CAP agreement welcomed by European food industry

- Last updated on GMT

Related tags: Common agricultural policy, European union, Eu

Last week's agreement on reform of the Common Agricultural Policy -
even watered down as it was - has been welcomed by the EU's food
and drink manufacturers as a step in the right direction.

Last week's agreement on reform of the Common Agricultural Policy - even watered down as it was - has been welcomed by the EU's food and drink manufacturers as a step in the right direction.

The CIAA (Confederation of the Food and Drink Industries of the EU), which represents manufacturers across the 15 Member States, said that the agreement reached by EU Agriculture Ministers late last week represented a major breakthrough for the agri-food sector.

While Agriculture Commissioner Franz Fischler's ambitious plans to scrap subsidies for farmers producing too much food were not adopted, mainly because of the refusal of France - the biggest beneficiary of the CAP - to accept such a hard line, the subsidy system will nonetheless be changed, with farmers (for the most part) receiving single payments which are not linked to production levels.

With the old system effectively scrapped, the agreement will improve the EU's position in WTO negotiations, the CIAA said, in turn obliging other WTO trade partners to make a step towards a possible compromise.

"The agreement is in line with the long term objective of the EU food and drink industry to promote a competitive, efficient and more sustainable agriculture in Europe,"​ said Jean Martin, president of the CIAA​.

The decoupling provisions - not linking subsidies to production levels - represent a decisive step towards opening the European agricultural sector to market forces, Martin said.

"The CIAA welcomes the fact that the payment of decoupled aid will be linked to the respect of EU regulatory requirements and of good agricultural conditions and supports the reinforcement of rural development measures,"​ Martin said.

But he warned that there was still some work to be done, with the CAP remaining an extremely cumbersome piece of legislation to manage. He also highlighted the fact that alterations to the rules at a national level could possibly lead to a reduction in competition in some EU countries.

The food and drink industry is the largest industrial sector in Europe with a production value of over €600 billion and 27,000 companies, mainly SMEs. The food and drink industry uses and transforms about 70 per cent of the agricultural produce grown within the EU, and as such has been campaigning for a reduction in subsidies which keep product prices artificially high.

Related topics: Market Trends

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