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Introduction
Will EU highly subsidised and over invested agriculture with strict regulation of pollution, welfare, support of biodiversity, and countryside support processes instead of investments as they do in South America after 2013? What balance in agriculture will be preferred? Internal between members of society, relations to nature, and wastes inside of EU or with external World business?
This paper was invited by call for discussion about aspects of maintenance of central or internal role of agriculture in Europe's budget and policy. Therefore, the internal vision of Agriculture Association of Czech Republic is compared with viewpoints of other stakeholders. The main differences were identified between EU-10 and EU-15 countries. Comments about World business impact are in the end of this article.
CAP Priorities of Agriculture Association of the Czech Republic after 2013
Motto: Competitive agricultural production with fair income leads to EU prosperity or vice versa. Firstly, production must ensure feed and food sovereignty of every country. Secondly, social, economic, and environmental criteria in rural areas will be also maintained.
CAP power is insufficient against global pressure. Economic performance of farms is the weakest part of food chain. Price policy is dictated by supermarket-chains and multinational networks without covering costs of agricultural production. In view of these facts both EU and every member state (MS) are obliged to protect their farmers, namely by legislation (Acts of Law for economic competition, and act of law of minimally guaranteed prices) against power of supermarkets chains whose global power exceeds power of both MS and EU.
Still, CAP money will feed global business of supermarkets and collapse farmers in low developed countries and make EU farmers uncompetitive, and dependent on subsidies. CAP measures as direct payments and further financial subsidies, which are to be aimed to keep high European production standards, food quality and safety, animal welfare, soil and water protection and protection of environment, will be still used after the year 2013. These activities will be paid from EAGGF and EAFRD funds. Simultaneously, the national subsidies and envelopes (state-aid) will be also used frequently.
CAP money will split EU. We should avoid the instruments above to cause so called “double speed” CAP. Contrary, they must serve to CAP simplification. Especially, calculations and coefficients of hectare payments must be simple, comparable, and equal. So, we do expect and recommend abolishing historical references between EU-15 and EU- 10 countries for the year 2014. Simultaneously, we would like to eliminate some measures and tools applicable within the Health - Check Directive, namely principle of progressive modulation. This is the only way, how we will be able to set-up equal and fair condition for all farmers across EU, and Worldwide.
The 1st Pillar of the CAP-direct payments, which is financially supported from the EAGGF, is the most important and the most effective tool for the support of agriculture. Applications for this support should be presented in advance for five years period but, annual changes can be allowed. We recommend to add to 1st Pillar unused financial funds from EAFRD, which were spent for modernization of agricultural enterprises till now. The major part of direct payments can be aimed on farm land payments (SAPS system is still applied in EU-10 countries). Additionally, simultaneous higher level of these payments would be allocated to support livestock production. The minor part of direct payments should be paid in accordance with number of full time employees in agriculture enterprise. Agricultural Association of the Czech Republic suggests including LFA as integral part of direct payments.
CMO will be continuously financed from EAFRD to compensate actual financial and economic depression. New and more effective tools and measures for agricultural market regulation are needed.
2nd Pillar of CAP- Rural Development Program will be still covered from EAGGF with co-financing from national sources after the year 2013. We recommend dividing this program into three parts: A) New Challenges (vulnerable areas, insurance, etc.), B) Agriculture production (higher added value, farm land, AEO), C) Rural areas (forests, landscape…). Part B + C should be implemented into N + 2 procedures. Such a new diversification seems to us as more effective approach.
We also cannot underestimate the important role of national subsidies (state-aid paid by individual EU MS governments). Competitive position of EU-10 with EU-15 countries due to difference in power of economy, which allows them to offer to their farmers the higher level of financial support calculated per one hectare of farm land. Because of this, we recommend to fix the level of state-aid across the EU corresponding to country’s direct payments. Fixed national subsidies would salvage consumer tax on “green” fuels or diesels used in agricultural production, and unify social and health insurance in case that partly compensated insurance is covered by government. Therefore, these payments should be embodied in national subsidies. We also do recommend removing all direct payments, subsidies and grants in all EU MS from taxation!
History of Czech Agriculture policy and consequences for CAP post 2013
Examples of consequences for agriculture are derived from experiences of Czech Republic were quite significant changes have occurred and author of this article could follow them as he lives there.
