Fruit & Vegetables Reform
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1 Fruit & Vegetables Reform 24 January 2007
2 Outline 1. Key elements of the European Union s (EU) fruit and vegetables sector 2. The current EU support schemes and budget 3. Why reform? The issues to be addressed and other factors 4. The reform 5. The calendar Fruit & Vegetables reform 24th January
3 1. Key elements 1.Key elements of the European Union s (EU) fruit and vegetables (F&V) sector Fruit & Vegetables reform 24th January
4 1. Key elements Production External trade Consumption Fruit & Vegetables reform 24th January
5 1. Key elements: Production Main world production by regions (in Mio tonnes, average *) World: Mio tonnes *except Latin America, North America and Oceania Asia 845 *Europe 174 Latin Amer & Caribbean 139 Africa 116 European Union (27) 108 North America Developed 71 Oceania *EU-27 + Albania; Andorra; Belarus; Faeroe Islands; Bosnia and Herzegovina; Gibraltar; Holy See; Iceland; Liechtenstein; Monaco; Moldova, Republic of; Macedonia, The Fmr Yug Rp; Norway; Croatia; Russian Federation; Serbia; Montenegro; San Marino; Switzerland; Ukraine; Channel Islands; Svalbard and Jan Mayen; Isle of Man Source: FAO Fruit & Vegetables reform 24th January
6 1. Key elements: Production EU-27 F&V production compared to World production (average ) in Mio t World EU ,4 8,3% 72,2 8,3% 108,6 8,3% 0 Total fruit Total vegetables Total F&V Source: FAO Fruit & Vegetables reform 24th January
7 1. Key elements: Production (EU-27) Significance of F&V in the agricultural sector (% of total production, average ), MS with share above 10% EU-27 average: 16.9% SI AT UK FR HU NL PL BE BG RO PT MT IT GR ES Source: Eurostat Economic Accounts of Agriculture Fruit & Vegetables reform 24th January
8 1.Key elements: Vegetable production (EU-27) Vegetable production by MS ( 000 tonnes, average ) EU EU total total production production million million tonnes tonnes IT ES FR PL EL NL DE RO UK PT HU BE BG AU LT SK SE CZ DK FI IR LV CY EE SV MT LU Source: FAO Fruit & Vegetables reform 24th January
9 1.Key figures Vegetable production (EU-25) Main products: Tomatoes (average ) (fresh market) UE: 6,3 Mio T ES: 2,1 Mio T IT: 1,3 Mio T EL: 0,8 Mio T FR, NL: 0,6 Mio T Source: Eurostat Fruit & Vegetables reform 24th January
10 1. Key elements: Fruit production (EU-27) Fruit production by MS ( 000 tonnes, average ) EU EU total total production million million tonnes tonnes IT ES FR PL DE EL RO HU PT AU NL BE CZ UK SV CY BG SK LT DK SE LV IR FI EE LU MT Source: FAO Fruit & Vegetables reform 24th January
11 1. Key elements Fruit production (EU-25) Main products: Apples (average ) UE: 11 Mio T PL: 2,3 Mio T FR, IT: 2,1 Mio T DE, ES: 0,8 Mio T Source: Eurostat Fruit & Vegetables reform 24th January
12 1. Key elements: Fruit production (EU-25) Main products: Citrus (average ) UE: 10,5 Mio T ES: 5,8 Mio T IT: 3,1 Mio T EL: 1 Mio T PT: 0,3 Mio T Source: Eurostat Fruit & Vegetables reform 24th January
13 1. Key elements: External trade (EU-25) Fresh fruits. Extra EU-25 trade ( 000 Mio ) EU: Net importer of fresh fruit 12 All fresh fruits 4,5 Only temperate (non tropical) fruits 10 4,0 3,5 8 3,0 Imports Exports 6 4 2,5 2,0 1,5 2 1,0 0, Source: Eurostat (Comext) 0, Fruit & Vegetables reform 24th January
14 1. Key elements: External trade (EU-25) Fresh vegetables. Extra EU-25 trade ( 000 Mio ) EU: Net importer of fresh vegetables 1,6 1,4 1,2 1,0 0,8 0,6 Imports Exports 0,4 0,2 0, Source: Eurostat (Comext) Fruit & Vegetables reform 24th January
15 1. Key elements: Consumption Consumption of F&V (g/day per capita). Strong differences between Member States. Under the level recommended by the WHO and the FAO (400 g per day) FAO/WHO: 400 g EL IT DE HU FR PT LU AT ES PL BE SF UK SE IE Source: DAFNE Data Food Networking 2006 DG SANCO Fruit & Vegetables reform 24th January
16 2. The current EU support schemes and budget Fruit & Vegetables reform 24th January
