[Ladies and gentlemen],
Thank you for inviting me to present some "reflections on the future of the Common Agricultural Policy".
I'm very pleased that I'm certainly not alone in reflecting on this subject: a great many people are now very interested in what the future holds for the CAP.
Of course, this was always true of farmers, other direct beneficiaries of the CAP, and specialist commentators.
But now it's also true of the "man in the street" in many cases. People are seeing rises in food prices in the shops. They know that one reason for is increases in agricultural prices. Many are worried about climate change, even if they don't hear scientists speaking with one voice on this topic. And they want to know what our policy responses to these issues will be.
So the debate about the CAP is more public than it used to be. On top of this, I think the debate has matured to some extent.
Too often in the past, the debate seemed rather like trench warfare between two sides constantly shooting at each other. There were those who would try to defend every euro cent of money spent under the CAP. And on the other side, there were those who seemed to think of the CAP as one of the greatest evils of the modern world.
There are signs that the trench warfare may be over. More people are aware of where the CAP has got to now. More commentators are admitting that important reforms have been quietly taking place. The debate is no longer about whether the CAP is simply "good" or "bad", but about what further changes we should make.
One immediate question is how we should react to the current situation on the cereals market.
It's important to be clear about the reasons for the current high grain prices.
Some media give the impression that the main issue lies in biofuel programmes. Certainly, the biofuels programme in the US is an influence on the global market, but there are many others. Some are temporary, such as weather problems. A very important structural influence is the growing demand for cereals in countries such as India and China.
I know that the tight market means this is a testing time for some people – not only in Hungary, but all around the European Union.
I use the phrase "testing time" quite deliberately. Because we are indeed required to pass a test, which is this: When we say that the CAP should encourage farmers to be market-oriented, do we mean it?
Having established the principle of market-responsiveness, we must allow it to operate, unless there are overwhelming reasons not to do so. We must resist the itch to intervene early.
Therefore, in the case of the cereals market, we must allow the current price signals to work their way through the system. That should raise crop production in due course. And if a certain restructuring is needed, that too must be allowed to happen.
Where consumer prices appear to be increasing much more dramatically than they should, I'm sure that the competent authorities will act if necessary.
At the agricultural level, I have chosen to take two pragmatic steps.
European Union Member States have already agreed to set at zero the rate of obligatory set-aside for the 2008 harvest. This ought to bring us at least an extra 10 million tonnes of cereals.
I have also proposed to suspend all import tariffs on cereals.
Needless to say, we will continue to watch the market closely.
In the medium term, if we really want to see the full picture on cereal supply and demand, we must also look at the issue from the perspective of the debate about genetically modified organisms (GMOs).
There is a growing number of GM crops which are authorised for use by our trade partners but not by us. As you know, we use the term "asynchronous authorisations" to refer to this situation.
In the past, this phenomenon has caused us anxiety more in connection with soyabeans than with maize. One reason is that our imports of maize feed products have traditionally been low. Another reason is that there used to be very few large maize-buyers on the world market, and therefore to some extent we could impose our non-GM preferences on certain key suppliers.
But times change.
We now need to import more maize, but are less and less able to set the tone on the world market. China and other emerging countries are now also big importers and do not all share our hesitations about GMOs. In this situation, many Argentine maize-producers appear to be switching to GM varieties. If this happens on a large scale, Brazil will be our only significant non-GM supplier. And who knows how long the Brazilians would hold out?
I am certainly not arguing that we in the European Union should authorise GM products which science tells us to reject. But where science has given a product a clean bill of health, that fact must be paramount as we follow the authorisation procedure.
Otherwise, hesitations about new GM products may really bite economically.
Another agricultural sector which is very much in the news is the wine sector.
This topic alone could occupy the whole of our discussion today. But I would like to summarise the situation and make a few key points.
