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Agriculture under the Europe 2020 Strategy

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Title: Agriculture under the Europe 2020 Strategy


1
Agriculture under the Europe 2020 Strategy
  • Andrzej Grzyb
  • Lecture, University of Economics
  • Poznan, 18 February 2011

2
Structure of the lecture
  • Guidelines for Europe 2020 Strategy
  • Agriculture in the European Union
  • Agriculture and the EU's international policy
  • Agriculture and public goods

3
Guidelines for Europe 2020 Strategy
  • What is Europe 2020 Strategy?
  • New, long-term program of periodic socio-economic
    development the EU
  • Replaced the Lisbon Strategy implemented since
    2000
  • Globalization necessitates joint action of the
    European Union countries to exit from the crisis
    and implement reforms
  • Challenges such as aging of society and growing
    need for efficient use of resources can be met at
    the level of cooperation in the European Union

4
The three priorities of the Strategy Europe 2020
  • Smart growth
  • i.e. a development based on science and
    innovation
  • Sustainable growth
  • i.e. a transformation towards a low carbon
    economy, effectively using the resources economy
    and competitive economy
  • Inclusive growth
  • to reinforce economy characterized by high
    levels of employment and providing economic,
    social and territorial cohesion

5
Five indicators of progress of the Strategy
  1. Achieving the employment rate of 75
  2. Improving the conditions for conducting research
    and development, including 3 of EU GDP for
    investment in research and development

6
Five indicators of progress of the Strategy
  1. Reducing greenhouse gas emissions by 20 compared
    to 1990 levels, an increase of 20 renewable
    energy in overall energy consumption, efforts to
    increase energy efficiency by 20

7
Five indicators of progress of the Strategy
  1. Raising the level of education, especially by
    reducing the percentage of dropout rates to less
    than 10 and increasing the proportion of people
    with higher education aged 30-34 by at least 40
  2. Promoting social inclusion, especially through
    reduction of poverty, with the aim of rising from
    poverty or social exclusion 20 million citizens.

8
Instruments for implementation of the
Strategy
  • Guiding Initiatives (Flagship Initiatives)
  • prepared by the EC
  • implemented at EU level, Member States, regional
    and local authorities
  • National Reform Programmes
  • developed by EU Member States
  • to be ready by April 2011

9
Guiding initiatives (flagship initiatives)
  • Innovation Union  improvement of the framework
    conditions for innovation and use of innovation
    to solve major social and economic problems
    identified in Europe 2020 Strategy
  • Youth on the Move improving quality at all
    levels of education and training as well as
    increasing the attractiveness of European higher
    education internationally

10
Guiding initiatives (flagship initiatives)
  • Digital Agenda for Europe achieving sustainable
    economic and social benefits of the single market
    of digital, based on access to broadband Internet
  • Resource efficient Europe supports the shift
    towards a resource-efficient, low-carbon economy
    and the desire to eliminate the dependence of
    economic growth from environmental degradation

11
Guiding initiatives (flagship initiatives)
  • An Industrial Policy for the Globalisation Era
    improving the conditions for entrepreneurship and
    supporting the development of a strong industrial
    base, capable to compete on a global scale
  • An agenda for new skills and jobs creating
    conditions for modernization of labor markets by
    facilitating mobility of workers and developing
    their skills in order to increase employment and
    ensure the sustainability of European social
    models

12
Guiding initiatives (flagship initiatives)
  • European platform against poverty ensuring
    economic, social and territorial cohesion by
    helping the poor and excluded people and enabling
    them to actively participate in economic and
    social life

13
Synergy of the Strategy with the EU initiatives
  • On January 26th, 2011 European Comission
    published guiding initiative Resource efficient
    Europe, which is the instrument for
    implementation of the Strategy
  • It is essential to use the resources efficiently
    in European policies on energy, climate change,
    transport, industry, agriculture, fisheries,
    biodiversity and regional development

14
Synergy of the Strategy with the EU initiatives
  • By using the effect of synergy between different
    policies, the initiative is intended to help in
    achieving the objectives set by the EU, such as
    long-term goal of reducing greenhouse gas
    emissions by 80-95 by 2050, reforming the
    agricultural sector and fisheries, increasing
    food security in developing countries and
    increasing the EU resistance to the risks
    connected with global growth in prices of energy,
    raw materials, goods and services.

