Position of the Agriculture Association of the Czech Republic, concerning Commission communication concerning Health-Check of the 2003 reform of the CAP.

Common position of the Agriculture Association Presidency of the Czech Republic, concerning Commission communication concerning Health-Check of the 2003 reform of the CAP.

I. Basic principles of the Czech Government approach, which were discussed and approved by Czech Government Council for EU Affairs on 14.11.07: citation- abstracts:

“ Having in mind unique role played by the agriculture for whole the society we have to keep in mind the most important factors and parameters and global trends as - global responsibility, food-safety, stability, etc., as well as rural development of the Czech Republic and structure of its agriculture in long-time horizon and impact of CAP ob others sector economies.”

We can definitely talk about sustainable and long- term necessity to secure agriculture deliveries for the market even from the point of view of limited sources of arable land and increased inquiry for food.

Having in mind food safety we have to follow long-term strategy concerning food self-sufficiency ( 80-85% )in main agriculture commodities ( cereals, milk products, meat ). If we will not be able to match this trend we can face unstability of world agriculture market, namely in the price level.”

CAP after the 2003-2004 reform does not create any agriculture surpluses in specific commodities ( cattle, fruit, beef and sheep meat ) and EU have become even importer of these commodities, moreover the negative balance of EU foreign trade has been increasing. And in commodity cereals we should admit, that the EU became the net importer.

II. Common position of the Agriculture Association of the Czech Republic is based on knowledge, daily practise and experiences of our agricultural entrepreneurs and is as follows:

a) “double speed” of CAP is without any doubts targeted on NMS and can be considered as discriminated one for these countries - ( production quotas, limited direct payments ).

b) CAP was modified in the such a way in order to create economic and commercial profit for EU-15, but for EU-10, respectively EU-12 but on the bill of us- ( decreased dimension of Czech agriculture, sugar reform impact on our sugar processing industry, etc. ).

c) For the future to come the CAP should be reformed in order to respect specific position of NMS and has to fulfil basic principles of equality between EU MS for all of us to be able to be competitive on the world market with agriculture products as well as on the common market of EU. We - Czech Republic refuse to be only cheap labour force in food processing industry or to be outlet for cheap and lower quality products.

d) Czech Republic will take over the EU Presidency in the first half of the year 2009 when we can expect discussion concerning future strategy of CAP. Our position is to be pragmatic and liberal one, tracing food safety and stability of food supplies and energy safety. The expected output from this general discussion is to be a “ road-map” showing and supporting full use of EU potential, namely in those countries, which are able to meet respective standards, quality and environmental conditions and requirements.

e) The CAP reform should be aimed in such a way that our multifunctional model of European agriculture must be integrated-active one, in order to keep competitive position of European farmers on the world market, especially facing the competition from U.S.A. We have to support risk management and stability of farmer incomes. European farmers must be allowed to carry business in liberal, flexible but not in bureaucratic atmosphere. The role of large size farms cannot be subsidized and they must play an integral part of the future development of CAP.

III. Health- Check

- 1. Direct payments, decoupling payments, coupled payments.

Position of the Czech Republic:

“ Czech Republic feels that there is no need for NMS to implement SPS from 2001 onward and than consequently start to negotiate level of direct payments within the frame of EU-27; there is an opportunity to apply model similar to former SAPS one. From the point of view of the Czech Republic, we expect among the other countries, that sensitive commodities as ruminants, hop, potato-starch and flax can be subsidised under similar model as is the SAPS-it can be one of the variants of the direct payments within EU-27.

Position and proposals of the Agriculture Association of the Czech Republic:

For the period 2011-2013 and after the year 2013 we prefer unification of SAPS system

( decoupling) with certain possibility to level ( coupled ) sensitive sectors.

a) From the year 2011 onward to set-up and to prefer payment demands which would be consisting from two parts: first part- for example some 70% of financial claim from the year 2013 are to be paid under SAPS rules. The other part ( for example 30% ) can be used for support of ruminants breeding, cultivation of special crop a crop on arable land.

b) All the payment will be ( have to be ) covered by the EU budget, it means, that in no way these expenses should affect national budget of respective EU MS ( position of Czech Republic fully support this proposal).

c) Agriculture Association of the Czech Republic would like to point out, that direct payments in Czech Republic are already taxable in comparison with other MS of the EU.

