Modernising and Simplifying the Common Agricultural Policy: Challenges and Opportunities Ahead

 

Ministers, elected representatives, ladies and gentlemen,

Good morning to you all. Let me first of all thank The Economist for hosting today's event – of course, like most people in Brussels, I am a regular reader.

High-quality journalism is more important than ever in today's murky fog of fake news and alternative facts. Your reporting on politics and business is the benchmark by which other media are judged.

The Economist's coverage of international economic, financial and business developments is rarely wide of the mark, and in choosing the timing and subject of today's event, you are once again showing that you have your finger on the pulse.

I have been saying since my appointment as Commissioner that the contribution of the agri-food sector to economic progress and job creation is really taking off.

And I am convinced it can increase significantly in the coming years, if the right support structures are put in place. Agribusiness can play a central role in sustainable economic growth in this century, including right here in Greece.

The business of agriculture has already come a long way. Today's sector is more innovative, more scientific, more globalised, and more business-savvy than ever before.

As a result, European farmers and food companies produce among the world's highest quality products, and are marketing them successfully across the globe.

 

Trade stats

High-quality traceable agricultural products have enormous value on global markets. The results speak for themselves: our most recent figures for EU agri-food trade showed monthly exports at a record level of €11.7 billion, adding up to a 12-month value of more than €130 billion.

This means that the EU now has a positive agri-trade balance of almost €20 billion, compared with €2.6 billion just 6 years ago.  This makes us comfortably the world largest agri-food exporter.

And the economic impact of these overseas sales is also clear: An independent study published last week estimates that every €1 billion of exports supports 21 400 jobs in the agri-food sector across the EU. And these are often good jobs in rural areas, which helps to keep local communities and economies alive.

Quality is the key word in this success story. The increasing global middle class, which will grow by 150 million people every year until 2030, demands the highest standards of safety and nutrition in their food consumer choices.

And given that in Europe we enforce some of the strictest safety and quality standards in the world, our farmers are in a very competitive position to meet that growing global demand.

This matters greatly to countries such as Greece.

When I last visited this country in October 2016, I told the Greek parliament that because Greek products are world-class, with a long-standing commitment to quality, Greek farmers should enjoy a strong competitive advantage.

We know that new food consumption trends favour Mediterranean agricultural products, which are often delivered by small-sized structures focused on quality rather than quantity.

Here in Greece there are over 20 different cheeses, 27 olive oils, and 23 vegetable and pulse varieties with protected "geographical indication" status.

This matters, because in terms of sales, products covered by geographical indications represent around 6 % of EU food and drink production while their share in EU food and drinks exports is 15 %.

Among these products is Greece's iconic Feta cheese, for which the Commission has worked hard to guarantee sufficient protection.

By promoting and selling our high-quality localised agricultural products abroad, we can provide rewarding and sustainable livelihoods for people living in rural areas.

Our GI products represent the culture, heritage and tradition of our food products, and the evidence clearly shows that they also represent a sound business choice.

 

Contribution of Agri Sector to National Economy

Agriculture is not traditionally considered an engine of economic growth. But the statistics I have just mentioned clearly outline that this attitude is changing.

Business and political leaders are waking up to the fact that our food chain employs more than 44 million people across Europe – making this the EU's biggest employer.

In the country I know best, Ireland, the agri-food sector is one of the powerhouses of economic recovery; a lesson which I know has not gone unnoticed in Greece. I made this point to Prime Minister Alexis Tsipras when I met him last year. And I reminded him that the Common Agricultural Policy is the platform from which all this has been achieved.

The policy has transformed in recent decades to become a more outward-looking, business-oriented support system for farmers and food operators.

Of course, it has maintained its original purpose of guaranteeing European food security by providing income support to producers.

Here in Greece, to name just one country, farmers will receive almost 15 billion Euro in direct payments in the 2014-2020 period, boosting their farm income and remunerating their work in producing numerous public goods.

But the CAP now does much more.

