Agrifish council meeting, 13 may 2020
Dear Chair, dear Ministers
Thank you for giving me the opportunity to present and discuss with you the Commission’s recent package of exceptional measures to support the agricultural and food sector.
- Since our last video-conference on 25 March much has happened. When we last discussed the situation, our main concern was the very significant problems with the availability of food and agricultural inputs, which were in turn putting food security at risk. Together we have ensured that a health crisis did not evolve in a food crisis. We can be proud that the food chain has successfully kept safe, high quality and affordable food on our citizens’ tables.
- The COVID-19 crisis has made us all more aware of the importance of food security and the need to help and to stand-by our farmers, who experience a very severe crisis, which in some cases threatens the survival of their business.
- You have rightly called for action, as have the Members of the European Parliament: we can only overcome this challenge together. This is a time for collaboration and swift action, but also for measured initiatives that target those sectors that experience problems.
- Largely, our agri-food sectors have proven resilient to the crisis. Looking at the market updates, you will see that the impact varied hugely between sectors and within sectors, while some sectors are able to stand their ground during the crisis, others are not and some are hit very hard.
- Clearly, we cannot be complacent. A great deal remains to be done. There is a huge challenge ahead of us in repairing the human cost and the damage to our economies. With continued hard work, commitment and cooperation we can and will succeed.
- Let me be clear on one thing: there is no alternative to ensuring together our food security, as evidenced by the relatively smooth overall performance of the EU agri-food sector during the crisis. Our reply to the crises must be full commitment to a fully functioning single market for the benefit of all.
- Let me recall and highlight some of the measures with a focus on the last elements.
- First, back in March the Commission acted swiftly by ensuring food security and the single market through Guidelines on border management measures.
- Secondly, a relaxed temporary state aid framework increased state aid for farmers up to 100.000 EUR and for food processing and marketing companies up to 800.000 EUR. This can be topped-up with an additional 20.000 EUR to 25.000 EUR in de minimis aid, bringing potentially several extra billion of Euros from the national budgets to the European agri-food sector.
- Third, as described in the Council Working Paper, we adopted a certain number of flexibility measures concerning direct payments, rural development and on-the-spot-checks. These were announced on 2 April and were subject to several legal acts adopted between 6 and 16 April.
- Fourth, on 20 April, the Commission adopted exceptional flexibility and simplification in the use of the rural development fund, to extend the scope of support to rural SMEs/businesses. Farmers will be able to benefit from loans up to 200.000 EUR on favourable conditions and Member States will be able to allocate funds available under their Rural Development Programmes to finance actions to face the crisis.
- Lastly, the Commission adopted a second package of measures on 30 April. It consists of 12 separate Commission regulations. They are aimed to stabilise markets. While acting swiftly, we still took the necessary time to reflect and to find the most appropriate measures for providing stability to future prices and production and therefore to stabilise food supplies and food security. The measures I suggest support the most affected agri-food sectors by addressing already observed disturbances as well as future risks
- I’m pleased to see that we were able to adopt these measures with almost unanimous support from the MS.
- However, for three of these Regulations which are delegated acts, we need the swift approval of the Council and the EP. I will explain in more detail which measures were taken and how they will help farmers face this crisis.
- In a nutshell, the measures consist of:
- Private storage aid for the dairy and the meat sectors;
- Much greater flexibility in the operational programmes, in particular fruit and vegetables and wine, to allow more spending;
- Allowing farmers to take joint action in derogation from the competition rules in the sectors of milk, potatoes and flower;
- (as well, as decided yesterday, rural development support)
Details on market measures (Second Package adopted on 30 April)
Private Storage Aid
- .The Commission will support private storage aid for dairy and meat products. Concretely, these are skimmed milk powder, butter and cheese for dairy and beef, sheep and goat meat for meat products.
- This measure allows the temporary withdrawal of products from the market for a minimum of 2 to 3 months, and a maximum period of 5 to 6 months. Applications to participate in the scheme opened from 7 May 2020.
- This measure aims to stabilise the market by temporarily reducing available supply and has already proven in the past to be a very effective and efficient measure.
- During the 1st week, offers were received for 1200 tons of skimmed milk powder, over 15 000 tons of butter and about 24 000 tons for cheese.
Specifically on the Delegated Act on Private Storage Aid for Cheese
- This Delegated Regulation has been adopted by the Commission using the urgency procedure of the CMO which means that it is directly applicable as long as the Council or the Parliament do not provide any objection.
- The objective is to support the cheese sector by temporarily withdrawing product from the market.
- This instrument is the same as those adopted for skimmed milk powder and butter. Only, the legal basis used is different so the act needs to take the form of a Delegated Regulation. It is a measure that proved effective at the time of the Russian ban.
