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The CAP Health Check : Six months to adapt a project built on questionable hypotheses!
WOAgri Editorial Department
The European Commission has just submitted an initial document to the European Parliament and Council with a view to “preparing for the ‘Health Check’ of the CAP reform.” In the accompanying press release, the Commission announced “a wide-ranging six month consultation” and explained that the goal is to “improve the way the policy operates based on the experience gathered since 2003 and make it fit for the new challenges and opportunities in an EU of 27 Member States in 2007.”
WOAgri believes that reaching this goal presupposes that the Commission has at its disposal the tools needed to carry out a truly pertinent analysis of the consequences of the CAP reforms (and not just those since 2003) and to better grasp the true consequences of the options considered in this health check.
As such, the hypothesis calling for “reflection on the future of the remaining ‘old CAP’ instruments (e.g. quotas, public intervention, price support and refunds)” given “the current medium-term outlook for markets, especially favourable in cereals and dairy” appears all the more daring in that the Commission has no simulation model at its disposal to confirm it. The models used by the Commission are utterly ill-adapted to the unique characteristics of the agricultural markets. This serious deficiency is in fact what led us to build the NAR model, currently nearing completion and set to provide its first findings in early 2008, to be officially presented at Salon de l’Agriculture trade fair.
WOAgri’s analyses show that in the absence of effective mechanisms for regulating supply, the key factor characterizing the agricultural sectors is hyper price volatility. This is currently affecting cereals in Europe. And nothing can guarantee that the relatively high prices observed for cereals and dairy will last. A supply surplus of just one percent would be enough to trigger large-scale price drops.
The Commission ponders the “role of market intervention and supply controls,” yet relies on a highly questionable premise: that of a world where there is no risk of a break in supply and where supply and demand meet in perfect harmony – in short, a situation in which the market’s invisible hand is able to meet the needs of producers and consumers alike. Consequently, the Commission proposes reconsideration of whether intervention systems should even exist.
In short, the Commission maintains that to determine the future of the CAP, it must first be dismantled.
Strangely, the Commission proposes to “carry out, at a later stage, a more general examination of risk management for the period after 2013.” It’s as if the Ministry of Defense were to plan to analyze threats only after five years of worldwide observation, while in the meantime neutralizing operational means of intervention.
WOAgri regrets that the CAP health check, as it stands, has stayed at the level of managing the technical and budgetary aspects of the support mechanisms: the Single Payment Scheme, application of conditionality, modulation and co-financing. This health check cannot effectively ‘fine-tune’ the 2003 reforms and contribute “to the debate on future priorities in the field of agriculture” as the Commission purports in its November 20 press release.
> Where are the goals related to food security when trade, which continues to intensify, is subjected to the fragility of communication channels in a still dangerous world?
> Where are the policies in favor of a new CAP, one that would be more capable of confronting the many strategic challenges of Agriculture (Food, Green Chemistry and the Environment), challenges that cannot be met by relying on market forces alone?
> Where are the concrete proposals for the risk assessment and management mechanisms essential for protecting consumers and farmers, given the knowledge that market risks, by far the most significant, cannot be insured?
> Where are the reflections on the essential link between agriculture and development of the poorest countries, at a time when Europe’s negotiation of the EPAs could exacerbate the situation in those countries well into the long term?
> What, finally, happened to the Commission’s capacity to draft proposals that spur the policy considerations of the Council and Parliament?
We see this health check as nothing but an administrative document that lacks scope and carries little weight in view of the decision-making process that led to the high-stakes integration of Europe.