European Commissioner Mariann Fischer-Boel: Commission can still activate safeguard clause on Romania agriculture

Should new audit findings reveal that Romania still faces problems in its ability to establish a well functioning farming payment system, a safeguard clause on Romanian agriculture can be reactivated by the European Commission, European Commissioner for Agriculture Mariann Fischer-Boel said in interview for HotNews.ro. She said that officials in Brussels found deficiencies in 2007 as well as in 2008.

Info in brief:

• New EU member states one would rather recommend rural development funds than direct payments, the Commissioner says.
• The European Commission should not interfere in commercial arrangements between farmers and retailers, but farmers could be encouraged to group together to improve their negotiating stand
• With 14 million hectares of utilised agricultural land and 30% of the population working in rural areas Romania has a chance to play an important role in the field of bio-energy.

HotNews.ro: In its path to European integration Romania had four red flags and it joined the EU with only one – the functioning of the system of the Payments and Interventions Agency for Agriculture (APIA). According to your assessment, have these problems been resolved as they should? Did this situation worried the EC and you especially regarding Romanian agriculture’s capacity to reach the European level in a short period of time?

Mariann Fischer-Boel: Throughout Romania’s accession process, the Commission closely monitored the progress achieved in setting up the mechanisms to ensure sound financial management and control of agricultural expenditure. We paid particular attention to the establishment of operational paying agencies and a functioning Integrated Administrative Control System (IACS).

Despite significant efforts from the Romanian authorities, audits carried out by the Commission services in 2007and 2008 revealed deficiencies. Financial risks resulting from these deficiencies, including recoveries, will be followed up in the so-called „clearance of accounts” procedure.

HotNews.ro: The European Commission decided on December 2007 not to activate the safeguard clause on Romanian agriculture. Is there still a risk that the safeguard clause be activated, as some Romanian politicians from Brussels are warning?

MFB: Last autumn, the Commission launched the application of the safeguard clause, in particular because of major deficiencies in the IT system for the management of payments. Following remedial action by the Romanian authorities before payments were made, the safeguard procedure was stopped.

Should new audit findings reveal that the IACS or other elements necessary to ensure correct payments are so seriously deficient that they affect the proper functioning of the overall system, the safeguard clause can still be activated.

HotNews.ro: First there were problems with IT system of APIA, now the payments are delayed because of insufficient filling forms for the farmers. Do you think that some of Romanian farmers will miss the momentum of application because of such problems?

MFB: Payments are currently being made in Romania for claims submitted by 15 May 2007. The applications for the claim year 2008 have to be submitted by farmers by 15 May 2008. Therefore, it is not possible to assess, at this stage, the effects of insufficient application forms.

HotNews.ro: There is an informal debate – Romanian representatives in Brussels believe more focus should be put on funds for rural development as more important than direct payments, while voices in Bucharest support the latter. In your opinion, which of the two would provide for better results in a new member state in the long term?

MFB: Each agricultural fund has its own scope and was designed to achieve a precise objective and to address specific situations. In the long term, the new Member States have more need for restructuring and modernization of their farming and processing sectors than the old Member States.

This was one of the reasons why direct payments are being phased in gradually and more resources were earmarked for rural development in the first years of EU membership for the new Member States. In more general terms, rural development is going to gain more weight in the CAP of the future.

HotNews.ro: In its first year as a Member State, Romania did not apply for any money from the European found for promoting traditional products on the internal market. Does this mean that Romania is missing opportunities of its EU membership?

MFB: Since Romania’s accession, organisations in the different Member States had the opportunity to apply twice for the EU promotion schemes. The first chance was at the end of March 2007 for Third Country promotion and the second at the end of November 2007 for Internal Market promotion. Proposals were submitted by 22 Member States, including eight new Member States.

Romania remains the only Member State that never applied for EU cofinancing for promotion activities on the internal market or in third countries.

Of course, it is early days, but it would be good to see Romania taking advantage of this excellent programme.

HotNews.ro: Romanian farmers are threatening with protests in Bucharest and Brussels because the prices of Romanian agricultural products are a lot lower than the ones from EU states present on the Romanian market and that 80% of the products on the market come from outside Romania. What is you opinion on such arguments and such intentions? Is it a legitimate complaint?

MFB: It’s only natural that some farmers may feel unsettled as they adjust to life in the EU with its open borders for goods.

The fact that Romanian produced foods are lower priced than those from other Member States should make them rather competitive.

But of course with the open borders, Romanian farmers will face increased competition.

As things settle down and the direct aid payments and rural development funds from Brussels start to flow, I believe life will become a lot easier for Romanian farmers. We have seen huge income growth among farmers in the 10 countries which joined the EU in 2004 and I anticipate the same effect for Romania and Bulgaria.

But the benefits are about more than a simple transfer of aid.

Romania now has access to a market of 500 million people. It has a lot of tradition and expertise and many farmers with good ideas and entrepreneurial spirit.

As time goes on, I am sure that Romanian producers can exploit the opportunities offered by the single market.

HotNews.ro: There is a conflict at the European level and in Romania between the producers and the retail industry on the prices set for the food producers by the retailers. Do you think that there should something be done in order to answer to the complaints of the food producers, does the EC have the intention to adopt some rules in this respect? Do the producers need to be helped to get the right prices for their food sold to the retailers?