Agriculture policy after Second World War emphasized self-suficiency in food products by planned and collective farming. Its productivity, level of subsidies, and product prices are comparable with recent agriculture under EU conditions.
Czech farmers have competed for several years almost without any subsidies with World price of agricultural commodities shortly after 1990.
Agriculture lost both people and market in that period. Later, in period before and after EU accession in 2004, Czech farmers have lost sugar production from sugar beet when firstly quota was given for free to foreign investor by Czech state who secondly sold it back to EU. EU made farmers happy when volume of subsidies returned to previous level. Health Check reduced SAPS payments for the majority of Czech farmers as their farms are big. SAPS are paid to land users, not to its owners in Czech Republic. Never the less, pig production collapsed due to lack of competitiveness of domestic fodder production with imported fodder from overseas to EU costal area. Transported meet is much cheaper then the one from local feed production or transported feed. . The only difference between agricultural policy of self-suficiency and CAP is its volume. Trade balance of Czech Republic of production became negative by 64 million EUR already in years 1993-1995 from previous self-suficiency. Restricted assortment of agricultural products in EU damaged the nature and reduced income opportunity in agriculture. Therefore, nature and jobs must be subsidised now. Do we prove that savings by selfsuficient agriculture are bigger then subsidies for damages and projects substituting multifunctional agriculture?
Regional policy substituted multifunctional agriculture by investments to pavements and sewage plants in villages. Other subsidies against or for nuclear power stations, removal of sulphur, CO2, laughing gas or other issues are the same case. For example price of 1 kWh from photovoltaic is 13,20 Czech Crowns, 1 kWh from bio-gas is 4.20 Czech Crowns and energy from bio-fuels is taxed by consumption tax. Investors have gained subsidies for photovoltaic power stations and biogas power stations.
Farmers are receiving one half of subsidies for these projects covering damaged multi-functionality and second half of subsidies comes from SAPS. All farmers, as they are getting old, think about sale of their land to investors for whom SAPS subsidies are attractive.
Both, liberalisation and nationalisation is well known in new EU countries. Seven years ban for work in EU countries followed stop for purchase of land by foreigners. Also one quarter of SAPS subsidy, which should increase gradually during seven years after accession up to the level of SFP is forcing national contribution to CAP. Richer states will contribute more to own farmers then poorer states.
EU is importing more and more agricultural and food products from World. EU is sending more officers to ask for same investments as were requested from EU farmers . But, it rarely happens. Former forest and recently eroded land shows that inspectors didn’t probably seen it on Google maps. Therefore, palm oil is still imported as sustainable.
Conclusion
Replacement of food commodities by vegetable, fruits from multifunctional agriculture in new CAP is unprobable. Cheap agricultural style of New Zeeland or South America will be implemented in EU even without CAP. There are four arguments showing why imported food commodities win over EU's food production. Firstly, purchase power of many consumers in second gear countries is hardly enough to buy food commodities. Secondly, argumentation above proved that investment lobby and officers benefit and ability of agriculture to sell its multifunctional culture to politicians by different way it did in the last CAP reform was denied. Thirdly, double gear EU and social cohesion has no impact on elections because able people emigrated, getting higher income, and participating in elections in the new country. Fourthly, regional policy of Greece have shown why cohesion is maintained also in second gear countries. Therefore, maintenance of central role of agriculture in Europe's budget and policy can continue only with recent CAP. Previous CAP principles were against hunger, overproduction, and imports.
Each removal of CAP role will move EU under power of officers and lobbyists who buy for consumers imported agriculture products. All these bad habits are included also in recent CAP and will continue if it is not changed. The main drivers of change are investors who are better prepared to take central role in EU policy by taking lump sum payments of SAPS of SFP indirectly from farmers. Investors are using word ‘simplified’. This word and tendency should be abandoned to keep subsidies for
farmers, nature and rural areas exclusively. The new CAP should return this defensive policy back to culture, which was based on work of farmer with neighbours and nature. Crop production is competitive with World market and should be removed from any restriction or support of CAP as it happened in sixties of last century with oilseed rape.
Czech Agriculture Association asks from central mission of agriculture in EU equal position with farmers of old EU-15 countries who openly declared the wish to keep recent budgetary advantage till 2024 in the form of 10 years transitional period starting from 2014. Secondly, Czech Agriculture Association tries to defend first pillar of CAP due to competitiveness, which is decreased by enormous number of regulations in EU in comparison with non EU countries.