Marek Sawicki

After 2013 the Common AgriculturalPolicy (CAP) should better stimulatethe continued development ofagriculture and the rural areas in theEU. However, if this objective is to beachieved a deep reform of the policyis needed. Polish experience, as wellas an analysis of the situation inagriculture across the EU, shows thatthe CAP is too complex; in realitythere exist 27 different versions of theCAP, one for each member state. Theadoption of different direct supportschemes has lead to a situation wherethere is neither equal competitionconditions between Member Statesnor between individual farms. If thereis to be the continued building of asingle market, EU agricultural policymust be subjected to more uniformrules, and it must be simplified. If it isnot, an adverse split between the

EU-15 and the EU-12 will be preservedfor many years to come, andEuropean agriculture will no longerbe competitive on internationalmarkets. Under these circumstancesthe entire European Union loses out.

The CAP in Poland

Poland, when it joined the EU,adopted a CAP which had alreadyundergone fundamental reform in1992, 1999 and 2003, which resultedin reduced price support and anincreased role for direct support, andplacing at the same time a growingemphasis on rural development.

The Accession Treaty defined a longperiod of ten years for phasing-indirect payments in Poland, whichresulted in a need for ComplementaryNational Direct Payments (CNDP).The Polish CAP is characterised as alsohaving a significant focus on supportfor rural development; the share ofthe second pillar in the Polish CAPenvelope for 2007–13 amounts toalmost 50 per cent of the total (the EUaverage is around 23 per cent).

In order to facilitate effectiveadaptation to new market conditionswhilst implementing the CAP, simplesolutions which least distort marketsignals were favoured. As a resultPoland was the first to opt for theintroduction of a simplified system ofthe Single Area Payment Scheme(SAPS). Polish priorities under thesecond pillar of the CAP weremodernisation and restructuring, as

this enabled acceleration of a processof catching up with the EU-15 agri-food sectors which had used the CAPinstruments for much longer.

The EU accession also requiredimplementation of a new series ofveterinary, sanitary, phytosanitary andenvironmental protection rules andregulations. In this context, directpayments played an important role asthey partially compensated the costsincurred by agricultural producersfor the costs of adjustment andbecoming compliant with the EUrequirements related to agriculturalproduction (such as standards of goodagricultural and environmental condi-tions under cross-compliance, GAEC).

Accelerating positive change

The CAP has undoubtedly acceleratedthe adjustment of the Polishagricultural sector. It has alsosignificantly contributed to improvingthe living conditions of farmers andrural inhabitants. The disparity betweenagricultural incomes and averagesalaries in the national economy hasclearly decreased. However, thedifferences between agriculturalincomes in Poland and the incomes inother sectors are still considerable, andmuch higher than in the EU-15.

Progress in raising education levels isencouraging. The percentage ofpeople with a higher education inrural areas has risen from 2.0 percent in 1996, to 4.3 per cent in 2002,and to 8.6 per cent in 2007. It

Guest EditorialPolish Vision of the CAP after 2013: Against aBackground of Economic Transformation andEU Membership

La PAC apres 2013 : la vision de la Pologne dans un contexte marquepar la transformation economique et l’adhesion a l’Union europeenne

Die polnische Vision der GAP nach 2013 vor dem Hintergrund vonwirtschaftlicher Transformation und EU-Mitgliedschaft

Marek Sawicki, Polish Minister ofAgriculture and Rural Development.

04ƒEuroChoices 10(2) ª 2011 The Author

EuroChoices ª 2011 The Agricultural Economics Society and the European Association of Agricultural Economists

continues to grow. It is apparentfrom surveys conducted to monitorthe use of direct payments that asignificant part of the support,especially to medium and smallerfarms, is allocated for education andother non-consumer goods andservices which significantly affects thesustained improvement of quality oflife for these farming families.

