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EU & International Agriculture Policy Developments and Outlook

POLICY DEVELOPMENTS

Agriculture and Food
There were a number of important policy developments in the agri-food sector in 2010. Of most significance to Ireland was the continued discussion on the future of the CAP. The role of the agriculture sector in the EU's economic recovery was recognised by the Heads of State and Government in its Spring Council Conclusions on the EU 2020 strategy. The competitiveness of the EU Agri-food model and how the food supply chain could function to greater effect was to the fore in discussions at Council and ran alongside the Commission High Level Group on Milk which examined the medium and long term challenges facing the industry arising from the abolition of milk quotas in 2015.

The Commission adopted a Green Paper on Forest Protection and information in the EU setting out options for an EU approach to the protection of forests and to information about forest resources and their conditions.  The public consultation process concluded in July 2010.

EU Budget Review
The expiry of the current EU Financial Perspective in 2013 and the negotiation of a new multiannual financial framework mean that the funding arrangements for the CAP require review. The EU budget review released in October 2010 did not propose overall figures or shares by Member State or by sector for the next multi-annual financial framework.  The overall level of funding available from the EU budget will determine in many respects the future shape of agricultural policy. It is expected that there will be strong competition for funding both between the different EU budget headings and, within agriculture, between Pillar 1 - direct payments to farmers - and Pillar 2 - Rural Development - and between Member States. Discussions on the budget review will therefore be inextricably linked to the on-going debate on the future shape of the CAP.

Future of the CAP
The Minister for Agriculture, Fisheries and Food launched a consultation process in July 2009 to seek the views of stakeholders on the most appropriate policies to be pursued by Ireland in the upcoming negotiations. Policy analysis and debates on the broad outline and general principles of future EU agriculture policy continued in 2010 with discussions at Member State and EU level. Ireland participated actively in these debates and organised a series of bilateral meetings at official and political level with the Commission, the European Parliament and other Member States.  A substantial number of policy position papers and discussion documents were produced by Governments, stakeholder organisations, interest groups and research entities.

The Commission communication setting out broad policy options for the future CAP 'The CAP towards 2020' was presented on 18 November 2010. A public stakeholder consultation on it was launched on 23 November 2010.   

Main elements of the Communication
The Communication advocates a strong future CAP based on two complementary pillars with three strategic aims of preserving food production potential in the EU, sustainable management of natural resources and maintaining viable rural areas.  The communication favours the continuation of decoupled direct payments and the retention of market management measures at safety-net level, with some enhancement. The communication proposes the introduction of new policy elements concerned with the functioning of the food supply chain.  Whilst no specific proposals are outlined the key issues are described as contractual relations, the current imbalance of bargaining power along the chain, the need for restructuring and consolidation at farm level, transparency and the functioning of derivative markets. The revised quality policy proposals and the proposals emanating from the Milk High Level Group are mentioned as integral elements of the reform.

It is suggested that objective criteria should be used for the distribution of rural development funds between Member States. There appears to be an intention to focus spending on green issues by e.g. linking investments to both economic and environmental performance.  There is also an intention to target specific groups or regions with specific mention made of support for business creation and local governance, direct sales and local markets.

A new risk management toolkit is proposed to address both production and income risks in the light of increased market volatility and income uncertainty.

Dairy Sector
In response to the crisis in the dairy sector in 2009, in October of that year the Commission established a High Level Group (HLG) of representatives to examine medium term and long-term ways of stabilising dairy farmers¿ incomes and improving market transparency.  The Group was comprised of representatives from all Member States and the Commission.  The Minister for Agriculture, Fisheries and Food established a Dairy Consultative Group, representative of all the main stakeholders, to advise on the work of the HLG.

The High Level Group published its report mid-June 2010 and recommended seven groups of measures. In addition to those related to the contractual relations between milk producers and dairies, producers' collective bargaining power and the role of inter-professional organisations, the recommendations also cover price transparency, market instruments, quality and labelling as well as innovation and research.

WTO Negotiations
The failure to reach agreement at the WTO Ministerial in July 2008, followed by the decision not to hold a Ministerial in December 2008 and the lack of any real progress in the negotiations on the Doha Development Agenda (DDA) in 2009, left the prospects for concluding a deal in 2010 as marginal, despite the advanced stage of the negotiations, and this proved to be the case in 2010. No final agreement was reached.

A stock taking exercise held in Geneva at official level at the end of March 2010 failed to provide an impetus for renewed negotiations.  Throughout the year work continued to progress technical issues and to find ways of moving the talks forward politically. However, the OECD meeting in May and the G20 in June failed to provide the political impetus necessary. At the end of 2010 and in the lead up to the Davos Economic Forum, there was some renewed optimism that there may be a possibility of concluding these talks in 2011.