- 2. Modulation, capping, degressive payments - decreased rate.

Position of the Czech Republic:

“ Having in mind size of Czech farms it is obvious that our country would become one of the most affected country because of the transfers within the modulation between 1st and 2ne pillar ( CAP ). If such a situation occur we would be facing lower level of our competitive position because of the fact that financial allocation of the 1st pillar are addressed for support of the agriculture production ( in comparison with the 2nd pillar ). Our farmer will not be able to be competitive with those countries where the level of modulation would be lower.

Allocation of financial sources from the 1st pillar into 2nd pillar must be modified in such a way for these financial sources to be comparable among all the EU countries in order to keep competitive position of all the European farmers. By the other words: for example to introduce modulation for all the farms- no matter their size- and to eliminate ceiling of 5.000 EUR; to modulate all forms of direct payments.

In reaction to EC communication concerning modulation (it means to increase modulation for 2% annually up-to 13% in the year 2013 for those farms, where the respective payments exceed 5.000 EUR/ farm ), our governments keeps its negative position to this proposal.

Tools reducing direct payments, which are based on the size of the farm are selective ones with impact on some MS only. This impact can be considered as the negative one-for example - degressive payments would influence some 40% of direct payments in comparison with the France, for example- 6,5% or Austria- 2,5%.”

Other countries: Slovakia-32,2%, Germany- 30,4%, Great Britain- 30%, Hungary- 21%, Portugal- 18,2%, Netherlands – 13,3% and other EU MS under 10%.”

Position and proposals of the Agriculture Association of the Czech Republic:

Agriculture Association of the Czech Republic considers present EC proposals-communication as discriminated ones, for some MS, as these measures have in mind the budget expenses savings only. Present proposal are not acceptable because of thee fact, that only some countries with integrated agriculture production on high level are to be affected.. All the comparative advantages of large size farm would be eliminated thus influencing in negative way EU competitive position against the rest of the world- especially against USA.

a. Agriculture Association of the Czech Republic fully supports the Czech Government position concerning modulation of all the direct payments in all MS ( it means even the amount which do not exceed sum of 5000 EUR per farm ).

b. Transfers of finances between the 1st pillar and 2nd pillar should be performed and accepted unless the modulated amounts in NMS will not be co-financed within the national budget and will be used for support of the competitive position of NMS farms and would support creating of risk management fund.

c. AA CR also support increase of minimal farm land area from 0,3 ha up-to 1 ha.

- 3. Cross-compliance.
Position of the Czech Republic:

“Exploiting experiences from MS which already have applied c/c we have learned that that there exist some differences, anyhow. Czech Republic would welcome application of c/c controls on the very same level as these control have started in EU-15, by the other words under the very same conditions when The level of direct payments will reach 100% in the Czech republic in the year 2013.

Czech Republic will support revision of individual directives and recommendations. The main task of this activity is to eliminate such requirements which binned farmers with bureaucracy and are against the real meaning of the directive. We have to abolish unwonted administration.”

Position and proposals of the Agriculture Association of the Czech Republic:

Our position is in accordance with Czech Government opinion.

- 4. Milk Quotas.

Position of the Czech Republic:
“ Czech Republic fully supports keeping of milk quota system ( marketing year ) till 2014-2015. The main target is to assure long term perspective for milk producers. We, ( Czech Republic ) cannot accept some proposals concerning milk quota transfers among EU member states”.

Position and proposals of the Agriculture Association of the Czech Republic:

NMS, which were intacted by respective milk quotas under their production possibilities should be allowed to:

a) gradually increase their milk quotas,

b) derogate ( pardon ) penalties for quotas exceeded.

