The CAP and structural change Ricard Ramon i Sumoy DG Agriculture and Rural Development European Commission European Economic and Social Committee Hearing "Land grabbing/ Large-scale land acquisitions in Europe" Agriculture 4 th November 2014 and Rural Development
Outline 1. Structural change of the EU agriculture: key figures 2. Structural effects of the CAP 3. The CAP2020: new policy responses and new opportunities 2
1. Structural change of the EU agriculture: Key figures 3
EU farm numbers since 1975 16 000 000 14 000 000 12 000 000 number of holdings 10 000 000 8 000 000 6 000 000 4 000 000 2 000 000 0 1975 1980 1983 1985 1987 1990 1993 1995 1997 2000 2003 2005 2007 2010 EU-9 (BE, DK, DE, IE, FR, IT, LU, NL, UK) EU-15 (EU-9 + EL, ES, AT, PT, FI, SE) EU-N12 (BG, CZ, EE, CY, LV, LT, HU, MT, PL, RO, SI, SK) EU-27 Source: Eurostat -FSS 4
Important differences across the EU 5
The economic crisis seems to affect the decline in farm numbers (2005-2010) Southern Central Northern (EL, ES, (DE, FR, (DK, IR, Visegrad IT, CY, Alpine Eastern BE, NL, FI, SE, Baltic (EE, (CZ, HU, EU-27 EU-15 EU-N12 MT, PT) (AT, SI) (BG, RO) LU) UK) LV, LT) PL, SK)* 0 % decline in number of holdings/year -1 -2 -1.70 -1.93 -2.22 -2.46 -3 -3.12 -4 -3.67 -4.00 -5 -4.70 -6 -5.85 -7 -8 -8.39 -9 * Strong influence of changed survey thresholds in 2010 6
EU farms are still small farms Share of holdings by UAA size class, 2010 90 80 69 70 percent of holdings 60 50 EU-27 EU-15 40 EU-N12 30 I--------------------28%----------------------I 20 11 8 10 3 3 3 3 0 < 5 ha 5-9.9 ha 10-19.9 ha 20-29.9 ha 30-49.9 ha 50-99.9 ha 100 ha or over Source: Eurostat -FSS 7
But these small farms only cover a minor share of the agricultural area Share of UAA by holdings of different size classes, 2010 60 50 50 percent of UAA 40 30 I----------------------------43%---------------------------I 20 16 9 7 10 7 5 5 0 < 5 ha 5-9.9 ha 10-19.9 ha 20-29.9 ha 30-49.9 ha 50-99.9 ha 100 ha or over UAA size class of holdings Source: Eurostat -FSS EU-27 EU-15 EU-N12 8
While total labour input has declined … 14 000 000 12 715 590 12 000 000 9 761 310 10 000 000 8 000 000 AWU 6 730 670 5 984 920 6 000 000 4 902 550 4 858 760 -23% 4 000 000 -18% 2 000 000 -28% 0 EU-27 EU-15 EU-N12 2005 2007 2010 Source: Eurostat -FSS 9
…output per unit of labour has increased Standard Output per AWU 60 000 52 756 50 000 40 646 40 000 Euro per AWU 31 325 30 000 22 510 20 000 + 52 % + 30 % + 39 % 9 701 10 000 6 384 0 EU-27 EU-15 EU-N12 Source: Eurostat -FSS 2005 2007 2010 10
Most farms in the EU are "family farms" 97 99 100 94 90 80 70 percent of all holdings 60 EU-27 50 EU-15 40 EU-N12 30 20 10 4 2 1 1 0 Sole holder Legal entity Group holdings Source: Eurostat -FSS 11
2. Structural effects of the CAP 12
What the CAP does ... Objectives of the CAP (EU Treaties) • Viable food production Agricultural productivity • Sustainable Current Fair standard of living for management of natural policy farmers resources Objectives Stabilise markets • Balanced territorial development Availability of supplies Ensure reasonable prices for consumers What the CAP does NOT do ... Intervene in the "land policy" ( national competence) Take into account the legal status of the holdings 13
Key basic elements to take into account… Since 1992, a path towards more market orientation… • From price support to income support (1992) • From coupled support to decoupled support (2003) • Removal of production constrains (2015, 2017) Growing integration into the global markets • The EU is now a price taker rather than a price setter • Growing world food demand; price volatility • Important opportunities in the international markets 14
To what extent have Direct Payments affected Farm structures? Some conclusions can be drawn from the " Evaluation of the structural effects of Direct support " published by DG AGRI July 2013 15
in terms of concentration process.. The 2003 CAP Reform contributed either to speeding up the exit of smaller- sized farms from the sector or to the growth in size of part of smaller-sized farms Variation between 2003-2005 and 2005-2010, in % of farm size class 02 01 01 00 - 01 - 01 2003-05 2005-10 - 02 - 02 - 03 - 03 Zero ha Less than 5 ha From 5 to 19.9 ha From 20 to 49.9 ha From 50 to 99.9 ha 100 ha or over Source: Evaluation of the structural effects of Direct support (2013) 16
concentration trends changed across the EU... • Farm concentration slightly increased in the EU15 MS between 2003 and 2010 • But it increased in a more important way in the EU12 MS • However, in particular in MS applying SAPS, structural changes leading to greater concentration may also have been the effect of other factors • In MS with SAPS a structural dualism in observed (which existed before the CAP was implemented in these MS) 17
i n terms of holding's management structure… • Legal status of holding (single holder/legal entity) has NOT been influenced by policy change • But holdings' organisational form has been indirectly affected by the 2003 reform (with a decrease of land under "farming by owner") Differences in the number of holdings between 2010 and 2003 in % of types of organisational forms EU 27 SAPS Shared farming or oth. modes SPS Regional F.by tenant F.by owner SPS Hybrid SPS Historical -08 -06 -04 -02 00 02 04 Source: Evaluation of the structural effects of Direct support (2013) 18
3. The new CAP: Policy responses and new opportunities 19
A more efficient system of support? The new CAP improves the targeting of the support • Retargeting of support shifts reference from farmer/beneficiary to (fixed) land • Provisions focus on facilitation of active farmer and land user • "Greening" in all its aspects moves focus and conditions support on land use Better distribution of support among and within MS • Gradual adjustment among MS essential to avoid distortions • Internal convergence could be based on agronomic criteria • Different challenges for MS applying the historical, regional or SAPS model of support 20
New opportunities for family farming/small farms… With new mechanisms to: • Support the setting up of young farmers (Young Farmers Scheme) • Simplify the support to small farmers (Small Farmer's Scheme) Rebalancing the system of support with: • Redistributive payment (supplementary payment for the first hectares) • Degressivity of the support (and optional capping) Enlarged possibilities under the Rural Development policy to: • Support to investments and farm and business development • Improve the access to the market • Encourage innovation and access to knowledge 21
Thank you for your attention 22
More information about… • Structural change of EU farms: • EU Agriculture Economic brief No 9 (October 2013) http://ec.europa.eu/agriculture/rural-area-economics/briefs/pdf/09_en.pdf • Structural effects of Direct support: • Evaluation on the structural effects of Direct Support, July 2013 http://ec.europa.eu/agriculture/evaluation/market-and-income-reports/structural- effects-direct-support-2013_en.htm • The CAP post-2013: http://ec.europa.eu/agriculture/cap-post-2013/index_en.htm 23
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