Ambassador of Austria Margit Wästfelt: Austrian Agricultural Policy
Ambassador Dr. Margit Wästfelt's address about Austrian agricultural policy in the luncheon seminar of Centrum Balticum Centre on September 20th in 2012.
I will touch on the following topics
Austria supports the perspective that also in the coming period the CAP will consist of common agricultural Policy - two pillars.
The 1st pillar is necessary in order to adapt to the higher standards concerning the environment, protection of animals, food security and so on, but also in order to counter the ever increasing volatility of prices.
The proposal of the European Commission concerning the external convergence meaning direct payments and distribution between MS is acceptable for Austria.
A great challenge will be the change from the historic model to the regional model. Here we must find a way so that the different forms of agriculture in Austria are taken into account also in the future.
The 2nd pillar of the CAP, the rural development is of special importance for Austria
In this context the agri environmental program and the introduction of the less favored area regime is of special importance. Here we find a special link with FIN where the less favored area regime is also of special importance. We both want to preserve agriculture and its different services for the population of the whole country and therefore we need special support for the less favored areas.
Apart from that we want our agricultural production to be sustainable. The agri environmental program in this context is essential.
The rural development plays not only an important role for agriculture itself – it reflects on the whole structure in the rural area: securing employment is directly connected with agriculture. It offers not only employment in connected areas but also other sectors are influenced in a positive way.
This goes far beyond tourism, which, of course, profits enormously from agriculture e.g. a well-kept landscape, the diversity of regional character, etc.
The concept of rural development
The multifunctional character of Austrian agriculture and forestry represents the spine of the rural region. The work done on our farms produces profit.The demand for investment goods and working material creates value.
Corresponding to a study of the Austrian Institute for Economic Research for the period 2007-2013:
Increase of gross value is 1,4 billion Euros
New employment – 31.000, out of this in the agricultural sector 8.500, other economic sectors 22.500.
Without agricultural -payments every other farmer would have to close down his farm because he could not be sufficiently profitable. An evaluation confirms that support-payments in the second pilar are in the first place profitable for the small farmers.
The rural development contributes to maintaining agriculture also in less favored regions, it improves the income situation in the agricultural sector and reduces the intensity of production and thus reduces also environmental burden. Through methods of advanced performance payments (Vorleistungsbezug) and the delivery of agricultural goods to the downstream sectors the whole economy is profiting indirectly from support measures.
Thus the program strongly contributes to growth and employment - not only in the agricultural area but also in other sectors. Rural development strengthens the competitiveness and innovation in the agricultural enterprises. Without agricultural payments employment and economic potential would be lost especially in the rural area. It constitutes the basis for an economically, socially and culturally vital rural area.
Rural development is the core of Austrian agricultural politics and financially more important than the 1st pillar (the relationship is 2/3 to 1/3).
Since the accession to the EU in 1995 Austria keeps working on the development, implementation and improvement of measures contained in the 2nd pillar.
This comprises measures in the agri environmental sector, the direct payments for disadvantaged regions as well as for investment and educational programs.
Especially our Agri Environmental Program has become a great success.
89 % of agricultural surface are subject to agri environmental contracts and are used in an environmentally friendly way.
Our agri environmental program contributes to the sustainable development of the agricultural area and it meets the rising demand for environmental services (Umweltdienstleistungen).
In addition to this the program encourages our farmers to develop production- methods that contribute to the protection and improvement of the environment and the Kulturlandschaft – cultural landscape.
This is important as about 70% of Austria’s surface is situated in mountainous areas where an especially sensitive use of natural resources is essential.
The 2nd pilar is also important for securing a sustainable use of 4 Million hectares of forests in Austria, which constitute about 48 % of Austria’s surface.
In Austria organic farming is attributed particular importance. 21.500 biological farmers are active in Austria, this corresponds to a 16, 4 percentage. Thus Austria ranks high on the EU list. The different measures for the rural development have contributed greatly to this fact. All measures were accepted well by the farmers and the population. And we also want to comply with what they expected in the future. In order to follow this path successfully we need sufficient financing and a good law frame.
Therefore, in the coming periods (2014-2020), we need also for the 2nd pillar comparable means as for the current period (2007-2013).This is essential.
When distributing the means among the MS, the past performances must absolutely be taken into account in order to assure continuity of the policies. This principle also goes for the fact that the average of the period 2007-2013 must be used as a basis – and not only the year 2013.
Austria accepts the co-financing-figures which are proposed by the Commission.
