Explanatory Memorandum to COM(2013)812 - Information provision and promotion measures for agricultural products on the internal market and in third countries - Main contents
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| dossier | COM(2013)812 - Information provision and promotion measures for agricultural products on the internal market and in third countries. |
|---|---|
| source | COM(2013)812  |
| date | 21-11-2013 |
The production of and trading in agricultural and agri-food products are a major asset for the European Union. Accounting as it does for 18 % of world exports and 20 % of world imports, the Union can claim to be the world's number one importer and exporter of agricultural products, jockeying for position with the United States. Within European manufacturing, the agri-food sector is a front-runner, providing 13.5 % of jobs and contributing 12.9 % of total sales. It is made up of 310 000 enterprises, 99.1 % of which are SMEs. Over the years, the European sector has focussed on quality and added value, offering processed products which are increasingly popular in Europe and worldwide. These products account for more than two-thirds of total EU agricultural exports, but still have considerable development potential.
It is crucial that European agriculture and the agri-food industry, which is closely dependent on the former, maintain and increase their competitiveness and their market shares on both the internal and export markets, while ensuring that undertakings entered into by the EU in its international trade relations are met. However, European agriculture is faced today with a much more competitive environment, largely resulting from the globalisation of markets. This trend should continue in the coming years with the prospect of the Doha round and various bilateral and regional agreements currently under negotiation being concluded. Though often feared, these agreements might also give rise to major opportunities for the sector.
Nevertheless, on the internal market only a small minority of European consumers are aware of the efforts undertaken by European farmers to supply high-quality, healthy and safe products. Only 14 % of Europeans recognise the logos of products that benefit from a protected designation of origin (PDO) or a protected geographical indication (PGI), these being the main European quality schemes established by the Union. The same goes for exports: the effort of investing in marketing and selling on distant markets represents a challenge for a sector essentially made up of SMEs and indeed micro-enterprises.
This situation is without doubt a challenge for European farmers, but it also opens up prospects which should be given effective support, in particular using CAP instruments. This is because the success of European farming will depend on its ability to increase its market shares and to enable the highly competitive food industry to maintain its prominent position in the EU in economic and trade terms.
This context calls for a modern and ambitious policy of promotion, one which learns from the lessons of the promotional programmes implemented to date and which represents an additional stage in the modernisation of the CAP. The objective is to support agriculture, and especially the SMEs and producer organisations which form the backbone of this sector, so that they can make a strong and dynamic contribution to European growth for the Union as a whole, and in particular for its rural areas. This requires a policy of promotion which is restructured for its beneficiaries (producer, professional and inter-professional organisations, both at national and European level), which is bolstered in terms of the resources available to it, and which distinguishes in terms of its approach between the internal market and third-country markets.
This proposal, which provides for a gradual but significant increase in the budget allocated to promotion measures, will be financed from appropriations already earmarked for the EU's Common Agricultural Policy for the period 2014-2020. This expenditure is estimated on the basis of the opportunities to be seized in third countries as a result of growing demand, e.g. in Asia where, by 2050, for ASEAN member countries alone, agricultural imports are expected to increase by over 17 billion dollars.
As well as growing demand from emerging markets in particular, which are already very important for the EU's agri-food exports, our access to markets will improve globally with the conclusion of the numerous trade negotiations that are currently under way. The free-trade agreements currently being negotiated represent markets with a present value of around € 35 billion per year for the European agri-food sector. The acceleration in demand and liberalisation of substantially all trade through these negotiations will probably make it possible for this figure to be very significantly increased. For example, by 2027 an ambitious free-trade agreement with the United States could increase the EU's agricultural exports by around 15 % (over € 1.7 billion per year) and its exports of processed agricultural products by 45 % (over € 13.4 billion per year). An ambitious free-trade agreement with Japan could increase agri-food exports by 137 % in the long term (over € 5.9 billion per year).
This is therefore a strategic and pivotal opportunity for the European agri-food sector that should, given the importance of European SMEs in this sector, be seized through an ambitious and innovative policy. These enterprises need support, expertise and encouragement to exploit this major opportunity. This requires a far-reaching public policy, equal to this opportunity. The amounts included in this proposal will enable this policy to be established in a credible fashion in the coming years.
The Common Agricultural Policy (CAP) enables the potential of the European agricultural and agri-food sector to be released and exploited. A reform is under way which will ensure, after 2013, that this policy feeds directly into the Europe 2020 Strategy for smart, sustainable and inclusive growth by promoting an agricultural sector which delivers food security, a sustainable use of natural resources and more dynamic rural areas. In parallel, reform of the policy for information provision and promotion measures for agricultural products, one of the instruments of the CAP, is also needed.
