The Commission will shave €1 billion off the CAP budget in 2004 as summer droughts across Europe saw exports wither and refunds reduced as the impact of reform takes shape.
The move follows the Commission's annual update - that analyses markets, exchange rates and legisative decisions - of the budget estimates for agriculture that have occurred since its original proposal in May.
For the recently reformed Common Agricultural Policy (CAP), the new assessment reduces needs compared to May 2003 by €1,092.5 million. This sizeable decrease is largely explained by three sectors, and in particular market measures for cereals, which accounted for €741 million of the reduction.
Drought during the summer of 2003 led to a dramatic decline in harvests, which in turn means lower quantities for export, and a large reduction in the estimates for intervention stocks.
Also touched by the climate conditions, some direct aids in the animal sector were advanced and paid from the 2003 budget, resulting in savings for 2004 for beef and veal and sheep and goat meat. These reductions were, however, slightly offset by increased needs for other sectors, notably dried fodder that called for an extra €64 million.
According to a statement this week, the Commission has opted to include in particular the recent reform proposals and the priorities of the European parliament as proposed by the general rapporteur. The latter includes €500 000 for studying environmental indicators, €500 000 for exploring the possibility of European quality labels, a split of lines between export refunds for meat and those for live exports and a pilot study on financing the risks of livestock epidemics.
The bottom line is that the proposals from the Commission for the 2004 budget will limit the overall increase from €99 billion in 2003 to €111 billion, a rise of 11.6 per cent, including the accession of 10 new Member States on 1 May. In addition, it is set to leave a margin of €4.3 billion under the maximum ceiling.
In June this year, ministers of agriculture from the EU Member States agreed on a somewhat diluted version of the reforms to the €45 billion CAP initially proposed by the EU's Agriculture Commissioner, Franz Fischler.