Reforming common agricultural policy

The central objectives of the EU Common Agricultural Policy (CAP) reform are to increase market orientation of the agricultural economy as a precondition for a viable European agri-food sector and to strengthen structural, environmental and broader rural development elements as a second pillar of the CAP. The main tasks for the coming months and years will be to manage the reformed CAP in co-operation with European, national and regional institutions, to monitor its effects, to avoid distortions in competition, to continue efforts to simplify legislation and to ensure sound management and control within the budgetary resources available.

On the market side, Agenda 2000 will increase competitiveness internally and externally in order to ensure that the Union's producers participate in the positive demand trends we expect world-wide. European farmers have to adapt more and more to earning their income from a "real" and not a "virtual" market.

The Council of Agriculture Ministers reached a global agreement on the reform of the Common Agricultural Policy (CAP), based on the European Commission's proposals put forward in March 1998 in the context of Agenda 2000. In summary, the decision includes a reduction in intervention prices for butter and skimmed milk powder of 15% in three steps over three years starting in 2003, combined with milk quota increases; a reduction in cereals intervention price in two equal steps : 10% in 2000 and a further 10% in 2001; oilseed aid per hectare is to be aligned to that of cereals in 2002; the basic price of beef is fixed at euro 2224/tonne, which relates to the trigger for private storage support, i.e. a 20% reduction, while intervention is maintained only as a safety net at euro 1560/t. Farmers' incomes are supported through a series of direct payments such as : dairy: euro 17.24/t of milk, supplemented by a payment from the European Union funded national envelope; cereals and oilseeds : euro 66/t; beef: a suckler cow premium of euro 200/animal, a bull premium of euro 210 paid once per lifetime, a premium of euro 150 on steers paid twice per lifetime, a slaughter premium of up to euro 80 on bulls, steers, dairy cows, suckler cows and heifers (euro 50 on calves over 1 month). These premia are to be supplemented through the national envelope. The cost of the reform respects the objective of budgetary stabilization.

With agriculture perceived as one of the sources of conflict between the EU and the USA, forces on both sides of the Atlantic are supporting a reform of the agricultural policies (EU-Common Agricultural Policy and US Farm Bill) towards a sustainable agriculture. The participants, farmers, business, NGOs, indigenous peoples' representatives, and academic experts have adopted a draft Common Understanding on Sustainable Agriculture and Rural Development. This draft will be shared with representatives of the Least Developed Countries in Brussels in May 2001 and be later addressed as a multi-stakeholder statement to the EU-US Summit in June 2001 in Sweden.