On the one hand, there is so much strength in the European wine sector. This is clearly true in Hungary. I'm told that there's evidence of wine-making in this part of Europe from 2 000 years ago. You invented the world's first wine classification system. You have wines with very good market penetration - like Tokaj, of course. And you achieve total wine exports of three-quarters of a million hectolitres.
Just as there have been good reasons to make wine in Hungary for 2 000 years, there is every reason to think that it will still be rational to do so in the years ahead.
On the other hand, the current situation in the European Union is unsustainable. We estimate that, without policy reform, we would run an annual surplus of 13 million hectolitres in the years ahead – which would be added to existing stocks.
Also, we now simply cannot justify spending €500 million a year on distilling wine which has no buyers. The public will not accept it.
So we need to take action:
• to spend our budget more usefully;
• to increase the wine sector's competitiveness and strengthen its reputation;
• to improve our framework of rules; and
• to take account of traditional, social and environmental concerns in the most appropriate way.
This is what my reform proposals are designed to do.
Under those proposals, we would stop throwing public money away on distillationschemes – which prevent market signals from getting through to producers.
Instead, generous national envelopes would allow Member States to put together assistance packages which meet the very diverse needs of their individual wine sectors.
An end to the planting rights system would allow wine-producers to respond to growing demand on the global market. But safeguards would prevent geographical indications from being devalued.
A purely voluntary grubbing-up scheme would give an honourable way out for those producers who felt they would not be profitable in future. Once again, safeguards would minimise possible risks for on the regional or national level – whether economic, social or environmental.
New labelling rules would enable European producers to cater better for sections of the global market which are currently dominated by their competitors.
And a large promotion budget would help to relaunch European sales around the world.
There's still a lot of heat in the discussions about how to reform our wine sector. But I hope we can hammer out a deal soon in the Agriculture Council – because the sector's future depends on it.
As we deal with individual sectoral questions, of course we're also examining the CAP more generally. As you know, we're now less than a month away from the launch of the "CAP Health Check".
As I have said many times, this is not going to be a fundamental reform. It's not about rethinking the essential principles of the reforms of 2003 and subsequent years. It's about ensuring that those principles are being worked out in practice in the context that we have now – as effectively, efficiently and simply as possible.
The full debate on the Health Check will start on 20 November, when the Commission adopts its initial "communication" on the subject. But in the meantime, I have chosen to air ideas in public fairly often so that the debate can gather some speed beforehand.
Much of what is likely to appear in the Health Check will have direct importance for Hungary.
Cross-compliance will be back on the table. We are certainly not going to water down its principles: these are essential if we want to keep public backing for the CAP. However, we could make the system work rather more smoothly.
We must also take a fresh look at our various market measures in the CAP, such as intervention.
A particular question under the heading of market measures will be how to prepare for the end of the milk quota system, which is due in 2015.
Let's be clear that the system is indeed entering its last few years of life. Milk quotas simply do not fit in with the competitive, market-oriented farming that the CAP now seeks to encourage.
But it's obvious that before 2015 we should take steps to help the industry to adjust, and possibly to help boost supply. We are looking at this closely.
• Some aspects of the Health Check will not be immediately relevant to Hungary, but they do have at least some relevance, because European agriculture operates within a single market.
An area of policy which is on the Health Check agenda is rural development.
We need to keep our rural development policy strong to meet a range of challenges. Some of these have been clear for a long time. Others are emerging now.
In this category I would place, for example, climate change, water management, and making the most of bio-energy.
There may also be possibilities within rural development policy to help farmers manage risk.
Before I conclude, let me make one final point.
With regard to the CAP in general, my focus is firmly on the Health Check for the time being. And the Health Check will be about changes to be made before 2013.
This certainly does not mean that the period after 2013 is taboo. As I have made clear in the past, I'm reflecting on the long term as well as the medium term – and I'm listening to reflections from others. This is essential if we want to make a success of the review of the European Budget which has now been launched.
However, we're not trying to build Rome in a day. The foundations are there. The Health Check comes next. I will make sure that it both fits the foundations and prepares for later building work.
Thank you for your attention.