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 New European Union Common Agricultural Policy to c

Brussels, 23 December 2004

From 1 January 2005, 10 Member States will introduce the fundamentalreform of the Common Agricultural Policy (CAP) agreed in June 2003. Thereform completely changes the way the EU supports its farm sector,offering EU farmers the freedom to produce what the market wants. Infuture, most subsidies will be paid independently from the volume ofproduction. These new "single farm payments" will be closely linked to therespect of environmental, food safety and animal welfare standards.Severing the link between subsidies and production will make EU farmersmore competitive and market orientated, while providing the necessaryincome stability. More money will be available to farmers forenvironmental, quality or animal welfare programmes by reducing directpayments for bigger farms. The changes will give consumers what they want,offer taxpayers more transparency and contribute towards moremarket-orientated world farm trade.

Commenting on the entry into force of the reformed CAP, Mariann FisherBoel, Commissioner for Agriculture and Rural Development said: ìThe CAP atthe beginning of 2005 is nothing like its popular caricature. The reformwill allow Europeís farmers to become true entrepreneurs. Our rural areaswill be offered a sustainable future, a chance to diversify and tocontribute to making Europe more competitive. The reform will allow us toplay to our strengths, producing world-renowned foods of the highestquality. And it sends out a strong signal to the world, boosting thechances of a successful outcome to world trade talks.î

The key elements of the new, reformed CAP in a nutshell:

* a single farm payment or single payment scheme (SPS) for EU farmers,independent from production; limited coupled elements may be maintained toprevent abandonment of production,

* this payment will be linked to the respect of environmental, foodsafety, animal and plant health and animal welfare standards, as well asthe requirement to keep all farmland in good agricultural andenvironmental condition ("cross-compliance"),

* a strengthened rural development policy with more EU money, new measuresto promote the environment, quality and animal welfare and to help farmersto meet EU production standards starting in 2005,

* a reduction in direct payments ("modulation") for bigger farms tofinance the new rural development policy,

* a ìfinancial disciplineî mechanism to prevent spending exceeding theceiling.

The SPS applies to the main market sectors, including cereals, meat andmilk. The tobacco, olive oil and cotton sector will be added to the systemin 2006.

Member States had the possibility to apply the SPS between 2005 and 2007.10 Member States decided to start on 1 January 2005. These MS are:Austria, Belgium, Denmark, Germany, Ireland, Italy, Luxembourg, Portugal,Sweden and the United Kingdom. The five other ìoldî MS (Finland, France,Greece, the Netherlands and Spain) will apply the SPS in 2006 while thetwo ìnewî MS who opted for the SPS, Malta and Slovenia, will start in2007.

In the 8 other new Member States the ìSingle Area Payment Schemeî (SAPS)applies. This means that uniform per-hectare entitlements are grantedwithin any one region from regional financial envelopes. These new MS willapply the SPS from 2009 at the latest.

Further information on the reform is available on the internet at:http://europa.eu.int/comm/agriculture/capreform/index_en.htm

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