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Beef and veal
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As part of the package of measures agreed for Agenda 2000, the Berlin European Council in March 1999 agreed to the proposed reform of the beef and veal market-organisation regime. The reform package contains a range of measures designed to stabilise markets within the EU, to ensure a fair standard of living for farmers, to restore levels of beef consumption in the EU, and to make beef products more competitive on world markets. The main measures targeted by the reform are direct payments to producers, payments for private storage and the public storage regime.
To rebalance supply and demand on the Community market, it has been decided to gradually reduce market support by 20%. Farmers will be compensated for this by a general package of direct payments. Then, starting in July 2002, the intervention price was replaced by a basic price set at 2 224 per tonne. Payments for private storage can be made when the average price on the Community market falls below 103% of this basic price. The reform also made provision for public intervention (the "safety net") when the average market price of juvenile cattle or steers falls below 1 560 per tonne. The March 1999 European Council called on the Commission to closely monitor trends in the beef market and take appropriate measures where necessary.
Following the recent BSE and foot and mouth crises, new emergency measures have been adopted for the beef sector to reduce growing surpluses and reassure consumers that food-safety standards covering beef produced in the EU have been tightened. These helped to stabilise the Community market in 2001, with both production and consumption showing a net recovery.
Direct payments to producers
Given the great diversity of livestock holdings in the European Union, the direct payments set up under the "Agenda 2000" reform since 1 January 2000 encompass various types of direct aid for farmers, designed to:
Despite the progress stimulated by the measures promoting extensive production - especially the overhaul of the extensification premium as part of Agenda 2000 - the market-organisation regime has still not been as successful as had been hoped in restraining the development of intensive production systems.
Hence, the Commission's proposal, in the latest reform of the CAP, that headage payments should be decoupled and replaced with a single income-support payment per farm, based on each farm's previous aid entitlement. Combined with stricter conditionality rules, including obligations regarding the upkeep of farmed land, this measure should help to curb the tendency towards intensive production and rebalance the market somewhat. Decoupling direct payments could lead to a certain drop in output as farmers increasingly switch to extensive production systems, which would cause market prices to rise and thereby improve the income of the sector's producers.
Exports of beef still greatly depend on export subsidies, even if some small quantities are exported without a helping hand from refunds. Almost one sixth of subsidised exports concern live animals. Since the conditions governing exports provide a certain reassurance in regards to compliance with food-safety and animal-welfare standards, the Commission has moved to tighten the conditions and controls determining the issue of export subsidies for live animals.
For the European Union as a whole, some two thirds of the beef produced is derived directly or indirectly from dairy herds. These close links with the beef sector mean that meat from dairy herds swells overall agricultural output by some 10%. Developments in the market-organisation regime for dairy products will therefore be of particular importance for the beef sector.
Report on the application of the beef traceability and labelling rules (04/2004) [pdf]
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