As a CAP tool, the European policy for the promotion of agricultural products must pursue the objectives of CAP reform up to 2020, and more particularly the objective of strengthening the competitiveness of European agriculture both on the internal market and in third countries, focussing on the following specific goals:
– Increasing the level of awareness among consumers of the merits of European agricultural products;
– Developing and opening up new markets for European agricultural products on the internal market and in third countries;
– Enhancing the effectiveness and efficiency of the policy.
In the CAP context, Union support relating to information provision and promotion measures for agricultural products has evolved. Before 2000, information provision and promotion measures were organised at sectoral level. In 2000 the sectoral measures were merged together to form a horizontal scheme. From 2000 to 2007, these activities were governed by two distinct Regulations, one relating to the internal market and the other targeting third countries. Since 2008, these two approaches have been merged into a single horizontal scheme (Council Regulation (EC) No 3/2008[7] and Commission Regulation (EC) No 501/2008[8]), but without any significant changes to their content.
This proposal enables information provision and promotion measures necessary for the agricultural sector to be able to rise to the many challenges it faces in a context of growing competition and opening-up of markets to be implemented on the internal market and in third countries. The success of European agriculture will depend on its ability to increase its market shares and enable the highly competitive food industry sector to maintain an important position in the EU’s trade and economy (with the food chain accounting for 6 % of the Union's gross domestic product (GDP)).
Measures will follow a European information and promotion strategy which identifies priorities on markets and products or messages to be highlighted (e.g. products with high added value), while taking account of free trade agreement negotiations and the most profitable markets and avoiding a fragmentation and dispersion of funding. A rebalancing of measures targeting third countries is also expected with this proposal.
In order to raise the number and quality of measures in a manner that is consistent with the 2020 CAP reform, which encourages farmers to organise themselves, the scheme should be opened up to new beneficiaries, such as producer organisations.
The best return on investment should also be sought for these measures, and strict guidelines should be established as regards the possibilities of mentioning the origin of products or brand names as a means of illustrating the main generic message highlighting the intrinsic characteristics of European agricultural products.
The programmes submitted by operators from different Member States make a substantial contribution to European added value. They promote the diversity of European agricultural products and will be encouraged as part of the reform.
Commission initiatives, such as high-level trade missions or participation in international trade fairs, help open up new markets to European agricultural products.
The proposal includes the development of new technical support services for stakeholders which favour the exchange of information on information provision and promotion measures or good practices and allow their expertise to be developed.
It also aims to simplify the management of the information and promotion policy. It proposes that the Commission should be more active in managing multi-country programmes, thereby making it easier for them to be set up and implemented. The respective roles of the Member State and the Commission in terms of monitoring and control must be clarified in order to avoid duplication and lengthy procedures. It is proposed that selection should take place solely at Commission level.
Finally, all action will be accompanied by a systematic impact assessment in order to confirm that the goals set have indeed been achieved. An evaluation framework will be set up to gauge how the promotion policy is performing using a common set of indicators linked to its strategic objectives, in keeping with the common monitoring and evaluation framework of the CAP.
Agricultural policy is a European policy. Instead of having 28 separate agricultural policies, the Member States pool their resources in order to pursue a European policy with a common budget. Agriculture is the only sector governed by a common policy with common rules - including on the matter of promotion - laid down by the Treaty. The ongoing reform of the CAP must impact on all the tools making up this policy.
In particular, in an internal market any action at EU level will have an important leverage effect in terms of (a) making it easier to set up generic information programmes which, by their very nature, are rarely implemented by the Member States or companies, particularly in the current context of economic crisis, and (b) implementing multi-country programmes which will give rise to an exchange of experiences between Member States and to economies of scale.
Contents
- RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENTS
- LEGAL ELEMENTS OF THE PROPOSAL
- BUDGETARY IMPLICATION
- Background
- Objectives of the proposal
- EU Added Value
- Stakeholder consultation
- Assessment of the current arrangements
- Impact assessment
- 3. Management of the scheme
- Legal basis
- Subsidiarity and proportionality principles
Interested parties have been widely consulted. A Green Paper launched by the Commission on 14 July 2011 initiated a debate the results of which were announced at a Conference on the promotion of European agriculture organised by the Polish Presidency in November 2011. The Council adopted conclusions on the Green Paper at its meeting in December 2011. On 20 November 2012, the European Parliament adopted a resolution further to the adoption of a communication on the subject by the Commission. Consultations also took place within the Advisory Committee on Promotion and within a CAP simplification experts' group at meetings in March 2012.
An assessment commissioned by the European Commission and carried out by an external consultant was published in January 2012. It provided an overall and independent evaluation of the current scheme. It examined the relevance and effectiveness of the EU's information and promotion policy for agricultural products in the light of the objectives set out in Council Regulation (EC) No 3/2008 and its consistency with other promotion measures applied under the CAP. The analysis covered the period 2002-2010.