EU Mercosur Negotiations
Negotiations for an agreement with the Mercosur group of South American countries (Argentina, Brazil, Paraguay and Uruguay) were originally launched in 1999 but were suspended in 2004 arising from major differences between the two sides in expectations across a range of headings including industrial goods, agriculture, services and intellectual property.   

At the initiative of both the Spanish Presidency and the Argentinean Presidency of Mercosur, the EU Commission College took a decision in early May to re-launch negotiations with Mercosur.  Three negotiating rounds took place in the second half of 2010 focusing on process and texts.
   
A number of Member States are supportive of the launch of the negotiations.  However, Ireland and some other Member States have raised serious reservations concerning the re-launch of the talks. Ireland's principal concern is with the impact of additional import quotas on the EU and Irish beef sector.  Ireland has been very active in highlighting its concerns and in pursuing the issue of mitigating measures in relation to the beef sector with the Commission.
   
Outlook 2011

Future of the CAP
The communication is being debated currently at Council, SCA and Working Groups with a view to drawing up conclusions at the March 2011 Council of Ministers. In tandem the European Parliament has produced a first report and is set to produce two more, one on the communication and a second on the legislative proposals.  Meanwhile the Commission is carrying out a detailed impact assessment of the various policy options.  The formal legislative proposals are expected later this year. Ireland will continue to play a proactive role in these negotiations.


Dairy
2011will see progress in the discussions on the Commission's legislative proposals on contractual relations in the milk sector.  

Quality package
Discussions on the recently published Agricultural Product Quality legislative  package which is aimed at better communicating to consumers the qualities of EU and local agricultural products will also commence with a view to political agreement in the June Council.  

Work on alignment of the CAP legislation to the Treaty of Lisbon will continue during 2011 and will focus on aligning four major legislative acts namely the Regulations on the Single CMO, financing of the CAP, Rural Development and Single Payment (Direct Payments).

On animal health discussions will focus on the the evaluation of the Community Animal Welfare Strategy 2006-2010, review of the bluetongue Directive to allow for vaccination.

Forestry
A report by the Commission services on the stakeholder consultation was circulated in December.  The Commission has proposed the establishment of an ad-hoc Group during 2011 to focus on forest information. The drawing up of a strengthened policy framework for sustainable forest management throughout Europe will be on the agenda of the Ministerial on the Protection of Forests in Europe in Oslo and will be discussed at the 9th session of the UN Forum on Forests (UNFF9).

WTO
The Davos process, combined with a report by the former DG of the WTO, Peter Sutherland, has reactivated expectations of a political breakthrough in 2011.


MERCOSUR
In the event that the momentum for conclusion of the WTO talks remains, this will have implications for the early conclusion of the EU MERCOSUR trade negotiations.

World Food Security
The number of undernourished people in the world declined to 925 million in 2010 from a high of 1023 million in 2009.  The reduction in the number of hungry people is a reflection of increased economic growth in developing countries and a reduction in food prices from the peaks of 2008.  However a crisis period like 2008 leaves vulnerable populations less able to cope with the next problem as they may have sold off assets and be in a less healthy state after the initial crisis.  

Although food prices dropped back in 2009, in many low income countries prices remain higher than they were before 2008.   Global prices began to rise in the second half of 2010 and have continued to do so in 2011.  Although there is not always a direct transmission from global prices to local markets rising prices present particular difficulties for low income food deficit countries.
United Nations Food and Agriculture Organisation (FAO)
October 2010 saw the inaugural meeting of the reformed Committee on World Food Security (CFS).  The reformed Committee is intended to be the most inclusive international and intergovernmental platform for all stakeholders to work together to ensure food security and nutrition for all. It will work in a coordinated manner in support of country led processes that lead to food security.

Civil Society Organisations participated in the October meeting as equal partners in a broad discussion covering price volatility, chronic food insecurity and land tenure.  The Committee agreed to start work on drawing up a Strategic Framework for Food Security and Nutrition.  In addition a High Level Panel of Experts has been set up to provide independent scientific advice to CFS Members.  

In 2011 Ireland will assume a seat on the FAO Council and will be a Member of the Council until 2014.  FAO Council is an important governing body which will be a key body for implementing the ongoing reforms in FAO.

Food Aid Committee
During 2010 work continued on bringing together consensus amongst Food Aid Convention members on how best to improve the Convention.  In December a decision was taken to renegotiate the Convention and work on this has started in 2011.  European Members of the FAC have stressed that this work must proceed swiftly.

Hunger Task Force
The report of the Special Envoy for Hunger was launched in November 2010.  The report notes the bleak situation worldwide for hungry and undernourished people but commends the Irish Government on is continued advocacy on this issue.  

United Nations World Food Programme (WFP)
During 2010 the Department continued its support for the vital work of the United Nations World Food Programme providing €9.96 million for food assistance.  Funding for food assistance is provided on a fully untied basis.  In 2011 Ireland will assume a seat on the WFP Executive Board.