The effects of restructuring andmodernising the agri-food sectors arealso noticeable. The process ofconcentration of production hasaccelerated, and most sectors havebeen modernised using the ownresources of farmers, processors,foreign capital, as well as the EUfunding. The dairy sector serves as agood example. In the mid-1990s, circa900,000 farms supplied milk toapproximately 400 dairies, most ofwhich were cooperatively owned.Currently, the number of dairies hasdecreased by half, and modernisedprocessing plants exportapproximately 20 per cent of theirproduction. In the meantime,however, circa 70 per cent of farmsstopped milk production, losing a

regular income which significantlyincreased the social costs of thereform of the sector.

An investment recovery, which beganin 2003, has continued to this day. Inthe period 2006–10 averageinvestment in the food processingsector amounted to approximately €2billion per year, a real increase of 40–50 per cent compared to 2000–02.The effort of attracting well-targetedand well-coordinated investment hashad an impact on the growth ofcompetitiveness of the Polish agri-food sector. It is also reflected in thetrade results, as well as in the qualityand diversity of Poland’s exports. Theshare of agri-food exports in Polishtotal exports has increased from 8.4per cent to 11.3 per cent. In 2003Poland became a net exporter of agri-food products, a situation maintainedeven in the recent financial crisis. Inthe period 2003–10, a more thanthree-fold increase was recorded in thevalue of exports in this sector, from€4 billion to over €13 billion today.

Polish food combines traditional andmodern production methods. It is notonly attractively priced, it is above allof good quality, and is produced safely.Tasty traditional varieties of fruit andvegetables, traditional technologies ofanimal husbandry (for example oat-fedgeese, traditional pig feeding), as wellas traditional processed products, suchas vodka or bakery products withtraditional flavours are all combined ina modern industry and result in a verycommercial trade offer.

The agricultural sector inPoland

Currently, 14.7 per cent of the totalnumber of people employed in Polandwork in the agricultural sector (threetimes more than the EU average). Theshare of agriculture in GDP in 2010was 3.7 per cent. Polish agriculture ischaracterised by its regional diversity,in particular in terms of its agrarianstructure, including the size and thenumber of farms. The average farmsize in the north of Poland is about 18hectares, whereas in the south it is lessthan 4 hectares. For comparison, theaverage farm size in the EU rangesfrom 5 hectares in Greece to 70hectares in the United Kingdom.

ƒ‘‘La methode

actuellement utilisee

pour distribuer les

paiements directs n’est

pas acceptable.,,Poland has the second largest numberof farms among Member States (afterRomania). It should also beremembered that Polish agricultureand its agro-industrial sectors beganthe process of transformation from acentrally planned to market economywith a large number of smallbusinesses – family farms, processingplants and sales outlets. At that time itwas conducive for the creation of aworkable market system as itpromoted competitive behaviour,though the rules of competition andmarket links were only emerginggradually. Undoubtedly, small familyfarms played an important role inbuffering the labour market, makingeasier the adjustment of other sectorsof the economy, and reducing thealready high social costs of systemtransformation. Today, these samefarms perform important public, eco-nomic, social and cultural functions,and they make the rural areas viable.

The competitiveness of Polishagricultural production, and its strongexport position, is largely determinedby medium and large farms, of whichthere are almost 800,000. Their

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EuroChoices ª 2011 The Agricultural Economics Society and the European Association of Agricultural Economists

importance in Poland is steadilygrowing. In the early 1990s, thegroup of farms of more than 15hectares utilised 20 per cent ofagricultural land, by 2007 this hadrisen to 47.1 per cent. Comparedwith 2002, the average farm size alsoincreased (by 13 per cent), while thenumber of farms of 1–5 hectares hasdropped by nearly 23 per cent.

Despite these positive trends and anactive policy in this area, structuralchanges still present a majorchallenge for Polish agriculture, whichis the same as in many other EUcountries. This situation will changefundamentally only over a longperiod of years, along withdemographic and structural changesthroughout the economy.

Rural development in Poland

Poland is one of only a few EUcountries in which the balance ofmigration from cities to rural areas ispositive. The countryside is seen as anattractive place to live. Over 90 percent of the rural population claim theyare happy to live in the countryside.