By evaluating the current policy framework and analysing future challenges and needs, the impact assessment assesses and compares the impact of three alternative scenarios. These reform scenarios were developed in line with three distinguishing factors which emerged from the public debate and the positions adopted by the various stakeholders, i.e. target market(s), the existence or not of a European promotion strategy and, finally, the rules on private brands and the origin of products. Three scenarios were formulated as food for thought in the decision-making process:
• The ‘improved status quo’ scenario involves a limited adjustment of the promotion policy. It recognises the policy's added value and seeks to remedy identified weaknesses with a view to simplifying the policy and making it more accessible, enabling beneficiaries to make the most of the tools offered, and to back them up with suitable technical support.
• The ‘targeted’ scenario, in addition to what is offered by the improved status quo, ensures better targeting of promotion measures on the internal and external markets through the development and implementation of a strategy. It also encourages collaboration between operators in the various Member States (by means of directly managed multi-country programmes). The strategy will also allow the range of products and themes eligible under the promotion scheme to be widened. Finally, this scenario involves better use of indications of the origin of products and brand names (e.g. 'banner' brands).
• The ‘exclusive to third countries’ scenario shares the same level of performance ambition as the ‘targeted’ scenario but concentrates solely on third countries, whereby promotion measures are managed directly by the Commission in compliance with a selection strategy. The improvements proposed by the ‘improved status quo’ scenario are also included in this scenario. In addition, over and above generic promotion, marketing activities for individual private brands would also be eligible under the scheme and could involve an extended list of products and themes.
While the ‘improved’ status quo scenario appears not to be targeted sufficiently at measures with high added value for the European Union, and the ‘exclusive to third countries’ scenario appears too risky given the low level of awareness of agricultural products in Europe, the ‘targeted’ scenario emerges from the impact analysis as being the most balanced scenario for the purposes of defining the outline of a promotion scheme which is more targeted towards the economic growth needs of agricultural sectors and markets but which, at the same time, improves the level of awareness among European consumers confronted with an increasingly vast array of products.
The scheme is at present managed on the basis of shared management (main expenditure linked to the implementation of programmes) and direct management (information provision and promotion measures at the Commission's initiative). The current Regulation should lead to a general and significant increase in the number of measures implemented and thus to an increase in expenditure subject to shared management and direct management alike, with a sizeable increase in the share of directly managed measures following the shift towards this type of management for multi-country programmes with the aim of encouraging their implementation.
On the basis of a cost/efficiency analysis, the Commission is able to decide to delegate programme management in full or in part to an executive agency, subject to compliance with Article 62 of Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council[9]. In the Commission's Communication entitled ‘A budget for European 2020’[10], the Commission proposed that it should exploit the possibility of making greater use of existing executive agencies.
In this context, and in accordance with Article 3 of Council Regulation (EC) No 58/2003[11] and Article 6(g) of Regulation (EU) No xxx/xxxx on the financing, management and monitoring of the common agricultural policy[12] [CAP Horizontal Regulation], the Commission intends to outsource certain tasks relating to the direct management of information provision and promotion programmes, including for multi-country programmes, and the assessment of proposals for simple programmes to an existing executive agency with the aim of providing a better-quality service and enhancing the EU's visibility in its information and promotion activities for agricultural products.
The proposal is based on Articles 42 and 43 of the Treaty on the Functioning of the European Union.
· Subsidiarity principle
The EU promotion and information policy usefully supplements and reinforces the schemes run by Member States by boosting the image of products in the eyes of consumers in the EU and in third countries, in particular as regards the quality, nutritional value and safety of foodstuffs and the methods of production. By helping to open up new markets in third countries, such action is also likely to have a multiplier effect on national and private initiatives.
The proposal falls under shared competence between the EU and the Member States and complies with the subsidiarity principle.
· Proportionality principle
Due to the increasing liberalisation of trade, including trade in agricultural and food products, the trade between EU Member States and third countries is growing in scale. In this context, and in view of the CAP's market-oriented approach, the regulation on information provision and promotion measures for agricultural products on the internal market and in third countries is therefore a crucial instrument that is consistent with the new framework of the WTO Agreement on agriculture.
It also naturally falls to the EU to promote the high quality standards of EU agricultural products and to encourage joint promotional programmes involving more than one EU country or more than one agricultural sector.
The proposal complies with the proportionality principle.
Compared to the present situation, the proposal gradually but significantly increases the budget allocated to information provision and promotion measures for agricultural products (from € 61.5 million in the 2013 budget to € 200 million in 2020). Details of the proposal's financial impact can be found in the financial statement.
The proposal relating to the 2014-20 Multiannual Financial Framework (MFF) includes the amounts of direct payments and market-related expenditure for the first pillar of the CAP. As a precaution, the Commission has taken account of the conclusions of the European Council of 8 February 2013 concerning the MFF. Subject to the adoption of the MMF Regulation, information provision and promotion measures will be funded within the amounts agreed by the European Council.