MFB: Farmers are assisted by the EU through the direct aid payments and the rural development funds they receive.

And most farmers are now able to benefit from the increase in agricultural prices.

It is not the role of the EU to interfere in the commercial arrangements between farmers and retailers, but we can encourage farmers to group together to strengthen their negotiating position with the retail sector.

That is precisely what we did in our recent fruit and vegetable reform and we hope that the good experiences in this sector can serve as an example to farmers across the board.

Of course, if there are suggestions of price fixing or unfair and anti-competitive prices, there is always the possibility that the competition authorities could become involved.

On a national level, the first port of call is the national anti-trust authorities.

HotNews.ro: In the context of high prices applied to food products, are GMOs a solution? Can still Europe be an island without GMOs in the world? Romanian producers request the permission to cultivate GMO soy, while the Minister of Environment talks about the intention to ban all GMOs in Romania. Which can be the winner of this confrontation or do you think there is room for compromise?

MFB: In my opinion, GMOs are a reality which we have to deal with.

Certain GMO products can bring advantages in terms, for example, of reduced chemical use and higher yields.

We in Europe have a very rigorous system for approving and labelling GMOs, which ensures that no GMOs may be grown or distributed in the EU unless they have been cleared as not presenting any health or environmental risks.

It’s obvious that many people are fearful of these products, so we need to have a sober debate about them and we must not try and force them upon an unwilling public.

But clear labelling and traceability means that farmers and consumers have a free choice whether to buy GMO-based products or not.

In my role as Agriculture Commissioner, I have one major concern, and that is the growing tendency for our major suppliers of animal feed to approve and plant new varieties of GM soy and maize which are not being approved in the EU.

Last year, my department did a study showing what the effects would be if our major suppliers of animal feed such as Brazil, Argentina and the US approve more and more varieties that are prohibited in the EU.

In the old days, we could determine to a large extent what was produced in these countries because we were their most significant market.

Nowadays, they have alternative markets for their crops and are no longer forced to take their production decisions based on European sensitivities.

As they approve more GMOs that we fail to approve, it will become increasingly expensive to import acceptable animal feed.

This will increase costs for our livestock producers, and in the worst case scenario mean that we end up importing greater quantities of meat.

The irony would of course be that we would import meat from animals fed with the very GMOs we in Europe do not accept.

This would be betraying both our farmers and our consumers.

I’m not advocating weakening our approvals system in any way, which must be based on watertight safety assessments from the European Food Safety Authority.

But I think we should speed things up.

Of course, already some 24 different GMOs are approved for food and feed use in the EU, and we are importing substantial quantities of GMOs, mostly for animal feed. For instance, of the 34 million tonnes of soybean and soybean meal imported annually into the EU for animal feed, more than 90% is labelled as GM.

As to the cultivation of GM crops, the only authorised type of product is insect resistant maize, which is cultivated in the EU on an area of slightly more than 100,000 hectares. This maize has clear agronomic advantages in areas heavily affected by some pests and can contribute to reducing the amount of insecticides used.

Some Member States have expressed doubts about the environmental safety of this GM maize. I think that farmers should have access to using this modern production technique provided that it is safe and the European Food Safety Authority (EFSA) will provide an assessment very soon.

HotNews.ro: Romania can’t reach its milk quota for this year, but at the European level there is an increase of 2% milk quotas. Why should the EU wait until 2015 to the full abolition of milk quotas and not sooner, as the prices of food products are high? How hard do you expect to be the battle at the European level?

MFB: There is no doubt in my mind that milk quotas have to go, and they will be phased out on 31st March, 2015.

There is growing demand both within Europe and outside for high quality dairy products. If we don’t free our producers to meet this demand, then others will exploit these new opportunities.

For the period 2007 to 2014, we forecast that milk consumption in the EU will grow by 8 million tonnes, or nearly 6 per cent. On top of this, there are the growing market opportunities in Asia.

We need to move smoothly from today’s situation to the end of the quota system in 2015.

It’s clear that we do need to take action before then. We can’t let dairy prices climb and climb, then bring them crashing down in 2015 when we end quotas.

Clearly, further gradual increases to quotas are a strong option and this is what I want to propose in the Health Check on 20th May.

We also have to ask what we should do for economically fragile regions which depend heavily on milk production.

I believe we can make better use of so-called „Article 69” measures, under which Member States can top-slice decoupled payments and spend the money on particular types of farming and projects. Making certain changes to Article 69 – for example, making it more flexible – could be the answer. And we can also help through rural development policy.

HotNews.ro: UE aims that 10% of its energy sources reside in biofuels by 2020. What is the Commission’s evaluation of Romania in this sector?

MFB: With about 14 million hectares of utilised agricultural land, mainly planted with cereals and oilseeds, Romania has an important role to play in supplying raw material for biofuels and bio-energy in general. And with about 30 percent of employment still in the agricultural sector and an agricultural sector mainly focused on arable crop production, Romania should benefit considerably from the development of bio-energy.

This also provides an opportunity to diversify the economies of rural areas into non-farming activities. The Rural Development fund cofinances investments for production of energy crops and for processing bioenergy in Romania.