ƒ‘‘Die Art und Weise,

wie die Direktzahlungen

im Moment verteilt

werden, ist nicht

akzeptabel.,,The new activities of ruralinhabitants: developing agro-tourism,promoting local products, andsupporting various cultural activities,encourage the preservation anddevelopment of the specificcharacteristics of Polish villages. Ruralinhabitants are making good use oftheir national and EU funds, but mostof all they are developing a newentrepreneurial spirit, demonstratinggreat creativity and showing initiative.They also support Europeanintegration; 85 per cent of the ruralpopulation supports the process.

Such multifunctional developmentrequires the further strengthening ofsocio-economic activities as well as

actions conducive to effecting positivestructural changes. The modernisingand restructuring processes in ruralareas have not yet been completed inPoland, and changing globalcircumstances present new challengeswhich also require continued,appropriate, adjustment. Given this, itbecomes apparent to most observershow crucially important anappropriate rural development policyis for both Poland and Europe.

Seizing the opportunity forreform of the CAP

In an era of globalisation andliberalisation of the rules of worldtrade at the WTO, Europeanagriculture is increasingly exposed tointernational price fluctuationsleading not only to theimpoverishment of consumers,growing hunger in the world and anincrease in the risks involved incontinuing agricultural activity. Bycontrast, the projected increase inworld food demand, as well as therising energy demand requires the EUagricultural sector to increase itsproductivity, while obeying theprinciples of sustainabledevelopment. Consumers at the sametime expect food to be supplied at areasonable price, that meets theirtaste expectations, that will behealthy and produced withoutharming the environment, usingtraditional or even organic methods.

Such diverse expectations can only beaddressed by the coexistence ofintensive agricultural production inregions with good conditions,supplying high added value productsto world markets, alongside smallerfarms which often operate in moredifficult conditions, but offer highquality food primarily to localmarkets. The strength and potentialof EU farms lie in the fact that theyprovide good quality food toconsumers from outside the EU, aswell as to local markets.

A new distribution of directsupport is needed

The CAP was originally created underdifferent circumstances and itsinstruments must undergo furtherevolution to remain relevant. A largepart of agricultural income all overEurope is derived primarily fromdirect payments which makes farmersrelatively passive and less inclined toaccept global conditions.

The current method of distributingdirect payments, which is derived fromhistorical levels of agriculturalproduction, is not acceptable.Decoupling means that today there isno justification for continuing supportbased on the level of production in thepast, because it does not reflect theobjectives set for the future CAP.Given the diversity in implementationmethods, the current system distorts

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EuroChoices ª 2011 The Agricultural Economics Society and the European Association of Agricultural Economists

competition within the single agri-foodmarket, thereby blocking thecompetitive potential of EU agriculturein the global market.

ƒ‘‘The current

method of distributing

direct payments is not

acceptable.,,Europe’s agricultural policy, on theother hand, should encouragefarmers to demonstrateentrepreneurship, it should supportcompetitiveness, and it should helpto ensure the preservation of therural environment for futuregenerations. It is, therefore, of keyimportance to link new objectivesand criteria for financial allocationand the level of direct support to theobjectives and tasks faced by the CAP.The introduction of a fair distributionof direct payments must not be anend in itself, but should be theconsequence of an overall reform.

The CAP benefits the entire EU

Are the CAP financing costs of 0.5 percent of the EU GDP too much, takingaccount of such societal expectationsand requirements? It is thought froma Polish view that the CAP budget inthe new financial perspective shouldremain at least at the current level.The EU agricultural policy must begiven a truly Community nature, tolimit the current, strongly diversified,policies implemented in MemberStates. This is important for tworeasons. First, to ensure a smoothfunctioning of the single market; and

second, because new tasks set foragriculture and the CAP, such asmaintaining biodiversity or mitigatingclimate change, can be viewed ascross-border public goods. Theassessments of costs and benefitsrelated to the CAP funding andcarried out at the level of Communityand of Member States should,therefore, take into account not onlybudgetary flows but also the indirecteconomic effects of this policy andprovision of European Public Goods.

