Ricard Ramon i Sumoy DG Agriculture and Rural Development European - - PowerPoint PPT Presentation

Agriculture and Rural Development

The CAP and structural change

Ricard Ramon i Sumoy DG Agriculture and Rural Development European Commission

European Economic and Social Committee

Hearing "Land grabbing/ Large-scale land acquisitions in Europe"

4th November 2014

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Outline

• 1. Structural change of the EU agriculture: key figures
• 2. Structural effects of the CAP
• 3. The CAP2020:

new policy responses and new opportunities

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• 1. Structural change of the EU agriculture:

Key figures

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EU farm numbers since 1975

2 000 000 4 000 000 6 000 000 8 000 000 10 000 000 12 000 000 14 000 000 16 000 000 1975 1980 1983 1985 1987 1990 1993 1995 1997 2000 2003 2005 2007 2010 number of holdings

EU-9 (BE, DK, DE, IE, FR, IT, LU, NL, UK) EU-15 (EU-9 + EL, ES, AT, PT, FI, SE) EU-N12 (BG, CZ, EE, CY, LV, LT, HU, MT, PL, RO, SI, SK) EU-27

Source: Eurostat -FSS

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Important differences across the EU

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The economic crisis seems to affect the decline in farm numbers (2005-2010)

• 3.67
• 2.22
• 4.70
• 1.70
• 1.93
• 2.46
• 3.12
• 4.00
• 5.85
• 8.39
• 9
• 8
• 7
• 6
• 5
• 4
• 3
• 2
• 1

EU-27 EU-15 EU-N12 Southern (EL, ES, IT, CY, MT, PT) Alpine (AT, SI) Eastern (BG, RO) Central (DE, FR, BE, NL, LU) Northern (DK, IR, FI, SE, UK) Baltic (EE, LV, LT) Visegrad (CZ, HU, PL, SK)*

% decline in number of holdings/year

* Strong influence of changed survey thresholds in 2010

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EU farms are still small farms

69 11 8 3 3 3 3 10 20 30 40 50 60 70 80 90 < 5 ha 5-9.9 ha 10-19.9 ha 20-29.9 ha 30-49.9 ha 50-99.9 ha 100 ha or over

percent of holdings

Share of holdings by UAA size class, 2010

EU-27 EU-15 EU-N12

I--------------------28%----------------------I

Source: Eurostat -FSS

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But these small farms only cover a minor share

• f the agricultural area

7 5 7 5 9 16 50 10 20 30 40 50 60 < 5 ha 5-9.9 ha 10-19.9 ha 20-29.9 ha 30-49.9 ha 50-99.9 ha 100 ha or over

percent of UAA

UAA size class of holdings

Share of UAA by holdings of different size classes, 2010

EU-27 EU-15 EU-N12

I----------------------------43%---------------------------I

Source: Eurostat -FSS

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While total labour input has declined …

12 715 590 5 984 920 6 730 670 9 761 310 4 902 550 4 858 760 2 000 000 4 000 000 6 000 000 8 000 000 10 000 000 12 000 000 14 000 000 EU-27 EU-15 EU-N12 AWU 2005 2007 2010

• 23%
• 18%
• 28%

Source: Eurostat -FSS

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…output per unit of labour has increased

22 510 40 646 6 384 31 325 52 756 9 701 10 000 20 000 30 000 40 000 50 000 60 000 EU-27 EU-15 EU-N12 Euro per AWU

Standard Output per AWU

2005 2007 2010

+ 30 % + 52 % Source: Eurostat -FSS + 39 %

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Most farms in the EU are "family farms"

97 2 1 94 4 99 1 10 20 30 40 50 60 70 80 90 100 Sole holder Legal entity Group holdings percent of all holdings EU-27 EU-15 EU-N12

Source: Eurostat -FSS

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• 2. Structural effects of the CAP

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What the CAP does ...

