presentation of studies results, dg agri, bruxelles 12:30...

EC JRC Project: „Agricultural Policy Developments and EU Approximation Process in the Western Balkans Countries (APDAP-WB)“

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Western Balkan agriculture andEuropean integration in 2018

Presentation of studies results, DG AGRI, Bruxelles

20 September 2018

12:30-14:30

Emil Erjavec, Tina Volk, Miroslav Rednak,

SWG Agricultural Economists Network

• The accession of Western Balkan (WB) countries to the EU has gained new momentum in 2018:

– … though countries are at different stages of integration.

• Agriculture: challenging integration into the EU

– align candidates with the EU‘s legal and institutional set-up

– … and efficiently integrate their agriculture into the single market and decision-making process.

– to apply the CAP!• the CAP is a demanding and moving target for the Western Balkans.

– … however, the framework for the future CAP is predictable:• based mainly on area-based producer support and an extensive set of

rural development measures.

– Previous research:• The WB countries are at different stages of forming this kind of policy.

Motivation

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SWG AgEconomics Network

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• Monitoring of agricultural policy in WB since 2008!– 5 different project (EU FP7, FAO, 3 JRC)

– Since 2013 under umbrella of SWG

Work of national academic experts and support by SLO team in the fields of:

• Agricultural statistics (national and EUROSTAT)

• Ag Policy documents (programming and legal frame)

• Budgetary transfers to agriculture (APM tool)

• Country and Synthesis Agricultural Policy reports

… special topic relevant for broader public

• Audience:• ministries in the region, stakeholders, international

community, especially the EC

Objectives

Cross-country analysis of agricultural policy

− as an attempt to set up regular monitoring of agricultural policy in the region

Comparison of WB agricultural policy with:

– the current CAP;

– and with the potential CAP framework given the proposed reform and future potential enlargements after 2025.

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A. Theoretical frame and methodological notes

B. Monitoring of agricultural policy

✓ What are the main development patterns in production and trade of WB agriculture?

✓ The new policy frame (new programming documents) in 2016-2018?

✓ Are there any significant changes in budgetary transfers and direct producer support?

C. Comparison of EU and WB agricultural policy

D. Qualitative assessment of the EU approximation process of WB agriculture 5

Content/issues

A. THEORETICAL FRAME AND METHODOLOGICAL NOTES

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• The agricultural statistics database has been compiled for the period 2005-2016(7)

• Based on a common template organised in a set of predefined tables for specific data topics covering:

– key general (macroeconomic) indicators,

– all the main fields of agricultural statistics • Farm structure, agricultural land use and production, agricultural prices,

economic accounts for agriculture

– agri-food trade

• Published at http://app.seerural.org/agricultural-statistics/

Agricultural statistics

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http://app.seerural.org/agricultural-statistics/

APM Agricultural policy measures tool

• Innovative classification tool for analysing budgetary transfers to agriculture:

– Long-term CAP structure (pillars, measures)

– OECD criteria for defining the lowest level of classification

• Three phases of data collection and analysis:

• Collecting data (all sources related to agriculture)

• Allocation of measures to the proper category

• Results & national and comparative analyses

• Classification scheme composed of:• Total budgetary support to agriculture divided in three main sections using

the current EU concept based on policy pillars

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Total budgetary support to agriculture1st pillar:

MARKET AND DIRECT PRODUCER SUPPORT

MEASURES

2nd pillar:

STRUCTURAL AND RURAL

DEVELOPMENT MEASURES

3rd pillar:

GENERAL MEASURES RELATED

TO AGRICULTURE

Comparison with EU agricultural policy

• APM tool used for comparison of WB budgetary support with the EU. – All sources of public finance were included.

– The EU has no database including all EU and domestic agricultural policy budgetary transfers at EU and Member states level!

=> The main source of data for the EU was the OECD PSE/CSE database (2018) with some adjustments.

• Relative indicators:– absolute value of budgetary support to agriculture (total and by group

of measures) divided by total agricultural output and expressed in %

– absolute value of budgetary support to agriculture in EUR divided by total utilised agricultural area (UAA).

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Comparison with EU agricultural policy

➢Qualitative assessment is based on the theoretical concept „CAP accession benchmark model“:

• 7 key bundles of issues with sub-issues

– PRE-ACCESION MODEL:• Pre-accession agricultural policy substantive framework

• Benchmark for the start of serious CAP integration efforts

– ACCESION MODEL:• Agricultural policy substantive framework upon accession

• Benchmark for the final stage of accession process (negotiation agreements, last national policy reforms)

… based on previous research and following the EC approach in the integration process. No official character of model!