The key to reform – thedivision of tasks between theCAP pillars

In addition to a budget appropriatefor the tasks to be undertaken, thereis also a need for deeper reflectionon the role of individual componentsof this policy after 2013. This includesthe need for a clearer division offunctions between components, andfor shifting the focus back towardspro-growth activities.

The first pillar of the CAP shouldcontinue to contribute to stabilisingeconomic conditions of farmsvulnerable to the effects ofglobalisation. It should also rewardthe farmers for meeting highEuropean production standards,including environmental protection,high quality, and production safety.

The second pillar should supportdevelopment and innovation to a largerdegree, and also actions that wouldallow any European farmer (bothowners of large farms and smallerfamily farms) to compete effectively oninternational and local markets.

Poland’s vision for the CAP consists,first of all, of a clear division of

activities within the two pillars. Thefirst pillar should be intended for‘compliant’ farmers, those who meetthe cross-compliance requirements,with payments set on the basis ofmeasurable and objective criteria,departing from historical references.The second pillar should be addressedto ‘active’, entrepreneurial farmers whodevelop their farms and pursue newCommunity objectives, thus increasingtheir competitiveness on the singlemarket and on the global agri-foodmarket. For this reason, Poland feelsthe need to financially strengthen thesecond pillar of the CAP, and tostrengthen it clearly throughout theentire EU. The Polish Ministry suggeststo other partners in the EU a pillarratio of 50:50. Such a change would bea realisation of a trend observed duringthe former reforms, as well as of pro-posals resulting from public debate andthe demands of several academic centres.

The suggestions concerning the futureof the CAP included in the legislativeproposals of the EuropeanCommission, whose publication isexpected in autumn this year duringthe Polish presidency in the Council ofthe European Union, will probably notsatisfy all parties. Nonetheless, theunderstanding is that ultimately, boththe EU Council and the EuropeanParliament will adopt solutionsresponding to the challenges, andmeeting the expectations of themajority of EU society. Poland, in theEU Presidency, will make every effortto ensure that negotiations over thefuture of CAP after 2013 continue inan atmosphere of responsible anddeepened reflection, conducive toreaching a compromise in 2012.

Further Reading

n Ministry of Agriculture and Rural Development (Poland). Agriculture and Food Economy in Poland. http://www.minrol.gov.pl/eng/content/view/full/18560

n Publications and Reports of the Institute of Agricultural and Food Economics – Polish National Research Institute. http://www.ierigz.waw.pl/index.php?idstr=204

n European Commission Agriculture and Rural Development. The Common Agricultural Policy after 2013. Public debate summary

report. http://ec.europa.eu/agriculture/cap-post-2013/debate/report/summary-report_en.pdf

Marek Sawicki, Minister of Agriculture and Rural Development of PolandEmail: marek.sawicki@minrol.gov.pl

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EuroChoices ª 2011 The Agricultural Economics Society and the European Association of Agricultural Economists

summary

summaryPolish Vision of the CAPafter 2013: Against aBackground ofEconomicTransformation and EUMembership

Polish and wider EU experiencesshow that the CAP is too

complex; in reality there exist 27different versions of the CAP. Differentdirect support schemes now meanthere is neither equal competitionconditions between Member States norbetween individual farms. If there is tobe continued building of a singlemarket, EU agricultural policy must besubjected to more uniform rules andmust be simplified. Poland’s vision forthe CAP consists of a clear division ofactivities within the two pillars. Pillar Ishould be intended for ‘compliant’farmers, those who meet the crosscompliance requirements, withpayments set on the basis ofmeasurable and objective criteria,departing from historical references;and Pillar II addressed to ‘active’,entrepreneurial farmers who developtheir farms and pursue new Communityobjectives, thus increasing theircompetitiveness on the single marketand on the global agri-food market.Assessments of the costs and benefits ofthe CAP at Community and MemberState levels should, therefore, take intoaccount not only budgetary flows butalso provision of European PublicGoods. The Polish Presidency will makeevery effort to ensure that negotiationsover the future of CAP after 2013continue in an atmosphere ofresponsible and deepened reflection,conducive to reaching a compromisein 2012.

