In the 2005 general budget of the European Union, about €50 billion, amounting to 45 per cent of the budget, was spent on agriculture. Agricultural expenditure has always been the subject of debate in the EU, and a cursory reference to these figures might suggest that nothing has changed as far as this issue is concerned.

However, this is not the case. In reality there have been many significant changes in the way expenditure under the EU's Common Agricultural Policy (CAP) takes place. As a result of a series of important reforms, the old image of the CAP as a vehicle for over-production has become out of date. Of course clichés are hard to get rid of and some people will still think of "butter mountains" when the CAP is mentioned. However, this is no longer a fair representation of what happens in reality.

Price support measures and subsidies on produce are being steadily replaced by schemes for direct assistance to farmers. The most recent reform cycle was launched in 2003 with the introduction of the Single Farm Payment, which is now being phased in and which will ultimately account for up to 90 per cent of all direct support payments to European farmers.

The Single Farm Payment is not tied to current production levels. Instead it is based on past subsidy receipts and current land area. To receive it, farmers must respect strict standards of environmental protection, animal welfare and public health. This provides assistance to farmers but leaves them free to follow market signals instead of seeking to maximise their access to subsidies which distort the market. This approach also gives farmers an additional incentive to ensure a pleasant countryside, a clean environment and an enhanced level of food safety.

In the meantime, the Commission has launched and is intent on strengthening the 'second pillar' of the CAP, namely rural development policy. There are many rural areas in the EU which depend on agriculture but which have needs which go beyond it. The EU's rural development policy is specifically intended to address this broader perspective to rural communities. It is a strategy that calls for the application of a wide range of policy measures to facilitate the restructuring of the agricultural sector, encourage environmentally friendly land management, diversify rural economies and raise the quality of life in rural areas.

Speaking earlier this month during a seminar in Washington, DC, Agriculture Commissioner Mariann Fischer Boel stated: "We are deadly serious about having a CAP which can face up to the discipline of the international market and the expectations of the public. Uncompetitive industry shielded by a high level of internal subsidies and protection has no place in the future CAP. I intend to continue the process of separating support payments from production in the years ahead - applying the principle more fully where it is already in force, and extending it to other agricultural sectors."

Fruit and vegetables

Effectively, just two weeks earlier, the Commission had announced the extension of the CAP reform to cover also the production of fruit and vegetables to bring this sector closer into line with the rest of the already reformed CAP.

Fruit and vegetables account for 17 per cent of the total EU agricultural production. Up to now, EU assistance for a number of products within this segment still includes support to producers on the basis of the quantity produced, particularly that delivered to the processing industry. This kind of subsidy will be phased out and replaced by other forms of aid which will still provide assistance to the farmer but which should have a less distorting impact on the market.

This assistance will cover the inclusion of fruit and vegetables in the Single Payment Scheme. Land dedicated to growing fruit and vegetables will be eligible for payment entitlements under the decoupled aid scheme which already applies to other farm sectors. However, the greatest emphasis will be placed on providing further support to and through producer organisations.

Producer organisations are seen as the key instrument in the reform of the fruit and vegetable sector. As the name implies, producer organisations are intended to bring together producers of given fruit or vegetable products. Their main aim is to help stabilise prices and therefore incomes to farmers by organising supply and by working towards a greater balance and less fluctuations between supply and demand.

It is estimated that there are almost 1,500 producer organisations operating within the 27 EU member states. Some are very large, with thousands of growers participating in them, with combined sales totalling millions of euros. However many of them are very small, some with fewer than 10 members.

The inroads made by producer organisations vary considerably from one country to another. In a recent brochure published by the Commission it is stated that whereas producer organisations in Belgium, Ireland and the Netherlands account for over 80 per cent of all fruit and vegetable production in these countries, the equivalent percentage for Poland stands currently at under 10 per cent.

Hence one of the goals of the intended reform is to give even more impetus to producer organisations such that they may achieve in all of the member states the same success they have already shown themselves capable of achieving in a number of countries.

In the words of Commissioner Fischer Boel: "Firstly, we must address the structural problems faced by the fruit and vegetable sector, by reinforcing efforts to tackle fragmentation. Membership of Producer Organisations must be made even more attractive." Towards this goal, the rules governing the establishment and operation of producer organisations will be simplified and they will be given greater flexibility in carrying out their intended functions.

Crisis management

Producer organisations will also be given a more important role in the implementation of measures intended to address situations of crisis management. Fruit and vegetable production is particularly prone to market crisis caused, among other things, by climatic fluctuations and pests. The Commission has identified a number of specific crisis management responses which could be managed directly by the producer organisations, if these were to choose to do so. This includes also harvest insurance schemes and other financial instruments which could be applied in support of producers in particular circumstances.

However, the proposed fruit and vegetable reform does not focus only on production but also on consumption. Fruit and vegetables are known to be essential facets to a healthy diet. And yet, in the great majority of EU member states, consumption of fruit and vegetable lies well below the consumption levels recommended by the World Health Organisation.

For this reason there is a specific provision, in fact a declared objective, to provide assistance to producer organisations to help them promote the consumption of fruit and vegetables in their localities. This will include initiatives to help improve the quality of their produce, schemes for the classification of produce and assistance with improved presentation and labelling.

If this particular objective could be achieved, it would improve public health while promising the fruit and vegetable sector a sustainable long-term future.

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