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The „CAP Accession Benchmark Model“

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Bundles of agricultural policy issues

Pre-accession agricultural policy substantive framework(PRE-ACCESSION MODEL)

Agricultural policy substantive framework upon accession (ACCESSION MODEL)

1. Sustainable policy concept

- economic, environmentaland social objectives

- social aspect

- horizontal aspects

Expanding priorities to include environmental and social aspects of farming.

Recognizing the role of institutions of knowledge formation and transfer (AKIS).

Balancing goals (a matter of national prioritization).

Clear environmental orientation.

Expanding policy beyond narrow sectoral aspects (food, knowledge).

2. Strategic policy framework

- planning

- indicators and monitoring

- policy evaluation

- policy management

Establishing a system of analytical support for policy formation and implementation.

Adopting a formal strategic policy framework.

Establishing policy monitoring.

Strategic planning/policy cycle as the basis of policy management.

Defining intervention needs and clear intervention logic.

Policy monitoring and evaluation.

Indicators and analytical support.

3. Size and allocation of financial resources

- total available amount of funds for agricultural policy

- producer support/rural development ratio

Ensuring funding for improving farming and rural areas and absorption of funds after accession (min. 1/3 of EU supported accession levels).

Efficient RDP (sufficient funding for developmental and other impacts).

Ability to co-finance EU actions –min. 1/3-1/2 EU sources after accession.

Available funds for state aids.

Balanced ratio between direct support and RD measures.


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4. Direct producer support

⁻ selection of measures

⁻ selection of products

⁻ criteria for obtaining funds

Area and headage payments prevailing (coupled and decoupled for limited sectors –no burden for sectors after accession).

Introduction of decoupled payments.

Some risk management measures.

Introduction of conditionality.

Reducing unequal treatment of potential beneficiaries.

Introducing control systems that are upgradable upon accession.

Single area decoupled payment.

Limited coupled measures (area/headage).

Conditionality for payments (environment and other standards).

Risk management measures.

Equal treatment of beneficiaries.

Functioning IACS, LPIS and other control systems for distribution of funds.

5. Competitiveness support measures

- investments in agriculture

- investment in processing

- investments in land and work

- producer organizations

- quality schemes

Diverse array of effective measures.

Functioning IPARD system of support and reasonable absorption of funds.

Functioning national system of support.

Functioning public extension service.

Established producer organisations.

Established system of setting up quality schemes.

A wide spectrum of measures for restructuring and raising competitiveness.

Support for collective investment and agri-food chains.

Support for producer organizations and quality schemes.

Support for young acquirers.

Support for advisory services.


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6. Environmental measures and public goods

- conditions for obtaining funds

- agri-environment and climate measures

- support for organic farming

- support for ANC and HNV farmland

- animal welfare measures

Recognizing the environment as a priority and determining the concept of environmental and conservation elements of agricultural policy.

Determining ANC and pilot support schemes for these areas.

Support to organic farming.

Pilot schemes for AECM.

A clear concept of agri-environment and nature conservation policy.

Established and functioning conditionality system for environmental and other standards.

Appropriate AEC and organic farming support.

Support for ANC and HNV areas.

7. Quality of life and employment

- local support

- diversification of activities

- social inclusion

- improved conditions in the countryside

Creating a concept of LEADER support and pilot projects.

Functioning IPARD measures in this field.

Adopting the logic of measures in this field and conducting pilot projects.

Support for young farmers.

A functioning local support system (LEADER concept).

Extended system of diversification, employment and other broader elements of rural development.

Support for social inclusion.

Support for small farms.

B. MONITORING OF AGRICULTURALPOLICY

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Macroeconomic and trade context

Importance of agriculture

• has decreased slightly, but remains high

Agri-food trade

• has shown an increasing trend in all six WB countries, with higher growth rates generally being recorded for exports than for imports

Source: WBs Agricultural Statistics Database 2018

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AL BA XK MK ME RS

2013 2017 2013 2017 2013 2017 2013 2017 2013 2017 2013 2017

GVA for agriculture (% of total GVA) 22.4 22.7 8.3 7.1 14.4 11.9 11.4 10.9 9.8 9.6 9.4 7.3

Employment in agriculture (% of total employment)

52.5 38.2 18.9 18.9 n/a n/a 18.7 16.2 n/a n/a 21.3 17.2

AL BA XK MK ME RS

2013 2017 2013 2017 2013 2017 2013 2017 2013 2017 2013 2017

Agri-food exports (% of total exports) 5.9 11.0 8.2 9.6 11.9 16.2 15.3 10.6 14.2 12.9 18.9 18.7

Agri-food imports (% of total imports) 18.7 17.0 18.0 17.4 23.8 22.8 13.0 11.1 26.3 22.0 7.7 8.1

Agri-food trade 2013-17 (mio. EUR)

(exports as proportion of imports)

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Serbia had a positive agri-food trade balance and its surplus generally shows an increasing trend. All the other WB countries are net importers of agri-food goods.