Through its rural development programme, Greece will receive almost 5 Billion Euro for measures benefiting farmers and rural areas in this period. This can play a crucial part in re-launching the rural and agricultural economy. I often say that the CAP addresses far more than simply agriculture – it is also a policy for job creation, social inclusion and the promotion of sustainable local communities and high quality food.

Nearly half of Greece's rural population is expected to be covered by a local development strategy while over 10% of the rural population will benefit from improved services and ICT infrastructure.

The LEADER programme aims to create 2 000 new jobs, while a further 3 140 beneficiaries will receive support for investments in non-agricultural activities, thus contributing to the creation of 2 860 rural jobs.

Approximately 25% of rural development funding is dedicated to physical investments, including farm restructuring and modernisation as well as the processing and marketing sector.

A further 8% is to be used for farm and business development, including support for young farmers, diversification and the development of non-agricultural activities.

And the CAP takes into account the specific territorial and geographical challenges faced by Greece's rural areas. For example, the smaller Aegean islands constitute an extremely fragmented insular territory subject to severe geographic and natural constraints.

Many islands are very isolated from the Greek mainland, and face particular challenges such as the additional cost of transporting products to and from their communities.

These islands benefit from a CAP support scheme which aims to limit the additional costs involved in transporting certain agricultural products to the islands, and foster the development of local production.

In addition, the new Greek Rural Development Programme contains a new approach to innovation, knowledge transfer and advisory services, with measures accounting for over 6% of the total budget.

These are all essential elements for building a successful and sustainable renewal of Greek agriculture and its food industry.

But there is an urgent need to move things forward on the ground, and not just in plans, so that farmers and other agri-food operators reap the benefit of advice while this is pertinent! 

We know the crucial role that an open and competitive advisory system plays in the transfer of knowledge. And here Greece needs to step up its efforts: at the moment your innovation environment is characterised by an impressive number of recent indigenous initiatives – but this is in stark contrast to the very limited setting up of organisational groups on innovation.

In other words, innovators are innovating, but they are not necessarily getting all the support they should be getting to innovate even more!

The CAP and other EU funds can do a great deal to support innovation, if properly implemented.

The Commission has finalised the 2018-2020 Work Programme for Horizon 2020, the EU's flagship research and innovation system, and there are numerous areas where new projects in food production and sustainable farming can be funded.

For example, under the heading 'Building a low Carbon, Climate-resilient Future' over € 3 billion is expected to be targeted towards projects, including in the food production space.

And the same is true under the heading 'Connecting economic and environmental gains – the Circular Economy' which has an envisaged budget of € 750 million. Greece should do more to find opportunities in these headings.

In terms of the CAP, I am convinced that further adjustments can be made to the policy which will allow it to do even more to support job-creating agri-businesses. For this reason, Commission President Jean-Claude Juncker announced in December that 2017 will be an important year for modernising and simplifying the policy.

 

Modernisation and Simplification of CAP

In February, I announced the first step of this journey when I launched a public consultation on the future of the CAP.

This consultation is open until May 2nd, and I encourage any agri-food stakeholders to make their voices heard. We have already had over 13,000 responses, which is hugely encouraging, though I must add that we have had very few from Greece! So let me call on Greek citizens to let us know what they think.

The public consultation will form the basis for a Communication on the future of the CAP, which will be published later this year and will outline a range of policy options.

We need to make the CAP's contribution to a variety of policy goals stronger, ranging from markets and trade, to climate change and environmental challenges, and making the sector attractive for the next generation of innovating young farmers.

 

In conclusion, ladies and gentlemen, I commend you for placing the focus of this Summit on how the agribusiness sector can increase its contribution to GDP growth in the coming years, here in Greece and right across Europe.

This is a policy debate I am currently holding with my colleagues at the European Commission, with national leaders and MEPs, and now with all EU citizens through the public consultation on the future of the CAP.

It is true that farmers and rural communities are the parts of society most affected by the CAP – but the policy affects the lives of every European citizen.

Farmers and other food-related businesses must be given every support to succeed – because when they do succeed, we all benefit.

Thank you.