AGRYA

Agricultural & Rural Youth Association

The role of young farmers’ organisation in the CAP reform

Dr. Miklós Weisz

associate president

Topics

1. Young farmers’ status in the EU and in Hungary

2. About AGRYA

3. Needs for the CAP reform

4. Current activities

1. Young farmers’ status in the EU and in Hungary

Problems in the generation renewal

Test

• What is the percentage of young farmers below the age of 35 in Europe?

6%

• What is the percentage of older farmers, over the age of 65 in Europe ?

Over 34%

Test

• How many farmers are over the age of 55 in Europe?

Almost half of all agricultural workers are 55 years or older.

At EU-27 level there is appr. 1 farmer of less than 35 years old for each 9 farmers of more than 55 years.

• How many farmers are there over the age of 65?

More than 4.5 million farmers are over the age of 65 in Europe.

Participants in the Hungarian agriculture (2009)

Companies, co-ops: 13 352

Private producers: 626 420

Who apply for subsidies: ~ 180,000

Generations in agriculture

2000 2010

Young farmers (< 35): - 2,1%Farmers (35 – 54): - 5,3 %

Companies, co-ops

Management:

~ 53%: aged 50-62

~ 16-17 %: retired

Generation change without new generations

Support measures for generation changein RD Programmes

• Installation aid for young farmers

• Early retirement for old farmers

• higher support for some rural development measures +10%

European Agricultural Fund for Rural Development

Axis 1 Competitive-

ness

Axis 2 Environment

+ Land Managem.

NHRDP

2007-2013

Axis 4

LEADER

Axis 3 Economic

divers. +

Quality of life

48% 31% 12% 5%

Measure 112 rationale:• Against the context of an ageing agricultural labour

force, the future of the farmers’ profession must be ensured

• Young farmers can bring new skills and energy, and a more professional management to the farming sector

• Consequently, a high level of young farmers will lead to:

increased adaptability in the face of new challenges

higher labour productivity

For 2007-2013, a €5 billion total public expenditure is programmed

€2.89 billion EAFRD contribution and €2.11 billion National/Regional contribution

Measure 112 has been included in the RDPs of 24 Member States

– (not selected by Malta, Netherlands and Slovakia)

Highest total public expenditure programmed is €1.6 billion for France

Lowest total public expenditure programmed is €4.8 million for Germany

Source: European Commission – DG Agriculture and Rural Development

1.291.29%% 1.571.57

%% 0.030.03%%

1.341.34%%

2.402.40%%

3.343.34%%

2.982.98%% 0%0%

Installation aid in Hungary (2007-2013)

1. round: 2007. december 3. – 2008. február 7.

- 2.514 applications, from which- 1.465 won

2. round: 2009. szeptember 15. – október 31.

- 6.145 applications, from which- 906 won

3. round: 2011. autumn ??

Installation aid

• Non-refundable subsidy, the amount depends on the planned size of the farm (in ESU) in the 4th year:

- 4 - 6,99 ESU: 20 000 euro

- 7 - 9,99 ESU: 30 000 euro

- above 10 ESU: 40 000 euro

• 90% of the subsidy: advanced payment

• 10%: after reaching the farm size

Criteria for eligibility

• aged between 18-40

• first time farming (establishment of a new farm or take-over)

• agricultural education

• …

10 ESU – in hectares

2007(251,77 )

2008(253,73)

2009(266,7)

2009(mod. SGM)

2010(270,42)

2011(277,95)

Wheat 33 33,3 35 25,2 25,5 26,3

Maize 24,5 24,7 26 18,6 18,9 19,4

OSR 29,7 30 31,5 27,7 28 28,8

Grape 8,5 8,6 9 7,1 7,2 7,4

Early retirement

1. round: 2007. december 3. – 2008. január 15.

61 applications, 36 won

2. round: 2010. március 1-31.

71 applications, 46 won

NHRDP: 4.500 was planned!

(In Germany: 17.000)

What are the hindering factors to be a farmer?

What do you think?

The most important difficulties

Access to credits

Access to subsidies

Red tape

Price volatility

Training

Other

Access to land

Access to land

High installation costs

Estimation of Profitability

Enough for subsistence

Average living standard

Extra living standards

Intention for Diversification

In the next 5 years: 93% plans

Processing

Services

Tourism

Bio E production

Other

2. About AGRYA

• generation based (<40 years old)• national• non-political• agricultural (and rural) association

In connection with more than 3,000 Hungarian young farmers

Since 1996

AGRYA Members

• From the whole country

with different activities:- Crop production

- Animal husbandry

- Horticulture

- Organic Farming

- Alternative activities (rural tourism, bio energy, food processing,…), Innovative projects

Farming and selling

• General problems: boom and bust, price volatility, financing,…

• And special ones:Generation change, farm installation, structural problems,…

Selling is rather done individually, but co-ops are forming

Aims of AGRYA

• To protect and represent the interests of young farmers in Hungary, and in international organisations.