Common directive with structural funds
On the whole it is appropriate to harmonize the conditions for the structural funds and the rural development. Also the joint strategic roof for the different funds can improve the effectiveness of the instruments. The rural development, however, must be maintained as part of the CAP
Partnership agreement
Concerning the partnership agreement it is important that on a national level the administrative costs are kept low. The Commission should take this principle into account when finalizing the document. As the partnership agreement must also consider the strategic framework it must be based on a large consensus in Austria. In any case it will imply higher political and especially bureaucratic costs. The proposal for simplification coming from Commissioner Ciolos - which we of course appreciate - can however not compensate these higher costs.
Austria welcomes the macro economic conditionality in the now presented form.
We are critical, though, towards the ex-ante conditionality and the performance- related reserve (leistungsgebundene Reserve).
We have seen in the past that the administrative costs were considerable but in the end it had no steering effect (a comparable system was in effect with the structural funds in the period 2000-2006). The additional administrative costs do not relate in a reasonable way to the added value. Also the method is questionable in the sense that the visible effect of interventions can also be delayed and can exceed the time frame which the Commission has foreseen in order to classify the “performance” (Leistung).
The form of direct payments: It is important that in highly disadvantaged regions payments may be made exceeding the proposed benchmark. This should make possible a specific compensation for those farms that suffer from particular natural disadvantages. In this context especially animal farms are concerned, where the work load is particularly high. This differentiation is finally also necessary in order to be able to work in ecologically sensitive areas.
New classification of “other disadvantaged areas”
With the support of scientist the Commission has defined 8 criteria for soil and climate, the basis for an objective and clear ranking of such regions. The criteria were presented as part of the Commission’s legislative proposals for the rural development 2014 – 2020. The 8 biophysical criteria are:
Low temperature,drought, excessive dampness/moistness of the soil, limited water-flow, disadvantaged texture of the soil and stoniness, depth of roots, bad chemical quality of the soil, steep hills.
Concerning the new classification of “other disadvantaged areas” it was foreseen that a region should be considered as such if the major part of its agrarian surface (at least 6%) should show at least one of the listed criteria reaching the indicated benchmark.
In Austria, the so-called “Katastral- communities” where installed in order to administer the real estate. These Katastral-communities are much more stable because in case of a division or joining of political communities they are not directly affected. Also by their natural location they are more homogeneous and this gives better results for their classification.
But in general we are of the opinion that an index system will be more effective for a satisfactory classification than the prevailing proposal.
The objective criteria applied should be as closely as possible related to the real situation in nature. Austria does not see this reflected in the Commission’s biophysical criteria as each one of them is applied separately. In nature, these criteria, however, have always a joint effect. This means that the output always depends of all criteria together and not only of one particular one.
This means that the joint effect of several criteria is not favored by this system.
In the moderate climate zone of Central Europe the disadvantaged agricultural production zones are conditioned by a great number of climate and soil criteria. These have a complex interchanging effect with each other. In order to take this phenomenon into account it is necessary to be flexible not only at the fine tuning but also in the first phase of classification. Austria, therefore, proposes the following procedure:
MS that have an advanced system of soil and climate evaluation should be able to use the benchmark indicator of their own index system (also instead of the benchmark of the Commission’s proposed system). These national benchmarks should be checked whether they could be comparable with the Commissions model. For the classification it would be necessary that a certain amount of agricultural surface e.g. 60 or 66 %, of an administrative unit should stay under this benchmark. As a second step, fine tuning could be carried out corresponding to the Commission’s model. We are sure that with this procedure no increase of the present “other disadvantaged areas” would take place. However, we would reach a more plausible result which would be much better understood by and easier to handle for our farmers.
Digressive payments
The proposed regulation provides for digressive payments for those “other disadvantaged areas” that were classified during the period 2007-2013 and that would lose this status by a new classification. The payments would be carried out during the period 2014 – 2017 and decrease from 80 to 20 %.
Austria welcomes the Commission’s initiative that proposes digressive payments for farms that are closing down. In order to make the transition as smooth as possible we are proposing an extension of the transition period. The digressive payments should be continued until 2020.
Conclusion
In view of the new challenges as e.g. climate change and food security we need also in Europe a comprehensive agricultural area. In order to maintain a comprehensive agriculture in countries with extreme conditions – mountainous areas and northern regions – we need sufficient means for the second pillar also in the future. The common goal of both our countries must therefore be to secure the financial means for the rural development also in the coming financial period.
