Within a single day – on May 20 – Bulgaria and all EU member states heard the call of the European Commission (EC) for changes to the 2003 reform of the Common Agriculture Policy (CAP).

The amendments, named the CAP Health Check, have been in the making for the past two years and aim to fine-tune, rather than overhaul, the 2003 CAP reform, Willi Schulz-Greve, an expert at the Agriculture and Rural Development Directorate General of the EC, told reporters in Sofia.

“The main objective of the Health Check is to liberate agriculture producers in their attempt to meet growing demand and respond more promptly to market changes. It also aims to simplify, rationalise and modernise CAP and give agriculture producers instruments to meet the new challenges they meet, for example, climate changes,” EU Agriculture Commissioner Mariann Fischer Boel was quoted in an EC statement as saying.

Furthermore, the “reform of the reform” seeks to address new challenges facing the agriculture sector such as rising food prices and climate change as well as pave the way toward a more market-oriented agriculture sector.

The instrumentality used to achieve these objectives tackles three main fields: direct subsidies, tools aimed at putting agribusiness within a more competitive environment, as well as rules aimed at further enhancing development of rural regions.

The direct subsidies system, in particular, is aimed at converging the subsidies’ payment system in old and new member states, Schulz-Greve said. The old member states are still operating a complicated payment system, which binds payout to volume of production, the type of crop grown and location and type of nurtured land. At the same time, Bulgaria, together with nine other countries from the new EU member states, operates a simplified system, which assigns a flat rate to all beneficiaries of direct subsidies.

For this reason, Schulz-Greve said, both subsidies’ systems are intended to gradually converge with that of old member states moving toward a flatter rate, whereas the one in Bulgaria’s camp is heading toward a more complicated premium system. To ensure a smooth transition to the new system, the EC has extended the convergence period from 2010 to 2013.

Besides, the EC found it relevant to move toward market liberalisation by gradually doing away with the quota systems, the exception being market segments of strategic importance to individual member states, Schulz-Greve said.

Currently, a number of countries have subjected a number of agriculture segments to heavy regulation. Therefore, abolishing regulations is essential in providing farmers with leeway to operate according to market needs.

At the same time, energy crop premiums, previously introduced to encourage biofuel production, are set to be abolished as of 2009, Schulz-Greve said, adding that the measure was no longer necessary because a sufficient number of land growers have already re-oriented toward cultivating crops necessary to build energy renewables, while market prices have grown sufficiently to no longer need support.

In addition, dairy quotas are due to be abolished through 2015. To ensure “soft landing”, the EC proposes raising the quotas first by one percentage point in each of the years between 2009 and 2014 and only thereafter waiving them.

The EC also sees the land set-aside subsidies as an outdated type of support and also suggested that they be scrapped.

The EC proposes to waive intervention for durum wheat, rice and pork, as well as reduce the price for fodder grain crops to zero per cent.

Individual member states will also be entitled to assign at their discretion 10 per cent of their EU agriculture budget cap. The funds may be used for direct subsidies and environmental protection measures or for improving the quality and marketing of products in the respective sector.

Alternatively, they could be funnelled to encourage beef or milk breeding. Or use it for insurance of farmers against natural disasters such as drought, flood or fires, this being the EU’s first contribution toward farmers’ protection against natural disasters.

On the other hand, the EC has deemed it relevant to stimulate agriculture producers subscribing to organic farming and has, thus, proposed to introduce the so-called cross-compliance subsidies. This means that all farmers and stock breeders complying with environmental regulations, who treat animals in a humane way and are cautious about food quality, would be entitled to premiums, Greve said.

In addition, the EC proposed to abolish the scheme supporting micro-farms and merge it with the EU’s general subsidy system, the so-called Single Payment Scheme.
Furthermore, member states are also due to set minimum subsidy payments, whereby each farmer would be entitled to a minimum subsidy of 250 euro.

According to Schulz-Greve, the EC has proposed to transfer part of the payments to the date assigned for direct subsidies to rural regions’ development in what is a sign of the growing emphasis on regions.

Currently, the EU writes off five per cent from farming subsidies above 5000 euro for development of rural regions. The EC proposes that the outlays be raised to 13 per cent. Larger farms, entitled to more than 100 000 euro, are obliged to allocate three per cent of subsidies for rural development purposes, those entitled to 200 000 euro – six per cent and to 300 000 euro – nine per cent.

These outlays are ideally to be used for programmes aimed at mitigating the impact of climate change, stimulating renewables, water management and biodiversity, which the EC calls the new challenges before agriculture producers and economies alike.

With the EU-wide conference call on May 20, the CAP health check, based on 85 opinions from various member states and interested groups – agriculture unions, environmental organisations, industrial enterprises – and endorsed by the EC on November 20 last year, was put up for informal and formal debate. The amendments are expected to be passed by the European Parliament by the end of the year and enforced as of January 1 2009.