17 2. The current EU support schemes Internal market Producer Organisations (POs): key element of the Common Market Organisation (CMO) Grouping of supply Improving market orientation, quality and environmental management Actions co-financed 50%UE - 50%PO EU financing limited to 4,1% of the Value of the Marketed Production (VMP) Fruit & Vegetables reform 24th January
18 2. The current EU support schemes Internal market Marketing standards EU marketing standards are set for all main fresh F&V to inform the consumer and to allow for fair competition by: Defining minimum quality. Classifying products and Setting the rules for presentation and labelling. The EU marketing standards are aligned on UN/ECE* international standards * Economic Commission for Europe (United Nations body) Fruit & Vegetables reform 24th January
19 Withdrawals 2. The current EU support schemes Internal market Currently the EU budget finances the withdrawal of certain fruit and vegetables from the market under certain conditions. These are conducted by the Producer Organisations (POs) and cannot go beyond 5% (citrus); 8,5% (apples and pears) or 10% (other products) of the marketed quantity. The EU pays the POs a Community withdrawal compensation per tonne of product taken off the market (within the mentioned quantitative limits).possible top-up by Operational Funds. The withdrawn products can be freely distributed to charitable organizations, penal institutions, children's holiday camps, hospitals, old people's homes, schools; distilled, used for nonfood purposes or for animal feed. Fruit & Vegetables reform 24th January
20 2.The current EU support schemes: products for processing Three different types of schemes 1. Tomatoes, citrus fruit, peaches and pears. Aid to production delivered to the industry. Paid to the PO on the basis of contract signed between PO and the industry. EU/Member State (MS) thresholds fixed by the Council. Penalisations if thresholds are exceeded. 2. Dried figs and plums Aid paid to the industry Conditional on a minimum price paid to producers 3. Dried grapes Aid per ha to producer. Conditional on a minimum yield Fruit & Vegetables reform 24th January
21 2.The current EU support schemes: products for processing Common features Complex schemes WTO amber box Aids granted to producers via the POs supplying the processing industry (except for dried grapes) Not market oriented enough Not in line with the principles of the 2003 reformed CAP Fruit & Vegetables reform 24th January
22 2. The current EU support schemes External market Specific fruit and vegetables legislation Export refunds, Entry prices (CCT- Common Customs Tariff), Special safeguard clause General horizontal trade legislation General safeguard clause (e.g. Canned mandarines from China) Antidumping measures (frozen strawberries) Fruit & Vegetables reform 24th January
23 2. The EU budget: fruit and vegetables EAGGF Expenditure (%) related to Final Agricultural Production (%) (2004) Beef/veal 10,0 17,37 F&V(fresh and processed) 16,3 3,51 Milk 13,2 4,45 % EAGGF % FAP Olive oil 2,5 5,3 Wine 5,8 2,44 Arable Crops 13,8 38,64 Source: EAGGF & Eurostat Fruit & Vegetables reform 24th January
24 2.The EU budget : fresh fruit and vegetables Budget evolution since 1996 (Mio ) Operational funds Withdrawals Export refunds Source: EAGGF Fruit & Vegetables reform 24th January
25 2. The EU budget: processed fruit and vegetables Budget evolution since 2000 (Mio ) Processed tomatoes Processed citrus Dried grapes Other processed fruit Export refunds Source: EAGGF Fruit & Vegetables reform 24th January
26 2. The EU budget: Total (2005) Evolution of total expenditure devoted to the Common Market Organisation (Mio ) Total expenditure 2005: 1488,8 Mio Processed : 854,3 Mio Fresh : 634,5 Mio Total fresh F&V total processed F&V TOTAL Source: EAGGF Fruit & Vegetables reform 24th January
27 3.Why reform? The issues to be addressed and other factors Fruit & Vegetables reform 24th January
28 3. Why reform? The issues and other factors The issues to be addressed 1. Concentration of the retailers 2. Insufficient grouping of supply 3. Aids for products intended for processing not consistent with reformed CAP 4. The crises in the F&V sector Fruit & Vegetables reform 24th January
