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EC proposals for CAP changes under the Health Check. How to treat them? Baltic Meeting- April 2008/

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EC proposals for CAP changes under the Health Check  How to treat them?

A.Miglavs, G.Salputra (LSIAE),
1st of April, 2008, Vilnius    
Conclusions
The EC proposals are in line with the general CAP development approach – towards further liberalisation of  EU agri-market 
The major issue for the Baltics is not resolved still: 
Not even a real mentioning about the need to reconsider the 1st pillar funding distribution
Even deeper freezing of the current situation through the modulation
Principle
Addressing the funding resources -100 % of savings remain in the country

Conclusions II
Many of the elements in the EC HC proposals are not significant or even relevant for the Baltics:   
The most important issues for the Baltics from the HC package: 
Full decoupling –especially for cereals
Depending on the outcome from here – consideration of SAPS details  
Modulation- avoiding its reconsideration before RDPolicies are reconsidered
If not possible – all the savings to be included in common RD budget to be distributed according to the RD budget allocation criteria
Solving the safety net issue 
Conclusions III    
The HC package offered by the EC: 
does not have major immediate impact on the Baltic agri sector perspectives;
The major issue – balancing of the 1st pillar budget is left for:
the “budgetary discussions” or 
Further CAP reform process 
Outlines the principles for the continuation of the CAP reform
Non negative ones- like enhancing the economic efficiency of the sector
Rather negative ones – like freezing the distribution pattern for the CAP budget; not real dealing with the issues of the viability of rural community
Conclusions IV    
Options for solutions
Activisation of the debate within the “Budgetary discussions”, keywords, t.i.: 
activity based; 
away from historical approach to reconsidered criteria, 
viability of rural community  
Policies to increase the competitiveness of the Baltic agricultural sectors
Further changes in farm structures
Increase in size and reconsideration of specialisation
Technological restructuring
Developing real rural regions development policies providing serious jobs alternatives
Facilitating the reinvolvment of land areas into agricultural turnover for future commercial use, including reconsideration of land policies  
Subject matter for the analysis: the practical EC proposals for the CAP changes      
Compulsory set-aside – to remove
Support for energy crops – to remove 
Market regulation
Milk quota – gradual 1 % annual increase
Liberalisation of intervention – dairy and cereals, also pork
No additional safety net instruments 
Modulation
New  (higher) rates for compulsory modulation
Earlier application in NMS
New pattern for the use of savings

SPS scheme 
Simplification – reconsidered CC
Flattering – option for switching from historical to regional
SAPS – prolongation till 2013
Condition of 2003 in GAEC?? 
Full decoupling
Arable crops
Livestock 
RDP
Options for amendments
Renewable energy production
Water management
Addressing global climat change
Aspects, HC proposals to be analysed from:
Production volumes
Could it facilitate growth of ag.com. production 
Competitiveness 
May it improve it in Baltics relative to OMS
Simplification 
Better understanding for beneficiaries 
Linkage to factor (Land market) prices
Decoupled “over” payments contribute to the growth of land prices
Financial impact
Redistribution of CAP 1st pillar funding and absorbtion by the BC 
Administrative costs
Enhancing renewable energy production
Will they provide incentives and resources for
Compulsory set-aside – to remove
Support for energy crops – to remove
Milk quota – gradual 1 % annual increase
Liberalisation of intervention – dairy and cereals, also pork
No additional safety net  instruments
New  (higher) rates for compulsory modulation
Modulation rates applied
“Output” from the modulation
Earlier application of modulation in NMS 
Modulation: New pattern for the use of savings from it
SPS: Simplification – reconsidered CC
SPS: Simplification – Flattering – option for switching from historical to regional
SAPS – prolongation till 2013
SAPS – Full decoupling