Objectives of the CAP (EU Treaties)

Agricultural productivity

Fair standard of living for farmers

Stabilise markets Availability of supplies

Ensure reasonable prices for consumers

• Viable food production
• Sustainable

management of natural resources

• Balanced territorial

development Current policy Objectives

Intervene in the "land policy" ( national competence) Take into account the legal status of the holdings

What the CAP does NOT do ...

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Key basic elements to take into account…

Since 1992, a path towards more market orientation…

• From price support to income support (1992)
• From coupled support to decoupled support (2003)
• Removal of production constrains (2015, 2017)

Growing integration into the global markets

• The EU is now a price taker rather than a price setter
• Growing world food demand; price volatility
• Important opportunities in the international markets

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To what extent have Direct Payments affected Farm structures?

Some conclusions can be drawn from the "Evaluation of the structural effects of Direct support" published by DG AGRI July 2013

The 2003 CAP Reform contributed either to speeding up the exit of smaller- sized farms from the sector or to the growth in size of part of smaller-sized farms

Variation between 2003-2005 and 2005-2010, in % of farm size class

in terms of concentration process..

16 Source: Evaluation of the structural effects of Direct support (2013)

• 03
• 03
• 02
• 02
• 01
• 01

00 01 01 02 Zero ha Less than 5 ha From 5 to 19.9 ha From 20 to 49.9 ha From 50 to 99.9 ha 100 ha or over 2003-05 2005-10

• Farm concentration slightly increased in the EU15 MS between

2003 and 2010

• But it increased in a more important way in the EU12 MS
• However, in particular in MS applying SAPS, structural changes

leading to greater concentration may also have been the effect of

• ther factors
• In MS with SAPS a structural dualism in observed (which existed

before the CAP was implemented in these MS)

concentration trends changed across the EU...

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• Legal status of holding (single holder/legal entity) has NOT been

influenced by policy change

• But holdings' organisational form has been indirectly affected by the

2003 reform (with a decrease of land under "farming by owner")

Differences in the number of holdings between 2010 and 2003 in % of types of

• rganisational forms

in terms of holding's management structure…

18 Source: Evaluation of the structural effects of Direct support (2013)

• 08
• 06
• 04
• 02

00 02 04 SPS Historical SPS Hybrid SPS Regional SAPS EU 27 Shared farming or oth. modes F.by tenant F.by owner

• 3. The new CAP:

Policy responses and new opportunities

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The new CAP improves the targeting of the support

• Retargeting of support shifts reference from farmer/beneficiary

to (fixed) land

• Provisions focus on facilitation of active farmer and land user
• "Greening" in all its aspects moves focus and conditions support
• n land use

Better distribution of support among and within MS

• Gradual adjustment among MS essential to avoid distortions
• Internal convergence could be based on agronomic criteria
• Different challenges for MS applying the historical, regional or

SAPS model of support

A more efficient system of support?

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With new mechanisms to:

• Support the setting up of young farmers (Young Farmers

Scheme)

• Simplify the support to small farmers (Small Farmer's Scheme)

Rebalancing the system of support with:

• Redistributive payment (supplementary payment for the first

hectares)

• Degressivity of the support (and optional capping)

Enlarged possibilities under the Rural Development policy to:

• Support to investments and farm and business development
• Improve the access to the market
• Encourage innovation and access to knowledge

New opportunities for family farming/small farms…

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Thank you for your attention

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More information about…

• Structural change of EU farms:
• EU Agriculture Economic brief No 9 (October 2013)

http://ec.europa.eu/agriculture/rural-area-economics/briefs/pdf/09_en.pdf

• Structural effects of Direct support:
• Evaluation on the structural effects of Direct Support, July 2013

http://ec.europa.eu/agriculture/evaluation/market-and-income-reports/structural- effects-direct-support-2013_en.htm

• The CAP post-2013:

http://ec.europa.eu/agriculture/cap-post-2013/index_en.htm