Organic Farming and the New Common Agricultural Policy

SPEECH/99/88

Dr. Franz FISCHLER

Member of the European Commission
responsible for Agriculture and Rural Development

Organic farming and the new common agricultural policy

Conference on Organic farming in the European Union -
the prospects for the 21st century

Baden/Austria, 27 and 28 May 1999

Ladies and Gentlemen,

I should also like to add my own thanks to those of my colleague Ritt Bjerregaard our conference hosts. The Austrian Ministry of the Environment, Youth and Family and the Ministry of Agriculture, the Land government of Lower Austria and - "on my honour" - Agrarmarkt Austria have put together an impressive programme, providing the right platform for examining the prospects for organic farming from all angles. I should like to begin my speech by taking a closer look at the conditions for organic farming that we have created in the European Union. Then I should like to point out which parts of Agenda 2000 are designed to promote the "greening" of farming, which will of course be of special benefit to organic farms.

Finally, in the last part of my speech, I will outline the future prospects, because, as we all know, we cannot afford to rest on our laurels.

So what is the state of play in organic farming today? It is currently one of the most dynamic sectors in agriculture in the European Union. Demand is on the increase in the European Union, North America, Japan, Australia and in some of the developing countries. The percentage of food trade in the European Union accounted for by organic products has risen from 1% to 3%. Market experts expect this share to double or even treble over the next few years.

Between 1993 and 1997 the area of organically farmed land more than doubled from around 890 000 ha to 2.2 million ha. Over the same period, the number of recognised organic farms and farms converting to obtain organic status rose from 35 000 to almost 97 000.

This development is part of the general trend towards a new relationship between consumers and farming. Firstly, food safety and quality are becoming more and more important criteria for consumer demand. Secondly, there is growing recognition of the need to minimise the negative environmental impact of farming and increase its positive external effects through sustainability.

Safety and quality

Of course, all foods are covered by safety and quality guarantees, and these have been and are being constantly improved. However, organic farming is also subject to additional, special requirements as regards production and processing. In the case of crop products, these requirements are laid down in Regulation (EEC) No 2092/91, and in the case of animal products, the Commission submitted a proposal to the Council and Parliament some time ago, and I hope it will very soon be possible for the Council to adopt a Decision. In crop production, only specified fertilisers, soil improvers and plant protection products are allowed. Processing is governed by strict limits on the use of additives and processing agents. There are also clear rules on controls, labelling and imports from third countries. The Community system also protects against impostors jumping on the organic bandwagon. Consumer reaction has been very positive, and I am convinced that with this Regulation the Community has been instrumental in the success achieved by organic farming.

To make it easier for consumers to find their way around and thus improve the chances of success on the market for organic products, we have proposed that a Community logo should be introduced for organic products side by side with the labels already used by organic associations. The draft shows an ear of corn blowing in the wind and the European Union stars on a blue background framed in green. We hope that this logo will be just as successful as the label for regional designations of origin which we introduced in 1998.

Let there be no mistake: in my view it is imperative that the common agricultural policy should address the need to guarantee and improve safety and quality standards. We have made considerable progress in recent years and will continue to develop our standards and uphold them at international level. The recent dispute over hormone-treated meat imports from the United States is evidence that not all our trading partners take the same standpoint. We must therefore take advantage of the forthcoming round of negotiations in the World Trade Organisation (WTO) to highlight the importance of consumer and environmental protection.

This is necessary, because the original purpose of the GATT was to restrict trade distorting measures and it therefore includes only few provisions which deal explicitely with the environment or with production standards. Nevertheless, there is a general understanding that every WTO Member State is authorised to establish environmental norms as long as they do not create an unjustifiable discrimination between countries, or a disguised restriction on trade.

However, European farmers are not the only farmers who produce organic food or produce according to high standards. Quality and safety are essential elements of the European model of agriculture, but high standards will not prevent us from competition and imports. It is a misunderstanding, that our European level is so much higher than in other countries, that no food would comply with our requirements and would be allowed to enter into the common market. On the contrary, farmers in third countries have very well adapted to growing consumer requirements and high quality production. The recent debate on hormones, for instance, has changed the perception of many US-consumers and the farmers will have to accept this development.

Up to now, WTO has taken a quite critical position concerning production norms and procession methods as far as these have been used for unilateral trade restrictions, because they would constitute an extra-territorial interference with other countries. A possible way out would be to establish multilateral agreements on commonly applied standards outside the narrow WTO process. Sanctioning of non-respect of these provisions could be linked to WTO ruling. However, to achieve such a multilateral agreement is a heavy procedure often stretching over several years.

In any case, our rural development measures including support for organic farming have been notified as green box measures. As such, there is no requirements for them to be reduced.

The original purpose of the GATT was of course to restrict trade distorting measures. Therefore it includes only few provisions which deal explicitely with the environment or with production standards. Nevertheless, there is a general understanding that every WTO Member State is authorised to establish environmental norms as long as they don not create a unjustifiable discrimination between countries, or a disguised restriction on trade. As a general rule, trade measures must be non-discriminatory in dealing with domestic or imported commodities.

However, it would be a misunderstanding to expect

In any case, our rural development measures including support for organic farming have been notified as green box measures. As such, there is no requirements for them to be reduced.

The environmental requirements

I should now like to move on to the second part of my speech and outline how we intend to apply the overhauled agricultural policy to "green" farming in general. Ritt Bjerregaard has already discussed this in detail.

