News last update:6 Aug 2012

CAP Health Check becomes more clear

The European Union has launched its next re-think of the Common Agriculture Policy, but Europe's livestock industry is already looking—and finding—areas of concern.

Known as the "CAP Health Check ," much of the main focus will be on further simplifying how farm payments will be made under the Single Payment Scheme and further decoupling in the livestock sector.

According to Frans van Dongen, international director of the Dutch Product Boards for Livestock, Meat and Eggs, though there are no direct premiums for pigs or poultry, some indirect premiums are still tied to land ownership for arable crops—for those producers who make their own feed. During the Health Check, those premiums may be reduced or eliminated, but most countries have already chosen to decouple those during the first part of the CAP reform.

Arable crops
"One likely aspect to appear in the proposals is the initiative to abolish set-aside for arable crops. Considering this past campaign with such a tight demand supply situation on world markets, very high prices and now new demand linked to the energy sector in biomass, it would seem sensible to mobilise all EU agricultural land. It is anticipated this initiative would result in 10 to 17 million tonnes of cereals made available on the market which would also assist in increasing closing stocks," said June Pearson, Head of Policy for the Grain and Feed Trade Association (GAFTA ). This is good news for pork and poultry producers, says van Dongen, because of recent increases in feed prices that is puting pressure on many livestock producers this year, something which isn't likely to ease in the short term. "On cereals intervention, it is expected that the Commission will gradually phase out the intervention system. Considering the last campaign with short supplies, intervention has become obsolete," she said.

Biofuel impact
For the pigmeat and poultry industries, one of the biggest knock-on effects from the Health Check will be from the new focus on biofuels. The EU's desire to boost biofuels use to 10% by 2020 would likely put pressure on cereal producers to increase production, especially with the elimination of set-aside likely to come out of the Health Check. "Focus has moved away from the livestock sector as a main customer for cereals towards energy markets and biofuels, emerging as a new competitor for the same resource. We need to have a debate on how to maintain a balance. I always say food and feed should come first as cereal supplies are strategic for the EU", says Alexander Doring, Secretary General of the European Association of Animal Feed Compounders (FEFAC ).

Initial ideas from the European Commission on how the CAP could be improved were launched Nov. 20 with legislative proposals expected in May. Between now and the end of 2008, Brussels will be alive with trying to find a compromise among all agriculture sectors while working towards tightening the CAP after the 2003 reform.

Related news:
New EC proposals will affect agriculture

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