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Speech - Dr Franz Fischler, Member of the European Commission with responsibility for agriculture and rural development, Brussels, 12 November 1998

Ladies and Gentlemen,

I am pleased to have the opportunity to discuss with you today the significance of the agricultural component of Agenda 2000 from the consumer’s point of view. I am firmly convinced that we need this dialogue since, when all is said and done, farmers and consumers are allies and not the rivals they have long been made out to be. I would also like to thank you for changing your packed programme at short notice to accommodate me.

To start with, I would like to ask a central political question, namely: What demands will be made by society on Europe’s agricultural policy?

If the Common Agricultural Policy were just art for art’s sake, it would not have survived for four years let alone the four decades for which it has been in existence. Although society has been well served by the CAP, goals and aspirations change over time. Nowadays, you will find very few people in the EU who worry about not finding enough bread or meat on the supermarket shelves. There are, though, likely to be many people who are concerned about the safety and quality of our foodstuffs. A majority of the population also wants to be sure of having attractive countryside, clean water and healthy soil, while more and more people are asking themselves whether their taxes are being put to good use, when they see the agricultural system in Europe continuing to produce surpluses which are later destroyed at great cost.

Agenda 2000 seeks to address and respond to these changing values, both to safeguard the interests of Europe's citizens and to maintain public support for farmers.

Competitiveness is not just a question of price. The quality of a food product, its recognition level, image, historical/cultural and geographical connections are all factors which are becoming increasingly significant, in respect of which agricultural policy must formulate the scope for action and create a legislative framework.

Requirements are, as always, highest in terms of ensuring that foodstuffs do not pose any threat to health. Governments must therefore do all they can to meet our demands for the highest possible level of food safety.

We know that agriculture is closely interlinked with the appearance and quality of our environment. Agricultural and forestry practices over the centuries have proved decisive in shaping and maintaining Europe's rural areas and environment. However, certain production methods, often highly intensive, are subject to increasing criticism because of the associated negative environmental effects. Linking the market-oriented and environmental functions is therefore one of the key challenges for agricultural policy in the future.

Society’s requirements are by no means the sole consideration, though, in view of the international developments which present additional challenges for our agricultural sector. Liberalisation and globalisation not only provide Europe with advantages and opportunities but also undoubtedly bring accompanying risks.

The challenge for Europe now lies in developing further its model of agriculture in such a way as to meet society’s expectations while simultaneously benefiting from positive developments on the world market.

What are the special features of the European agricultural model?

It is clear that different demands are made on agriculture in Europe compared with other countries which typically have vast tracts of farming land at their disposal. The population density in Europe is 115 inhabitants per km², as against 28 in the USA and 3 inhabitants per km² in Canada and Australia. Given the circumstances in Europe, the crucial use of land for agricultural purposes gives rise to additional functions besides simply producing foodstuffs. Upkeep of the landscape, environmental protection, economic and ecological stability of the land are social objectives which agriculture must fulfil and which are of added benefit to consumers in terms of a higher quality of life.

What is to be done?

- We must step up our efforts to apply healthy and environmentally-sound production methods tailored to regional conditions so that food-quality and safety requirements can be met.

- The farming sector must capitalise on its strengths and improve its competitiveness. Accusations of "Americanisation" levelled during the Agenda 2000 discussions are wide of the mark. Moreover, the mechanisms of external protection will remain in place, as will the objective of providing a fair income for farming families.

- The common agricultural policy must create the right conditions for environmental protection and landscape maintenance services to be recognised and rewarded as fully-fledged functions of European farming.

- Farmers must be encouraged to develop new activities within and outside of agriculture. Such diversification will help to safeguard and create jobs in rural regions, thus contributing to the continued vitality and attractiveness of rural communities.

Ladies and gentlemen,

Against this background, it is no longer just a question of whether but rather of how we must reform agricultural policy.

The underlying tenet of our strategy for reform is to enhance the competitiveness of local agricultural produce in order to stimulate demand on the internal market and to be able to export more products without subsidies. We want to achieve this by moving further away from a system of price support and placing greater emphasis on direct payments.

Market expansion, on the other hand, also means reducing market-driven production curbs and paying for all farming services.

In a nutshell, the major advantages of our strategy are that the competitiveness of our products increases, consumers and processors pay less, and the necessary incentives are provided for further structural improvement. The benefits will be felt by everyone in the long run.

What does the consumer stand to gain from this agricultural reform?

Agenda 2000 is good news for consumers: Prices will, in future, be determined more by supply and demand. The days of farmers’ incomes being safeguarded solely by means of artificially high prices are over. Under Agenda 2000, prices will once again function as an indicator: Consumers, through their purchasing behaviour, will "vote on" the products which are more in demand and those which are less so.

Increased competition will result in a greater product selection, with consumers able to choose from a wider range of quality products meeting stringent standards and basic foodstuffs complying with fundamental requirements in respect of the environment, hygiene and animal protection.

There is considerable scope for budgetary savings as a result of the reform: In two independent studies, presented in October, it is anticipated that the gain for consumers by the year 2005 may be in the region of ECU 10 billion to ECU 17 billion. This would lead to a reduction in the consumer price index of between 0.3% and 0.45%, and to further curbing of inflation.

Of course, the extent of the possible savings depends largely on future market price trends. What I am concerned about, though, is that the savings should be passed on to the final consumer, and that is what I will strive for.

As far as consumer prices are concerned, there have been some interesting developments over the years: While, in 1975, the price received by a farmer for beef was just 4% less than that paid by the consumer in the shops, the difference in 1985 was already 21% and an impressive 37% in 1995. The situation with pigmeat and poultry is similar. At the moment, we can see that the crisis in the European pigmeat sector has sent producer prices plummeting to an all-time low, and yet the man or woman in the street doing the daily shopping for pork chops sees precious little change.

This prompts the question of where the money goes and whether we really are in a functioning internal market? There is, understandably, frustration among farmers and consumers, since neither of them stands to gain from price cuts which are not fully passed on to the consumer by the industry and trade sectors. I think that we ought to take a closer look at this situation together. I have already asked my colleague, Emma Bonino, to take action in this matter and have instructed my departments to investigate certain products such as fresh meat with regard to the difference between producer and consumer prices.

If lower costs are to be passed on to the consumer, it is essential that there is proper competition at every stage of the processing and marketing operations. Abuse of a market-dominating position or price-fixing arrangements detrimental to the consumer will be severely punished by the Commission.

Another way in which Agenda 2000 can be perceived as people-friendly is that, as a result of the greater emphasis on direct payments and the lowering of intervention prices, there is more transparency in terms of the consumer and taxpayer having a clearer idea of the services for which farmers are paid (foodstuffs, environmental services).

Agenda 2000 meets these expectations, with targeted compensatory payments for disadvantaged regions, environmental protection and landscape preservation programmes being stepped up as part of a new policy for rural development. Bearing in mind the diversity within Europe, each rural region will have the opportunity to implement its own specially tailored programme for rural development.

Ladies and gentlemen, the Commission’s proposals for agricultural reform pay due heed to the demands made by society on Europe’s farming sector and to the legitimate expectations of consumers. A reformed agricultural policy will provide consumers with a wider range of foodstuffs satisfying the European criteria of quality, safety and environmentally-friendly production, and at cheaper prices.

Agenda 2000 will therefore be an important step towards creating a Europe which plays fair by its consumers and is responsive to their needs. We must get one thing clear, though: To achieve these goals, we need the support of consumers and their representative associations. If you want farmers to provide better quality and environmentally-friendly farming methods, then you also have to be prepared to pay a fair price in return.

Thank you for your attention.

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