15
Synergy Strategy - Action Plan
  1. Work out an action plan for the EU low carbon
    economy by 2050 an action plan for energy sector
    by 2050 and an action plan for resource
    efficient Europe
  2. Work out a plan for energy efficiency by 2020 and
    strategy for sustainable competitiveness in the
    construction sector

16
Synergy Strategy - Action Plan
  1. Development of energy infrastructure (including
    intelligent grid), trans-European transport
    networks and the adoption of the White Paper on
    the future of the transport sector
  2. Revision of the Directive on excise duty on energy

17
Synergy Strategy - Action Plan
  • Preparation of the proposal to reform the Common
    Agricultural Policy, Common Fisheries Policy and
    Cohesion Policy in accordance with the priorities
    of Europe 2020 Strategy
  • In relation to each of the above mentioned areas,
    the European Commission will submit concrete
    proposals for action, which will be monitored
    within the framework of Europe 2020 Strategy

18
Agriculture and international trade
  • Trade in agricultural products in the EU is
    responsible for 6 of total trade
  • Declining trend can be observed for example, in
    1995, trade in agricultural products accounted
    for 9 of total EU trade
  • The source of this trend is the development of
    trade in industrial products over the past 15
    years, which accounts for approximately 150. At
    the same time, trade in agricultural products
    increased by approximately 60

19
Trends in international trade
Source data from the European Commission website
DG TRADE
20
The value of international trade in agricultural
products
  • The annual trade in agricultural products with
    third countries is approximately 160 billion per
    year
  • The exchange is balanced, the value of both
    export and import amounts to around 80 billion
    euros a year
  • In the past, trade in agricultural products
    generated a negative balance

21
International trade in agricultural products
  • Enlargement of the European Union for new
    countries in 2004 resulted in an increase of
    trade with third countries by about 60
  • The European Union is currently the world's
    largest importer and the largest exporter of
    agricultural products
  • It is connected in particular with the trade
    exchange with developing countries

22
The balance for international trade in
agricultural products
23
The balance for international trade in
agricultural products
  • Security and stability of supplying agricultural
    products were the main reasons for development of
    the Common Agricultural Policy in the 60's
  • Even today, when trade is balanced, in the area
    of ??some products, the EU still imports far more
    than exports

24
The balance for international trade in
agricultural products
25
The balance for international trade in
agricultural products
  • The EU is a net importer of most resources. In
    the area of trade, the deficit is about 25
    billion euros. This deficit is generated in
    particular by oil products, fruits and vegetables
  • The surplus is generated by dairy products. Trade
    in crops and products connected with farm animals
    is balanced

26
The balance for international trade in
agricultural products
  • The European Union is a net exporter of processed
    agricultural products. The surplus is about 20
    billion euros
  • Import from 10 most important trading partners of
    the European Union represents more than half of
    the total agricultural imports. Brazil was
    responsible for 12 billion euros or 16 of
    imports. United States accounted for 9 of total
    imports, while Argentina for 8

27
Import of agricultural products to the EU most
important sources of import countries
28
Import of agricultural products to the EU most
important sources of import - regions
Source data from the European Commission website
DG AGRI
29
Export of agricultural products from the EU -
most important sources of export - countries
  • More than half of exports from the European Union
    goes to the 10 most important trading partners
  • The United States is responsible for 19 of total
    exports from the EU, Russia for 10, and
    Switzerland for 7

30
Export of agricultural products from the EU most
important sources of export - countries
31
Export of agricultural products from the EU -
most important sources of export - regions
Source data from the European Commission website
DG AGRI
32
Structure of imports of agricultural products in
the EU
33
Import of agricultural products from developing
countries
34
International agreements
  • Agreement on free trade areas (FTA) with third
    countries
  • Agreement on Partnership and Cooperation (PCA)
  • Association Agreement
  • Sectoral agreements

35
Agreement on free trade areas (FTA) with third
countries
  • Example
  • South Korea

36
The most important, recently ongoing negotiations
of EU with the third countries
  • CENTRAL AMERICA
  • ARMENIA, GEORGIA,
  • ASEAN
  • BRAZIL
  • CHINA
  • EUROMED
  • INDIA
  • JAPAN
  • CANADA 
  • SOUTH KOREA
  • ACP COUNTRIES
  • MERCOSUR
  • GCC - Gulf Countries Council
  • RUSSIA
  • UKRAINE
  • ANDEAN COMMUNITY

37
European Union Enlargement
  • Croatia
  • Iceland
  • Macedonia
  • Turkey

38
Agriculture and public goods
  • Multifunctionality of European agriculture
  • The definition of public goods
  • Types of goods provided by agriculture
  • Global
  • Local
  • Awarding for public goods
  • Variants
  • Problems