• To organise vocational programs for its members helping their farming

• To prepare & develop young farmers for the changes and challenges connected with the EU membership

• To protect agricultural and cultural traditions, and to strengthen rural areas

Main ActivitiesConferences

Young Farmers’ Annual Conference

Young Farmer Club discussions

www.agrya.hu

Call Center

Representative work

• Participation in national boards (MRD - VM)

• Rural Development Programme – Planning

• Rural Development Programme – Monitoring Committee

• Hungarian National Rural Development Network

„Second Wave” Programme

For new members

From the younger generation (aged 18-25, mainly farmers’ children)

- Vocational trainings

- Study trips

To strengthen their inherence with agriculture

International activities

CEJA (2004-)

RYE (2006-)

Exchange programmesInternational Projects (Citizenship, Youth, Leonardo)

Central European Rural Youth Co-operation – CERYC

Sloven – Czech – Polish – Slovak – Romanian – Bulgarian – Hungarian

Cooperation programme

Regional cooperation:- Similar problems – similar solutions- common representation in international organizations- best practices, references- media appearance

„The most innovative young farmer in Europe – 2006”AGRYA delegate

Kamilla Kesjár - finalist „Most Innovative Young Farmer in Europe - 2008”

Strategy

„Build-up a Community

With Professional Work”

Presidency

Altogether 7 members

+ National Office

Running projects

„Grow your own”

- Vegetable seed to 2000 children

- Competition: photos, blog, web-page

- Key words:

local production, self-sufficiency

value of own work, responsibility

Running projects

Rural Adventure

• Youngs from cities:

one week on a farm

• Work together with the young farmer

• Competition: blog, photos, Facebook, Twitter

3. Needs for the CAP reform

Foundation of the CAP

1957 Treaty of Rome

agriculture a special concern:

- low incomes and declining rural areas

- high share of employment and of consumers expenditure

- food security

- strong political lobby

CAP Objectives

Article 33 of the Treaty of Rome - increase agricultural productivity to ensure a

fair standard of living for agricultural producers- stabilise markets- assure availability of supplies- ensure reasonable prices to consumers

CAP principles

• Single market: free trade in agricultural products;

• Community preference: a preference for products from the EU (by discouraging imports);

• Financial solidarity: regarding the CAP, all members have to pay

CAP objectives and tools

Objectives• Increase Productivity• Standard of Living• Stabilize Markets• Guarantee Supply• Reasonable consumer

price

Tools• Direct Support• Intervention prices• Export subsidy• Consumer Incentives• Import levies

Mechanisms to achieve these Objectives

Isolate the EC Market from competing imported products

EC MarketWorld Market

World Market

Set high target prices which the regulator hopes the farmer will receive

TARGET PRICE

Set a Low Intervention Price at which the Regulator will always purchase

TARGET PRICE

INTERVENTION PRICE

Market Functions within the Ceiling and the Floor:

actual prices vary according to supply and demand

TARGET PRICE

INTERVENTION PRICE

If there is too little supply and prices rise too much, then the border protection is changed to

allow for supplies from outside

INTERVENTION PRICE

TARGET PRICE

Tariffs are lowered or supply is increased through TRQs

If there is too much supply then the regulator intervenes to withdraw products from the market

TARGET PRICE

INTERVENTION PRICE

Subsidies for sales on the world market

53

Tariffs are lowered or supply is increased through TRQs

CAP impact

– farmers responded by intensifying production in supported sectors

– surpluses required increasingly heavy expenditure - grain and butter mountains, wine lakes, cost of export refunds etc

– friction with other suppliers to the world market who were not so reliant on subsidy - EU accused of dumping subsidised products on LDC

– in some cases intensification of agricultural production led to environmental damage

Benefits from the CAP

Self-sufficiency of food supplies in the Community - agricultural output increased greatly.

Food security was assured. Agricultural markets were stabilised. Farmers enjoyed a fair standard of living -

although large farmers and farmers in the North of Europe benefited most from this situation.

What went wrong?

Guaranteed prices - overproduction; Problem of surpluses began to emerge; Big farmers produced more and thereby earned

more money; small farmers needed assistance earned less;

In order to increase output - soil with excessive amount of fertilisers, herbicides: environmental problems

Quotas, levies, tariffs in agricultural trade - problem for exporters to the EC and to promote open trade and further liberalisation.

Dumping on world markets distorted prices and antagonised non-EU producers.

Consumers however lost out - high food prices

Historical development of the CAP

Reducedsurpluses

Environment

Incomestabilisation

Budgetstabilisation

Food security

Improvingproductivity

Market-stabilisation

Incomesupport

Overproduction

Explodingexpenditure

Internationalfriction

Structuralmeasures

Deepening the reform process

Competitiveness

Rural Development

Market orientation

ConsumerConcerns

Ruraldevelopment

Environment

The Early Years

The Crisis Years

The 1992Reform

Agenda 2000

ProductivityCompetitiveness

Sustainability

CAP Reform2003

Milestones of the CAP

1957: Treaty of Rome

1968: Common Market Organizations

1984: Supply control (dairy quota, set aside)

1992: Mac Sharry reform: price reductions and compensatory payments (area; livestock)