29 3. Why reform? The issues and other factors The issues to be addressed 5. Environmental concerns. Need to improve the current commitments 6. Need for Simplification Other factors The Court of Auditors report «Growing success? The effectiveness of the European Union support for fruit and vegetables producers' operational programmes» (special rapport no. 8/2006) Fruit & Vegetables reform 24th January
30 3. Why reform? The issues 1.Concentration of the retailers % sales through large retail chains DK FI FR DE IT NL SP SE UK PL CZ Concentration of the retail sector is increasing. Large retail chains account for 70-90% of all food retail in France, Germany, the Netherlands, the UK and Nordic countries. Large retail chains increase their market share in new MS. Source: Masterpanel; Secodip; Refresh Directory; GFK Panel Services; Frugiventa; Statistical Office of Czech Rep.; CAL; Handelsbladet FK; Unaproa; Fruit & Vegetables reform 24th January
31 3. Why reform? The issues 2.Insufficient grouping of the supply. Ratio of POs on the Total Production in (Mio ) Production marketed outside POs M arketed production of PO + APOs (36 %) 2001 (35 %) 2002 (36 %) 2003 (31 %) 2004 (33,7 %) EU-25 Source: DG AGRI on the basis of official data communicated by MS Fruit & Vegetables reform 24th January
32 3. Why reform? The issues 2. Insufficient grouping of supply - unbalanced geographical coverage in the EU: % of production marketed by POs, EU-25 average*: 33,7% Fruit & Vegetables reform 24th January BE NL IE UK FR DK SE AT ES IT DE MT CZ EL FI PT HU CY PL * Excluding Member States for which data is not available (SI) or where there were no POs in 2004 (EE, LT, LU, LV, SK) Source: DG AGRI on basis of offical data communicated by MS 1
33 3. Why reform? The issues 3. Consistency with CAP reform 2003/4/5 Sectors already reformed Cereals, meat and dairy (2003) Mediterranean products: Olive oil, tobacco, cotton, hops (2004) Sugar (2005) Bananas (2006) Still to be reformed Wine Fruits and vegetables Fruit & Vegetables reform 24th January
34 3. Why reform? The issues 4. Crises Temporary crises in the F&V market occur frequently because of the perishable nature of the products and the fact that they often cannot be stored. Volume and quality of the fruit and vegetables produced are often dependent on weather conditions. Consumption is also also sensitive to weather. For instance rain and low temperatures in summer reduce consumption of peaches and nectarines. Therefore, for some products, temporary surpluses that do not find a market can just be generated by bad weather. The above factors generate large price variations. Fruit & Vegetables reform 24th January
35 3. Why reform? The issues 5. Environment The sector should continue improving its environmental commitments. Cross-compliance is not required in the existing F&V support schemes. 6. Simplification The Commission is committed to simplify European legislation wherever possible, both for the administration and for the producers. In order to make POs more attractive. Fruit & Vegetables reform 24th January
36 3. Why reform? Other factors The Court of Auditors report Effectiveness of expenditure by Producer Organisation has to be checked and monitored better. The overall policy objective of concentrating supply has not been achieved in most MS. Fruit & Vegetables reform 24th January
37 4.The reform The process The objectives The options The proposal Fruit & Vegetables reform 24th January
38 4. The reform: The process The evaluations and reports Evaluations on processed products tomatoes citrus peaches and pears Evaluation on withdrawals (ongoing) The report on soft fruits The Impact Assessment September 2005: setting up of impact assessment group 2006: Public hearing and Advisory Committee - Document on the options 18 May to 13 July 2006: The public consultation period Fruit & Vegetables reform 24th January
39 4. The reform: The process The public consultation The Commission received 130 contributions from: - Member States - Regions - Stakeholders - NGOs Fruit & Vegetables reform 24th January