Flexibility for Sectoral Aid schemes
- The Commission will allow flexibility in the implementation of market support programmes for wine, fruits and vegetables, table olives and olive oil, apiculture and the EU’s school scheme (covering milk, fruit and vegetables).
- This flexibility aims at limiting available supply in each sector to lead to a rebalancing of markets by reorienting priorities and funding towards crisis management measures.
- It also provides flexibility in terms of deadlines and other management measures for these programmes, like we did earlier for other CAP policy tools.
Specifically on the two Delegated Acts on flexibility for sectoral aid schemes
- Some of these flexibilities are subject to two delegated acts that are under your scrutiny.
- The first of these two Delegated Regulation does not foresee the urgency procedure and cannot enter into force until you and the Parliament provide for a positive non-objection.
- The main elements of this regulation in respect to the fruit and vegetable sector are to provide producer organisations with more flexibility to amend the operations programmed.
- The relevant aspects for the wine sector provide growers with more flexibility to amend their planned operations.
- The second Regulation has been adopted by urgency procedure. It will be directly applicable as long as the Council or the Parliament do not object. It also concerns the wine and the fruit and vegetables sectors.
- Its aim is to reinforce the capacity of the beneficiaries and MS to reorient additional funds to crisis prevention and crisis management measures in both sectors. In large part due to the crisis, there was likely to be a big underspend in the budget on these programmes. What we have done is to introduce the scope to re-establish priorities and increase flexibility to instead allow this money to be re-directed towards combating the crisis.
- I would like to stress that this money would otherwise be lost to these sectors.
- I call on all MS to quickly adopt and implement these measures. Only their implementation will allow to measure their effectiveness and, if needed, reassess the situation later on.
Crisis Cooperation in the milk, potatoes, live plants/flowers sectors
- For all three sectors, farmers and their associations, recognised producer organisations and inter-branch organisations are allowed (they are not obliged) to agree on market stabilisation measures, such as production planning, market withdrawals, processing, storage, promotion,...
- The measures are authorised for 6 months. The measures must strictly aim at market stabilisation (no price fixing, no impediment to trade, or discrimination).
- The use of these measures must be communicated to Member States’ competent authorities (including competition authorities) and Member States will communicate to the Commission.
- To conclude my considerations concerning the Commission’s second support package, I would be grateful, given the urgency and the need to reassure stakeholders, that the three Delegated acts under scrutiny are quickly confirmed and implemented by the Council.
- I know these measures do not cover all sectors that may experience problems. Poultry farmers for example have taken action to reduce their production to adjust to falling demand following the closure of the food service sector. I am aware of their difficult position and would like to commend their market oriented behaviour.
- We focused on sectors that were a priority across the Union for the majority of Member States.
- I would also like to remind you, dear Ministers, that you can turn to the State aid flexibilities that have been created by the Commission to help these sector which are not covered by the standard market safety net provided by the CMO Regulation.
- I am pleased to see that such schemes are now being introduced across Europe. 8 MS have already put in place specific schemes for agriculture for a total amount of EUR 1,229 Million.
On the exceptional rural development support in response
to Covid – 19
- Exceptional circumstances required bold actions. This is why, after listening carefully to the suggestions coming from MS and stakeholders, I proposed on the 30th of April to create a new temporary measure supported by EAFRD.
- This new measure will allow Member States to pay a lump-sum to farmers and small agri-food businesses particularly affected by the COVID-19 crisis.
- Lump-sum payments shall be made by 31/12/2020. The maximum amount of support shall however not exceed EUR 5.000 per farmer and EUR 50 000 per SME. This comes on top of the de-minimis aid for the agricultural sector and the increased state aid ceiling I mentioned earlier.
- This proposal still needs to be adopted by the Council and the European Parliament, and I count on your support for a quick and smooth approval.
- The new measure has been designed in a way, which offers a large margin of flexibility to the Member States for its implementation. For instance:
- Support may target only certain categories of beneficiaries or sectors (those particularly affected by the crisis), to be defined within each Rural Development Programme, based on objective and non-discriminatory criteria.
- The level of payments may be differentiated by categories of beneficiaries and sectors, again depending on how affected they are by the crisis.
- Beneficiaries receiving support would not have to justify the actual use of the funds, since the lump-sum payments are not based on invoices to be submitted by beneficiaries.
- Expenditure can be eligible before the submission of the amendment of the rural development programme.
- Amendments of Rural Development Programmes introducing the new measure will be processed by the Commission in the shortest possible time.
- Expenditure would be eligible since the moment of the Covid-19 outbreak.