- 5. Producers organizations enterpreneuring in commodity of potato starch.

Position of the Czech Republic:

“ Czech Republic would prefer systematic and unified time –table for finishing of ALL the quotas, including potato starch one in marketing year 2014/2015. For the Czech Republic is not acceptable further cutting of national quota in the future.”

Position and proposals of the Agriculture Association of the Czech Republic:

Our position is in accordance with Czech Government opinion.

- 6. Sugar quotas.

There is no intention of the Agricultural Association of the Czech Republic to approve any area cuts.

- 7. Market intervention mechanism - ( cereals ).

Position of the Czech Republic:

“ Main task of the Czech Republic is to keep flexible intervention system connected with main commodities- wheat ( durum ) and barley”.

Position and proposals of the Agriculture Association of the Czech Republic:

Our position is in accordance with Czech Government opinion.

- 8. Other measures and tools within the frame of CMO.

Position and proposals of the Agriculture Association of the Czech Republic:

To maintain others tools including those, which support public stocks and export subsidies for processed and non-processed agriculture products.

- 9. Bio-energy, energy crops, carbon credit.

Position and proposals of the Agriculture Association of the Czech Republic:

In the EU application framework we should unify whole the system as in the majority of EU MS are bio-fuels supported by governments, ( there is a wide range of varieties ); in the Czech Republic does not exists such a support, this situation can create market imbalance.

a) There is an necessity for the carbon credit to be strengthened for the next period ( from 3- up to 4 years ) and should be kept until the year 2013.

b) We ( AA CR ) recommend full support of 2nd generation bio-fuels.

-10. Risk management.

Position of the Czech Republic:

“ Czech Republic is not against creation of unified “ so called” European strategy on EU level however we take into consideration complications and difficulties while finding common opinion among all the MS, as these conceptions, strategies and programs are mostly built-up on national programs of individual states ( EU ). The main question is to find possible financial source for the respective financing of this whole the European project. Some sources can be obtained due to obligatory modulation, but there is no obligatory neither voluntary modulation applied with the Czech Republic”. If the Czech Republic would accept voluntary modulation after the year 2013, we assume that this European model of risk management is to be, ( must be ) covered by the financial sources from the EU budget.”

Position and proposals of the Agriculture Association of the Czech Republic:

Our position is in accordance with Czech Government opinion and we ( AA CR ) recommend:

a) For this fund use financial sources transferred within the modulation from 1st pillar into 2nd pillar.

b) For the future to come, this risk management fund should serve ( + grant-in-aid subsidies for insurance – see state aid ) as the one of the most important tools used for stabilization of farmer incomes.

- 11. State Aid.

Position of the Czech Republic:

“ Czech Republic thenceforward regards State Aid as the one of the measures, which are the most important tool, which can fully support specific measures which should be taken into consideration in agriculture.”

Position and proposals of the Agriculture Association of the Czech Republic:

EU is supposed to take into consideration and to support imbalance on the floor and level of national envelopes while there exist huge differences among MS of EU. For example: Czech Republic- 39 EUR/ha, Poland – 60 EUR/ha, Austria- 231 EUR/ha, Deutschland- 295-EUR/ha, No matter this facts there are even some differences in the level of obligatory payments ( insurance, taxation…) of farmers for social and health security.

State Aid should fulfil following tasks:

a) to support and to improve breeding work and cultivation,

b) to keep and to use genetic funds and respective genetic sources,

c) to eliminate animal disease and pestilence,

d) to support education, economic service and improvement of knowledge,

e) to support system of agriculture insurance ( in the Czech Republic already exists Guarantee Fund which plays the role of the agriculture insurance company ), however we support the idea that respective support can be granted to all the agriculture companies( co-operatives, share-holder companies …) with the number of employees up to 1.200.

Dipl. Eng. Miroslav JIROVSKÝ
President

Prague, 3rd January, 2008