39
Multifunctionality of European agriculture
  • The Cork Declaration 1996

40
The definition of public goods
  • According to Paul Samuelson, public goods are
    goods of the following characteristics
  • no one is excluded from the benefits arising
    from their use (no exclusion from consumption)
  • increase in the number of users does not
    eliminate or reduce the possibilities of using
    particular goods by all users (they are not
    competitive in consumption)

41
Division of public goods
  • Global
  • Local

42
Global public goods are goods that are universal
for all countries, social groups and generations,
e.g.
  • oxygen production
  • carbon sequestration
  • protection of biodiversity
  • protection of water
  • ensuring food safety

43
Local public goods are goods that are consumed on
the local level, e.g.
  • land protection
  • water erosion, relates to more than 20 of the
    area of our country
  • protection of water
  • protection of landscape
  • protection of rural heritage
  • creating conditions for leisure and recreation
  • creating jobs in rural areas

44
Variants of awarding for public goods
  • direct assessment of the procured goods and
    paying for them
  • payment for the use of property rights to
    resources or factors of production
  • payment for the lost income connected with the
    supply of public goods related to the environment
  • Covering of the transaction costs

45
The objectives of the future CAP
  • Economic efficiency and competitiveness
  • Food safety
  • Distribution of income
  • Rural public goods
  • Protection of the environment
  • Protection of landscape
  • Food Standards
  • Animal welfare
  • Development of rural areas

46
The priorities of Polish presidency ( 1
July 2011 31 December 2011)
  • promotion of investment associated with the
    development of renewable energy sources in rural
    areas
  • promotion of activities aimed at increasing
    energy production from agricultural by-products
    and residues of agro-food industry
  • efficient use of EU financial resources
  • taking care of public goods - food security and
    multifunctional development
  • future of the milk and milk products market
    abolition of the milk quota in 2015
  • simplification of the Common Agricultural Policy

47
The draft report The CAP towards 2020 meeting
the food, natural resources and territorial
challenges of the future - by Albert Dess MEP
  • A wide debate on global budget of Pillar 1 and 2
  • The idea of sustainable and competitive
    agriculture
  • Plant and animals welfare
  • Simplification of the future CAP

48
Direct Payments
  • Not connected with the volume of production
  • Equitable distribution of the budget under Pillar
    1 and Pillar 2 between Member States and farmers
    from each Member State
  • Strategy of farm payment
  • Division of direct payments and individual
    historical benchmarks
  • Guarantee of basic income for small farms
  • Simplification of the system of direct payment
  • No upper limit
  • Payment for profesionally active farmers

49
Sustainable management of natural resources and
elements of the environment
  • Improved sustainable management of natural
    resources should be linked to direct payments
  • Any environmental benefits can be efficiently
    achieved by Member States through the adoption of
    benefits from Pillar 2
  • Participation in programs of sustainable
    development is mandatory for each farmer
    receiving direct payments
  • Compensation for element of the environment in
    Pillar 2 is powered from the budget of Pillar 1

50
Cross-compliance and simplification
  • The system of cross-compliance for all
    beneficiaries of direct payments
  • Cross-compliance - limited to the control of
    primary and recognized standards
  • The elimination of disproportionate burdens
    placed on livestock by the cross-compliance

51
Market instruments and safety net
  • The general market orientation of the CAP should
    be maintained
  • Further, individually focused on farm, risk
    management in the facethe of expected
    environmental risks, climate, risk of epidemics
    and high price volatility on agricultural markets
  • Providing farmers with national risk management
    tools
  • Multi-level security network in the event of
    temporary disruption on the market
  • The extension of private sector insurance schemes
  • The system of export credits
  • The extension of the sugar market reform of 2006
    until 2020.
  • The fight against speculation in agricultural
    commodities

52
Rural development
  • The abolition of the previous axis of rural
    development
  • Introducing targeted measures, to be decided by
    the Member States in the second pillar, to attain
    priority objectives of the EU (2020 Strategy)
  • The compensatory allowance for disadvantaged
    areas be
  • retained in the second pillar
  • An optional increase of 25 in national financing
    in the second pillar (top-up) should be possible
  • Abrupt changes in the allocation of
    appropriations in the second pillar to be avoided
  • At least 10 percentage points of any national
    cofinancing should
  • come from public funds

53
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  • Fundacja Programów Pomocy dla Rolnictwa Sekcja
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mgr inz. Andrzej Grzyb
58
Wyklad na Uniwersytecie Ekonomicznym, Poznan 18
lutego 2011
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