The European Commission will explore the possibility of pushing Common Agricultural Policy (CAP) monies into a genuine safety net for farmers.
Details of the Commission’s plans for the future of CAP where highlighted in a recent report – ‘Improving market outcomes – Enhancing the position of farmers in the food chain’.
The document highlights the possibility of shifting CAP resources to make it possible to develop and fund a strategic EU risk management policy.
This policy should be complementary to and coordinated with Member States’ systems for agricultural risk management and allow Member States the necessary flexibility to address their specific needs.
Farmers do not consider direct payments as ‘risk cover’
The Commission also says that farmers do not consider direct payments as a ‘risk cover’, and in situations of market crises producers ask for exceptional measures, as the existence of direct payments is not considered a crisis response.
The latest milk crisis is case in point: two solidarity packages, together worth €1 billion, have been adopted notwithstanding the existence of direct payments, it says.
To ensure that farmers are provided with risk cover, the Commission says that a resource shift should aim at introducing an integrated risk management policy at EU level.
This strategy will included a structured and coherent framework of complementary private and public risk management measures, it says, and such a framework could provide an adequate response to the variety of risks producers face.
What risks do farmers face?
The document cites two of the potential risks that farmers may face in the coming years, including risks related to agricultural production (yields and quality) and market prices.
According to the Commission report, risk management instruments can be put in place by both private and public parties, depending on the underlying market situation.
Already the European Commission’s current rural development ‘risk management toolkit’ is made up of three instruments.
The Commission’s Risk Management Toolkit:
- Financial contributions to premiums for crop, animal and plant insurance against economic losses to farmers caused by adverse climatic events, animal or plant diseases, pest infestation, or an environmental incident.
- Financial contributions to mutual funds to pay financial compensations to farmers for economic losses caused by adverse climatic events or by the outbreak of an animal or plant disease or pest infestation or an environmental incident.
- The ‘Income Stabilisation Tool’ (IST), taking the form of financial contributions to mutual funds that provide compensation to farmers for a severe drop in their income.