, or a certain number
of these farmers will have to adjust, especially those who are
smaller but are still producing for the market, they have to adjust
and there will not be enough money from the rural development
sources for them. Of course, due to the lower direct payments
they will not have as much possibility to invest due to their
lower incomes.
Q787 Lord Plumb:
It is the next question. We are well aware that there are a lot
of hard working and quite efficient smaller farmers in Poland
but there are big farmers too. What is your view on, in effect,
what is called the capping of the upper and lower level holding
back payments at a certain level possibly? What is happening structurally?
Are changes rapidly or gradually taking place in structural reform?
To what extent is investment taking place from foreign investment
and is that permissible, legally can people just come in and buy
land, and are they doing so? I will ask my other question at the
same time and you can answer altogether, if you like. The other
question is on the whole question of milk quotas. The Commission,
as you well know, have proposed the elimination ultimately of
milk quotas. They are in being at the moment and the proposal
now is to increase the milk quota by 2% making a softer landing
when they are eventually eliminated. Does that commend itself
to Polish farmers?
Mr Gawlik: I will be quite brief here because
we are still analysing the issue of the upper limit. In our case,
in relation to the lower limit, an agricultural holding is considered
as a farm when it has at least one hectare of arable land. The
signals from the Commission are that there will be quite a large
degree of flexibility for the Member States to state what they
would consider as a farm. Right now we think we will have no problem
with the lower limit, if there is any.
Q788 Chairman:
Do you want to keep a lot of farms of the size of one hectare?
Mr Gawlik: In our case if we keep them away
from the business that will be a couple of thousand farms or hundreds
of thousands of farmers and there will be no real alternative
for those people. They have to have something to earn their living.
Q789 Lord Plumb:
You said there are 600,000 pig farmers.
Mr Gawlik: Yes.
Q790 Lord Plumb:
What is the average number of pigs per holding?
Mr Gawlik: I am afraid I do not know.
Q791 Lord Plumb:
I am talking very generally.
Mr Gawlik: I would be pleased to provide you
with that information.[6].
Q792 Lord Plumb:
I think it would be very interesting to look at this and see what
is happening.
Mr Gawlik: What concerns the pig farming, and
it is connected with your first question, my Lord Chairman, is
that there is quite a big change in the concentration of production,
so middle and medium-sized farms are more important in production
for the market than small farms. Concentration is quite visible.
Those farms which produce for the market and are the most efficient
are of a bigger size.
Q793 Lord Greaves:
Are the very small farms mainly producing for themselves, for
their families, or do they sell at markets in the villages and
so on?
Mr Gawlik: It depends on what type of production
they have. They produce mainly for themselves and partially to
sell to neighbours and at local markets.
Q794 Lord Plumb:
Do they add value? Do they kill pigs and make products from the
pig meat and sell them? Is it something that is developing in
the rural areas?
Mr Gawlik: I am not aware of that because then
you have to fulfil quite strict sanitary and veterinary rules
if you run this type of production.
Q795 Lord Plumb:
Milk quotas?
Mr Gawlik: We welcome this discussion about
the soft landing and milk quotas as such. You might be aware of
the fact that two months ago we presented our proposal to the
Council to increase milk quotas from the next marketing year by
5%. (The answer continued off the record) It is welcomed by us
that the Commission sees a possibility to increase milk quotas
immediately from the next marketing year because there is room
on the international market and the EU market to produce and sell
more milk products. It would be wise to give our farmers, at least
those who would like to use this possibility, the chance to produce
more for the market. In relation to milk quotas, we think it is
not the best time to make a final decision about the abolition
and dismantling of the quota system totally. It is quite a favourable
situation in the market at the moment. It seems that everybody
is quite enthusiastic and sees the possibility to dismantle the
system. It would probably be less painful right now but nobody
can question that the system as such has some stabilising value.
Before the analysis we are not sure whether we should dismantle
system totally.
Q796 Earl of Dundee:
A theme of growing importance since 2003 has been the need to
safeguard the natural environment and, of course, Poland has some
of the most valuable areas of natural habitat and landscape. Through
Pillar II and EAFRD are enough funds available just now to look
after these assets?
Mr Gawlik: This is part of the question which
I am not best prepared to answer but I will do it with the help
of the notes from my colleagues. Within this rural development
plan for the next Financial Perspective there are a couple of
activities which concern the most endangered species of birds
and most vulnerable habitats which are outside the Natura 2000
areas. To answer the question whether this money is enough or
not it is hard to answer right now, we will have to wait and assess
whether those actions are efficient. In the discussion about the
Health Check we think that it would be worthwhile to start discussions
about possible support for the farmers who operate on so-called
vulnerable zones under the Nitrate Directive. As I understand
it, they are excluded from the agri-environmental programmes right
now which is connected with the principle of "polluter pays".
It might be worthwhile to start discussions about whether these
farmers could be supported within the EAFRD.
Q797 Earl of Dundee:
What efforts, if any, so far have been made, or maybe it is too
soon, to exclude such farmers from the agri-environment programme?
Mr Gawlik: I am afraid I cannot answer your
question precisely. If you are interested in obtaining this information
I could provide you with it in written form.[7]
Earl of Dundee: That is very kind of
you.
Q798 Baroness Jones of Whitchurch:
Could I just ask a quick supplementary and, similarly, you may
not be able to answer it but it is a more general point. Do the
Polish farmers understand the need to protect the environment
or do they see themselves just as farmers or do they understand
why in the EU we might want the farmers to have a broader environmental
responsibility as well? Do they understand that or do they think
we are slightly odd for expecting that?
Mr Gawlik: They definitely understand it because
they are working closely in relation to the environment so they
rely on the environment.
Q799 Baroness Jones of Whitchurch:
Would they understand if we made a case for stronger biodiversity
or maintaining semi-wild habitats and things like that?
Mr Gawlik: In our case during the 1990s there
were quite negative changes in agriculture and after the transition
agriculture has been less intensive so it will not be so hard
for them to adjust to the higher environmental requirements.
2 Single Area Payment scheme Back
3
According to the Article 5 of the Regulation (EC) 1782/2003
with later amendments Back
4
Accordingto the current legal framework Back
5
Point A of the Annex III to the Regulation (EC) 1782/2003 with
later amendments Back
6
According to the EUROSTAT data for 2005 the average pig number
per holding was 31.3 animals Back
7
This information is provided in the form of additional note
to this transaction Back
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