40 4. The reform: The objectives To improve EU fruit and vegetables' competitiveness and market orientation or, in other words, to contribute to achieving sustainable production that is competitive both on internal and external markets To reduce fluctuations in fruit and vegetables producers' income resulting from crises To increase consumption of fruit and vegetables in the EU To continue the efforts made by the sector to maintain and protect the environment To simplify and where possible reduce the administrative burden for all concerned. Fruit & Vegetables reform 24th January
41 4. The reform: The objectives These objectives of the reform have been identified taking into account: - consistency with the reformed CAP, market support and rural development measures, - WTO compatibility and - conformity with the financial perspectives. Fruit & Vegetables reform 24th January
42 4. The reform: The options 1. Status Quo A reference scenario updated in line with WTO commitments 2. Transfer option Producer Organisations (POs) to be transferred to Rural Development (with co-financing by Member States) 3. PO + POs to be maintained in CMO but increasing their attractiveness. Options 2 and 3 both include: Decoupling of the support for products intended for processing Fruit & Vegetables reform 24th January
43 4. The reform: The options Conclusions of the Impact assessment The impact analysis concludes that the "PO+" option, which provides for the inclusion of F&V producers and areas in the Single Payment Scheme and for maintaining POs that will be made more attractive, gathers the maximum of advantages. Fruit & Vegetables reform 24th January
44 4. The reform: The proposal THE SINGLE PAYMENT SCHEME PO s CRISIS MANAGEMENT PROMOTION OF CONSUMPTION ENVIRONMENT CONCERNS TRADE WITH THIRD COUNTRIES Fruit & Vegetables reform 24th January
45 4. The reform: The proposal PO s CENTRAL ROLE IMPROVING PO s ATTRACTIVENESS (I) More FLEXIBILITY in POs scheme One product one PO EXTRA EU SUPPORT (increased to 60%) for: Regions with low levels of organisation, New Member States, Outermostregions. EXTRA EU SUPPORT (increased to 60%) for mergers of POs and associations of POs (APOs) for their 1st operational programme Fruit & Vegetables reform 24th January
46 CRISIS MANAGE MENT 4. The reform: The proposal CRISIS MANAGEMENT Crisis management through POs (50%-50% financing) Only for members Limited to a maximum: 33% of the Operational Fund. New tools available for crisis management Green harvesting, Non-harvesting Promotion/communication in case of crises Training Harvest insurance Financing of the administrative costs of setting-up (only) of mutual funds Removal of 100% EU paid withdrawals except for free distribution; other withdrawals co-financed by producers. Fruit & Vegetables reform 24th January
47 4. The reform The proposal Inclusion of fruit and vegetable areas in the Single Payment Scheme Render all fruit and vegetable areas eligible for the Single Payment (potato areas are also being included). Transfer of the financial amounts given to Member States for processed fruit and vegetables to their Single payment envelopes. Financial amounts are calculated as the average historical expenditure over the reference period for the Member States who were Members of the EU before 1 May 2004 and are based on the amounts resulting from the enlargements treaties for the other Member States. Member States will then have to decide, according to objective and nondiscriminatory criteria, which producers will receive entitlements and the amount(s) corresponding to the entitlements. To be eligible for an attribution of entitlements, producers need to have produced fruit and vegetables during a period between 2001 and 2007 as chosen by the Member State who were Members of the EU before 1 May 2004 and during a period chosen between 2004 and 2007 for the other Member States. Fruit & Vegetables reform 24th January
48 Implementation of the Single payment Scheme in the EU The Single Payment Scheme implementation in the EU (17 Member States)* Historical model Regional model 10 Member States: AT, BE, FR, EL, IE, IT, NL, PT, ES, UK (Scotland, Wales) 8 Member States: DK,LU, SE, FI, DE, UK (Northern-Ireland and England), MT and SI (since 1/1/2007) * The other Member States apply the Single Area Payment Scheme. Fruit & Vegetables reform 24th January