The integration of environmental concerns is – as agreed by the heads of government in Amsterdam – an objective to be pursued by all Community policies. Agricultural policy has long recognised its responsibilities in this area, farming as it is being the main user of land and other natural resources. To stand the test of time, farming must therefore ensure that our limited resources are exploited in such a way that future generations can continue to enjoy them. Sustainability is nothing less than that.

Europe's farmers, and agriculture politicians, also know that they are not the only ones to live and work on the land. Sustainable exploitation of natural resources must therefore bring all parties involved together in an integrated approach to rural development. This is one of the main results of the Cork conference I organised in Ireland in November 1996. The principles set out in the final communiqué were the starting point for the Agenda 2000 proposals on rural development which were accepted by the Council of Ministers without too much wrangling.

To implement our new rural development policy, the Member States and regions are required to submit integrated programmes by the end of the year. The main new feature is that all rural areas can be included, and all development measures are to be combined in one single programme. A wide range of measures are available from which programme managers can select those best meeting the development requirements of the particular region. However, all programmes and thus all regions are required to incorporate the agri-environmental measures on offer.

Agri-environmental measures

Agri-environmental measures are at the heart of our strategy, as they allow us to reward environmental conservation services and stewardship of the countryside, and go beyond the basic requirements of good farming practice.

Agri-environmental measures include land use in compliance with the aims of environmental protection and upkeep of the countryside, extensification and promotion of low-input farming methods, organic farming, maintaining valuable biotopes, landscape protection, preserving traditional elements of the landscape and biodiversity.

As in the past, financial support for farmers is to be calculated on the basis of lost income and the additional expenditure generated by special environmental requirements. Limited financial incentives may also be provided to make participation in these schemes more attractive to farmers. In the next financing period the upper ceilings on Community subsidies have been raised from those laid down for measures accompanying the 1992 reform to 600 euro per hectare for annual arable crops, 900 euro per hectare for perennial special crops and 450 euro per hectare for other forms of land use.

I believe that this makes an important contribution to strengthening organic farming even further.

Other rural development measures

In addition to the agri-environmental measures, however, rural development support measures can also be used to promote sustainable production methods and organic farming.

In particular, I would like to draw your attention to the schemes encouraging farm investment, which providesassistance to farmers converting or expanding their holdings. Part-time holdings are no longer unfairly excluded from such schemes.

Balanced development of the organic farming sector rests not just on increased organic production, but also on appropriate processing of organic products. The Union is therefore calling for investments in the processing and marketing sectors. As well as promoting marketing, investments should be directed towards improving environmental protection and hygiene conditions, quality and quality control. The possibilities for producer groups are to be discussed by a Working Party this afternoon.

Training and further training may also be promoted in future under the rural development programmes. Member States may choose to focus on sustainable agriculture or organic farming.

Sustainable agriculture is also being promoted by two other measures in particular: first, the compensatory payment for less-favoured farming areas, and second, measures to support sustainable forestry. This possibility has been completely remodelled under the ‘Agenda 2000’ reform package and the compensatory payment can now be extended to areas that have to comply with specific natural and environmental requirements, such as national parks and nature reserves.

Further environmental elements in the Agenda 2000 reforms

Under the ‘Agenda 2000’ reform package, environmental objectives have been strengthened not only through rural development policy but in other ways too. New elements benefiting the environment have also been incorporated into market policy, for instance. These include the extensification premium for livestock, the introduction of a grassland premium and tighter environmental requirements for set-aside land.

I would also like to draw your attention to another major change: we have created a horizontal Regulation covering all the market organisations which links direct payments to farmers to compliance with good agricultural practice. If farmers do not adhere to minimum standards ensuring environmentally-compatible farming, Member States will be able to reduce direct payments and use the money saved as additional funding for rural development measures, including the agri-environmental schemes. Whether the Member States will actually make use of this drastic measure remains to be seen.

Future tasks

In the third part of my speech, which takes a look at the prospects for the future, I would like to expand on three points made by Ritt Bjerregaard:

Decentralisation and increased flexibility are the guiding principles underlying the new rural development policy. It is now up to the Member States to present proposals for rural development programmes at the most suitable regional level. They may choose those measures which best meet their needs and priorities from the range of options provided by the new rural development regulation.
Consumer confidence in organic foodstuffs hinges on compliance with organic production standards, and adequate checks. If farmers want to make full use of the market opportunities for organic products, they have to accept these strict standards and make sure they meet them.
We learn not only from our own experience, but also from the examples of others. Looking beyond national or regional boundaries can also be an extremely useful way to promote organic farming. The European level is ideal for exchanges of experience between Member States and the regions.

Summary

I should like to finish by summarising the main points of my speech: as a result of public interest in environmental issues and improved quality of life, environmentally-compatible farming methods such as integrated farming, traditional low-input farming and organic farming in particular are becoming more and more important.

Organic farming can offer an interesting alternative for many farms, but we also need corresponding sales channels. We have by no means exhausted the market potential for organic products. But organic farmers will only be able to make full use of this potential if they manage to build a bridge to consumers by linking up with the processing sector and by intelligent marketing.

By reforming rural development policy we hope to establish sustainability as a basic principle underlying rural development in rural areas. Promoting organic farming through agri-environmental measures and the many other promotion possibilities are important building blocks in this strategy.

I believe that the reform of the CAP has created a firm foundation for sustainable agriculture. It is now up to us to make good use of these opportunities. Quality is not created by chance: as well as funding it needs intelligent thinking and a real determination to make things better.

Thank you for you attention, ladies and gentlemen. I wish us all every success in this conference.