- The maximum amount that can be allocated to this measure is 1% of the envelopes of each Rural Development Programme.
- The Member States and regions would need to include the measure in their Rural Development Programmes via a modification and allocate funds to it via transfers from other measures.
- In addition, the current framework for pillar II includes various measures that could be used to mitigate the impact of the crisis. For instance, support is available for:
- risk management tools to compensate farmers experiencing production losses above a certain threshold
- direct selling of agricultural products by farmers
- setting-up and development of rural-tourism activities
- home delivery services of food and basic products or medicines to rural inhabitants,
- medical facilities and small-scale infrastructure in rural areas.
- I would like to remind that Member States dispose of a great margin of flexibility to quickly adapt Rural Development programmes to mitigate the impact of the crisis.
- This could imply for example the introduction of new rural development measures, or the transfer of budgetary allocations between measures already programmed. My services will be swift and flexible when assessing Member States proposals aimed at crisis mitigation.
- I want to stress to you that without amending this regulation we are be able to support small farms with a lump-sum payment, especially those that lost their off-farm job, in order to make sure they stay in business
- I can assure you that my services will be swift and flexible when assessing Member States proposals aimed at crisis mitigation.
- Finally, the Commission is ready to accept – exceptionally and only in view of the special circumstances – that Member States review their decision on the flexibility between pillars.
Financing the CAP crisis package
- The Commission has reacted quickly, with your support, to address the most urgent problems. I am pleased that most agricultural stakeholders, the Members of the European Parliament and you are welcoming these measures.
- In this unprecedented period, we have turned our CAP-wallet inside out to make sure all funds can be used to the last Euro.
- Still some find this “too little” and request more measures.
- I want to underline:
- All the measures described above are foreseen to be financed from the existing 2020 budget without using the 2020 Crisis Reserve. This is good news for farmers since it means that farmers do not pay the crisis measures.
- There are some calls to use the 2020 crisis reserve [EUR 478 million].
- We all know what that would mean: farmers would not get reimbursed for this year’s cut in their direct payments for financing the 2020 reserve. The timeline is also extremely complicated and all the process makes it close to impossible for the 2020 crisis reserve to be used.
- Looking now beyond 2020 and hearing your calls for further action, I want to reiterate the context we are all facing.
- While the Commission will continue to stand ready to support farmers where necessary, it would not be straight-forward at all to accept that direct payments must be cut in order to do so.
- As regards the budget of 2021, the Member States` direct payments ceilings and market expenditure are already above the EAGF ceiling in the MFF. So, a financial discipline cut is anyway already needed in 2021.
- In case a part of the costs of the storage measures will fall in the 2021 budget this will increase the required financial discipline.
- Therefore, it is paramount to have a sufficient budget for the CAP, with a focus on the first year to address the most urgent needs. The sooner we have clarity on a strong crisis package in the MFF, the sooner we can together start working on the necessary measure to address the crisis.
- The COVID-19 crisis provoked some disturbances in certain agricultural markets to which the European Commission was quick to react with the adoption of two packages of measures to support the sector. We continue to closely monitoring the situation.
- The Commission is aware of the calls that have been made in this context at national level to consume local agri-food products. It should be noted that these calls were made even though no enduring supply problems, food shortages or sustained increases in food prices have been observed in Europe since the inception of the current crisis. The Commission underlines the importance of the Single market for our food security.
- The measures in place will help the market and they have been very well received by most of you – thank you for your support – by the European Parliament and stakeholders. I particularly thank you for having given very strong positive opinions in your votes on all the implementing regulations proposed by the Commission.
- I insist on the necessity to implement all these measures as soon as possible to establish market stability and farmers confidence in those sectors most affected by the crisis. This means agreeing with the delegated acts as soon as possible under the scrutiny procedure.
- There are already first signs that the market is in parts recovering. The price drop for some dairy and beef products has been stopped. Our CAP has proven to be very resilient in this crisis. We should recognise this success and build on it for the future.
- The combination of increased flexibility, market measures and the support to farmers’ liquidity through measures like increased advances, increased state aid, the use of remaining rural development funds provides farmers with unprecedented support to face this crisis.
- We need to make a rapid and extensive use of these measures put at your disposal to provide a quick response to the difficulties farmers are facing.
- This is what we could do in the current budgetary context. Activating the crisis reserve would mean: all farmers would be paying for further interventions in some sectors that are most heavily affected.
- Therefore, our joint way ahead should be to work on a strong 2021 budget
I am here today to listen carefully to you and to understand your views. Let me be clear: I will continue to do everything in my power to support farmers, their income and their ability to guarantee our food security.