La PAC apres 2013 : lavision de la Polognedans un contextemarque par latransformationeconomique etl’adhesion a l’Unioneuropeenne

Selon l’expérience de la Pologneet plus largement de l’Union

européenne, la PAC est trop complexe;il en existe en fait 27 versionsdifférentes. Le fait que les programmesde paiements directs soient maintenantdifférents signifie que les conditions deconcurrence entre États membres etexploitations ne sont pas égales. Si laconstruction d’un marché unique sepoursuit, la politique agricole del’Union européenne doit être sujette àdes règles plus uniformes et êtresimplifiée. La Pologne voit pour la PACune division des activités entre les deuxpiliers. Le premier pilier devraits’adresser aux agriculteurs «conditionnels », ceux qui respectent lesconditions d’éco-conditionnalité, avecdes paiements définis sur des critèresobjectifs et mesurables, autres que lesréférences historiques; et le deuxièmepilier à des agriculteurs entrepreneurs «actifs » qui développent leursexploitations et poursuivent desobjectifs communautaires nouveaux,améliorant ainsi leur compétitivité surle marché unique et sur le marchéagroalimentaire mondial. Lesévaluations des coûts et avantages de laPAC au niveau de la Communauté etdes États membres devraient doncprendre en compte non seulement lestransferts budgétaires mais aussi lafourniture de biens d’intérêt publiceuropéens. Lors de sa présidence, laPologne fera tout pour s’assurer que lesnégociations sur l’avenir de la PACaprès 2013 se poursuivent dans uneatmosphère de réflexion responsable etapprofondie, propice à la conclusiond’un compromis en 2012.

Die polnische Vision derGAP nach 2013 vor demHintergrund vonwirtschaftlicherTransformation undEU-Mitgliedschaft

Die Erfahrungen aus Polen undanderen Ländern der EU zeigen,

dass die GAP zu komplex ist; inWirklichkeit gibt es 27 verschiedeneVersionen der GAP. Die Unterschiedebei den Direktzahlungsprogrammenbedeuten, dass weder zwischen denMitgliedsstaaten noch zwischeneinzelnen landwirtschaftlichenBetrieben gleicheWettbewerbsbedingungen herrschen.Wenn der EU-Binnenmarkt weiterhinaufgebaut werden soll, müssen dieVorschriften für die Agrarpolitik der EUvereinheitlicht und vereinfacht werden.Die polnische Vision der GAP sieht eineklare Einteilung der Aktivitäten in diebeiden Säulen vor. Die erste Säule zieltauf ‘‘konforme’’ Landwirte ab, welchedie Anforderungen in Bezug auf CrossCompliance erfüllen. Die Zahlungenerfolgen auf der Grundlage vonmessbaren und objektiven Kriterienund orientieren sich an bisherigenWerten. Die zweite Säule richtet sich an‘‘aktive’’, unternehmerisch tätigeLandwirte, die ihre Betriebeweiterentwickeln und neue Ziele imSinne der Gemeinschaft anstreben.Somit erhöhen sie ihreWettbewerbsfähigkeit auf demBinnenmarkt und auf den Weltmärktender Agrar- und Ernährungswirtschaft.Bei der Festsetzung von Kosten undNutzen der GAP auf Ebene derGemeinschaft und der Mitgliedsstaatensollten daher nicht nurhaushaltsbedingte Geldströme, sondernauch die Bereitstellung öffentlicherGüter in Europa berücksichtigt werden.Die polnische Präsidentschaft wird sichnach Kräften darum bemühen, denVerhandlungen über die Zukunft derGAP nach 2013 einenverantwortungsvollen und wohlüberlegten Rahmen zu bieten, so dasshoffentlich im Jahr 2012 einKompromiss erzielt werden kann.

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EuroChoices ª 2011 The Agricultural Economics Society and the European Association of Agricultural Economists 2011