2003: Single Payment Scheme, Cross Compliance; Rural Development Policy

Expenditures of the EU in 2000

Structural Funds 36,10 %

CAP 45,23 %

Monetary reserve 1,03 %

Common Policies 6,26 %

External actions 6,76 %

Administration 4,62 %

EU Budget 2009Chapter Target Paying Difference to the

2007-2013

1a Sustainable growth: competitiveness

11.762.497.000 11.060.385.024 9.503.000

1b Sustainable growth: cohesion 48.426.884.669 34.975.134.166 1.115.331

2 Natrural resources (agriculture and rural development)

56.121.437.011 52.583.314.070 3.517.562.989

3a Freedom, security and justice 863.925.000 617.440.000 8.075.000

3b Citizenship 650.963.000 680.660.000 37.000

4 The EU as a global partner 8.103.930.360 8.330.886.836 - 419.930.360

5 Administration 7.639.129.321 7.639.129.321 137.870.679

6 Compensation to Bulgaria and Romania

209.112.912 209.112.912 887.088

Reasons for CAP reforms

EU net agricultural importer > net exporter

Surpluses and increasing expenditure in 1970s & 80s

Changing needs and wants of society

Other roles of private and public sectors

WTO-negotiations and EU-enlargements

CAP policy areas today

CommonAgricultural Policy

(CAP)

Food Environmental function

Rural functionMultifunctional agriculture

1. Pillar:

- Market measures (sugar, wine, fruit & veg, etc.)- Direct payments (“decoupled“ from production)- Cross Compliance standards

2. Pillar:RuralDevelopmentPolicy

Modulation

The policy issues in a nutshell...The policy issues in a nutshell...

Direct payments

Adjusted SPS

GAEC

Markets

Price support/Quotas reform

Safety net ?

Rural development

Axis 1(structural

adjustment)

Axis 2(environment)

Axis 3(territory and

diversification)

Phase-out ? Revenue insurance ?

Phase-out ?

Income

Struct

ural

adju

stm

entPublic

goods

Future ?

CAP expenditure and CAP reform path

0

10

20

30

40

50

60

70

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

% GDPbillion €

0,0%

0,1%

0,2%

0,3%

0,4%

0,5%

0,6%

0,7%

Export subsidies Market support Direct aidsDecoupled payments Rural development % of EU GDP

EU-10 EU-12 EU-15 EU-25 EU-27

4. Current activities

Young farmers and the CAP reform

Who is the new CAP made for?

Young farmers and future CAP

CAP ++

food security, high quality food production, landscape and biodiversity conservation, animal welfare, development of rural areas,…

CAP – –

environmental problems, high expenditures, international trade aspects, complicated, bureaucratic system,…

Young farmers and future CAP

• to moderate the risks of producers and consumers (risk management, guarantee systems)

• Remuneration of public goods

• Simplification of CC

Young farmers and future CAP

EU-10: serious development and modernisation needs

- sustainment of the CAP first and second pillars - sustainment of the current co-financing ratio - area based payments rather than historical based ones

Pillar I: fair distribution, top-up Pillar II: maintenance of measures which serve the

improvement of competitiveness and structural changes

We want a CAP which…

• is financed in a sustainable way, • meets the international requirements,• is transparent and fair, • simplified,• respects the environmental, consumers’ and

farmers’ interests

Instead of a radical reform, a long-term, common interest-based programming is necessary.

72

CEJA

A non-profit organisation which represents young farmers’ interests towards the EU

institutions• Defends and promotes the interests of YF to EU

stakeholders

• Inform YF on agricultural topics at the European level

• Knowledge exchange through seminars and conferences

• Establishing common positions to deliver to policymakers

• Lobbying in Brussels arena

History of CEJA

• Founded in Rome, Italy in 1958• Originally: 6 members of the EEC• Current: 28 member organisations and 1

observer member from 22 Member States• The voice of more than 1 million European

Young Farmers

73

28 member

organisations

from across

Europe

74

CAP towards 2020 must address renewal of generations

• Young Farmers prioritised with strong installation policy (Young Farmers Package)

• Reform of model of payments

• Targeting ‘active farmers’

• Public goods and environmental services

• Market measures and safety nets

• EU protein plan

Young Farmers Package

• Installation aid compulsory across EU

• Top up payment in Pillar 1

• Revised rate of co-financing 80/20% in Pillar 2

• Young farmers reserve fund

• Knowledge vouchers

• Early retirement schemes

• Educational exchange programmes

Source: Brian Fuller et al.:‘Greening’ the CAP

The „new way” of the CAPThe „new way” of the CAP

CAP post 2013 reform

78

2010 2011 2012 2013 2014

BE HU PL DK CY IE LT EL

18/11/2010 May 2011 late 2011 End 2012 01/01/2014

Communication Legislative proposals

CAP2020

EU Council

EU Commission

EU Parliament EP plenary vote of budget review

?

Agreement between Parliament and Council

Implementation

Would you start again?

Absolutely

Maybe

In no way

Thank you for your attention!

Contact:

AGRYA1138 Budapest, Váci út 134/C.

agrya@agrya.hu tel./fax: +36 1 3200 429