49 Eligibility of fruit and vegetable areas today and in the reform proposal A. Single Payment Scheme To get a payment under the Single Payment Scheme, a farmer has to have an entitlement and a corresponding hectare of eligible land. It applies in 17 Member States. 1. In the regional model: areas with fruit and vegetables (except orchards) and table potato areas are eligible for the single payment but only up to the limit of the average number of areas in the reference period In the historical model: all areas with fruit and vegetables and with table potatoes are excluded from the single payment scheme. B. Single Area Payment Scheme It applies in 10 of the New Member States (not in Slovenia and Malta since 1 January 2007) All fruit and vegetable areas (including orchards) and table potato areas are eligible for payments. Fruit & Vegetables reform 24th January
50 Eligibility of fruit and vegetable areas today and in the reform proposal Today, before the reform: SPS Historical SPS Regional SAPS F&V areas - (except secondary crops occupying land less than 3 months a year) + (but within historical limits) + Permament crops (orchards) Table potatoes - + (but within historical limits) + In the reform proposal: all agricultural area with fruit & vegetables including permanent crops and land under table potatoes eligible in all 27 Member States. Fruit & Vegetables reform 24th January
51 4. The reform The proposal THE SPS THE SINGLE PAYMENT SCHEME (SPS) and the SINGLE AREA PAYMENT SCHEME (SAPS) DECOUPLING. No link between aid & production Support in GREEN BOX CONSISTENCY. All land with F&V eligible (including orchards. Potatoes added as well) FREEDOM TO FARM FLEXIBILITY for MS to allocate payment entitlements. Objective & non discriminatory criteria SIMPLIFICATION. Aligning with the reformed CAP CROSS COMPLIANCE binding under the new scheme Fruit & Vegetables reform 24th January
52 4. The reform: The proposal ENVIRON MENTAL CONCERNS ENVIRONMENTAL CONCERNS CROSS COMPLIANCE is compulsory within the Single Payment Scheme Minimum of 20% spending on ENVIRONMENTAL measures in each operational program. EU co-financing rate of 60% for ORGANIC production in each operational program. Fruit & Vegetables reform 24th January
53 PROMOTION OF CONSUMP Through POs: 4. The reform: The proposal PROMOTION and CONSUMPTION promotion of POs' brands and generic promotion. POs are obliged to include in their operational programmes action to promote the consumption of fruit and vegetables targeted at young consumers. Through EU s promotion programmes: Focused on young people. EU co-financing up to 60 % towards school-age children and adolescents. Fruit & Vegetables reform 24th January
54 TRADE WITH THIRD COUNTRIES 4. The reform: The proposal TRADE WITH THIRD COUNTRIES EXPORT REFUNDS are abolished The rest of the provisions related to Trade with third countries remain unchanged until the outcome of the WTO negotiations: Entry prices (CCT) Special safeguard clause General safeguard clause Fruit & Vegetables reform 24th January
55 Budget 4. The reform: The proposal The total amount that will be transferred to the Single Payment Scheme is about 800 Mio. The budget for producer organisations is currently about 700 Mio. It will increase gradually over the years according to the success of the Producer Organisations. Currently the yearly increase is 50 Mio. Fruit & Vegetables reform 24th January
56 5. The calendar Fruit & Vegetables reform 24th January
57 5. The calendar 24 January 2007: Commission proposal 2007: discussions in both European Parliament and Council leading to adoption by Council 2008: Entry into force of the new CMO Fruit & Vegetables reform 24th January
58 5. The calendar The single CMO Evaluation on POs by the Commission Report on results of the Producer Organisations support scheme Fruit & Vegetables reform 24th January
59 THANK YOU VERY MUCH FOR YOUR ATTENTION Fruit & Vegetables reform 24th January
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