CAP Reform 2003

CAP Reform Agreed

By Eric Donald in Brussels

26 June 2003: The European Council of Agriculture Ministers agreed mid-term reforms to the Common Agricultural Policy (CAP) in Luxembourg on Thursday 26 June 2003.

The key battle grounds in the negotiations were the severity of the milk price cuts, and the planned intervention price cut for cereals.

The ministers have agreed three cuts of 7% per annum in the intervention price for butter and a cut of 4% in the fourth year. The price reductions for skim milk powder are unchanged at 5% for each of three years. 

The proposed limit of 30,000 tonnes on the purchase of intervention butter has been increased to 70,000 tonnes until 2004, but it will be reduced to 30,000 from 2007.

Countries have agreed to provide options on how member states can implement decoupling to best suit their situation, an option on 100% decoupling, and an option to delay the implementation of decoupling until 2007.

Member states can choose an option to retain up to 100% suckler premium and 40% of the Slaughter Premium. Alternatively, they can retain either up to 100% of the Slaughter Premium or 75% of the male Special Beef Premium, but not both.

The intervention price for cereals will remain unchanged, but the monthly increments (intervention storage payments) will be reduced by 50%. There will be no changes to modulation.

The reforms agreed by the Council of Agriculture Ministers will come into effect from different dates, with decoupling due to start in January 2005 at the earliest. There will be a period of transition up to 2007, but decoupling must start in 2007. The date for dairy payments to be included in the single farm payments is 2008, but countries can elect to begin these payments earlier.

CAP reform deal agreed....with sweeteners

By Eric Donald

27 June 2003: The final CAP Reform deal agreed on 26 June had sweeteners for most member states. All the larger countries are particularly happy with the final outcome. 

The pro-reform countries led by the UK, Sweden, the Netherlands and Denmark sees the introduction of de-coupling and modulation and the option of degressivity as major victories.

The Germans too, led by the Green Minister, Renate Kunast has options to pursue her environmental agenda through the increased rural development funding coming from modulation.

At the other end of the spectrum those countries originally opposed to these radical reforms led by France, Ireland and Spain have all got something out of the deal. The French have achieved the removal of the cereal price cut, the possibility of coupling the suckler cow premium and the option not to introduce any de-coupling until after the full Agenda 2000 term is completed.

For Ireland the key battle ground was to minimize the milk price cuts and keep the reduction as close to the Agenda 2000 deal as possible. On de-coupling we now have important options, which allow us keep, various beef schemes if we chose to maintain production.

The Italians got the slaughter premium coupled, while the Danes look for and got the special beef premium (even though they may not use it). The Greeks got extra milk quota, the Austrians extra suckler cow quota, while for Finland and Sweden higher drying aid for cereals was agreed. At the end of the day just one country, Portugal, voted against this compromise package.