Qualitative assesment of policy development

➢ Programming structure exists, but what about implementation?

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Agriculture and rural development strategy

National programmes / Action plans

IPARD II

AL National Agriculture and Rural Development Strategy (ISARD) 2014-2020 (2014)

Action Plan for ISARD implementation 2014-2020 (2014)

Action Plan for ISARD implementation 2016-2018 (2016)

Prepared and approved by EC (2015)

BA Mid-term development strategy for agricultural sector in the Federation of Bosnia

and Herzegovina 2015-2019 (2014)

Strategic plan for the development of agriculture and rural areas in the Republic of

Srpska 2016-2020 (2015)

Strategic plan for the Rural Development of Bosnia and Herzegovina 2018-2021 (2018)

Program for Rural development of the Federation of Bosnia and Herzegovina 2015-

2020 (2014)

In preparation

(since 2014)

XK Agriculture and Rural Development Program2014-2020 (2013)

Mid-term expenditure framework 2016-2018 (2015)

Economic reform programme 2016-2018 (2016)

Prepared

MK National Agriculture and Rural Development Strategy 2014-2020 (2014)

National program for agriculture and rural development 2018-2022 (2018)


ME Strategy for the Development of Agriculture and Rural Areas 2015-2020 (2015)

Action Plan for acquis alignment, Chapter 11 – Agriculture and Rural Development 2015-

2020 (2015)


RS Strategy of Agriculture and Rural development 2014-2024 (2014)

National Program for agriculture 2018-2020 (2017)

National rural development program 2018-2020 (in adoption)


Total budgetary support(relative, % of agricultural output)

Budgetary support to agriculture

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• Significant differences. High increase in Kosovo*. • Highest level in Macedonia and lowest in Albania.

*This designation is without prejudice to positions on status, and is in line with UNSCR 1244/1999 and the ICJ Opinion on the Kosovo declaration of independence

Total budgetary support


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Evolution and composition by groups of measures (%)

0

2

4

6

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0102030405060708090

100

13 14 15 16 17

%% MK

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0102030405060708090

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%% AL

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0102030405060708090

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%% BA

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0102030405060708090

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13 14 15 16 17

%% XK

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0102030405060708090

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13 14 15 16 17

%% ME

0

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0102030405060708090

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13 14 15 16 17

%% RS

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OTHER MEASURES RELATED TO AGRICULTURE

STRUCTURAL AND RURAL DEVELOPMENT MEASURES

Direct producer support measures

Market support measures

TOTAL % of output (right scale)

BA,RS and MK highlevel of directproducersupport.

Tendency: higher support for agriculture: higher level of direct producer support!

Direct producer support(relative, % of agricultural output)


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0

2

4

6

8

10

AL BA XK MK ME RS

2013 2014 2015 2016 2017

• Serbia: decreasing tendency; elsewhere increasing.• Very low support in Albania, relatively high in Macedonia.

Direct producer support


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Evolution and composition by groups of measures (index)

0

2

4

6

8

10

0102030405060708090

100

13 14 15 16 17

%% MK

0

2

4

6

8

10

0102030405060708090

100

13 14 15 16 17

%% AL

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2

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8

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0102030405060708090

100

13 14 15 16 17

%% BA

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8

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0102030405060708090

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13 14 15 16 17

%% XK

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0102030405060708090

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13 14 15 16 17

%% ME

0

2

4

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8

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0102030405060708090

100

13 14 15 16 17

%% RS

13 14 15 16 17

Miscellaneous direct producer supportDisaster and other compensations to producersVariable input subsidies Direct payments based on current area/animal Direct payments based on output (price aids)TOTAL % of output (right scale)

Structural and rural development measures


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Relative level of structural and rural development support in WB countries,

(% of output)

Agricultural budgets are less development-oriented?• low absolute and relative amounts of funds• impacts on development?

0

1

2

3

4

5

AL BA XK MK ME RS

2013 2014 2015 2016 2017

Structural and rural development measures


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Composition of structural and rural development support in WB countries

• Funds for improving

the competitiveness

of agriculture prevail.

• Mostly for capital

investments in farm

production assets and

irrigation (MK).

• Funds intended for

improving the

environment and the

countryside are

negligible in most WBs.

• MK significant share of

rural economy

support measures.

0

1

2

3

4

5

0102030405060708090

100

13 14 15 16 17

%% MK

0

1

2

3

4

5

0102030405060708090

100

13 14 15 16 17

%% AL

0

1

2

3

4

5

0102030405060708090

100

13 14 15 16 17

%% BA

0

1

2

3

4

5

0102030405060708090

100

13 14 15 16 17

%% XK

0

1

2

3

4

5

0102030405060708090

100

13 14 15 16 17

%% ME

0

1

2

3

4

5

0102030405060708090

100

13 14 15 16 17

%% RS

13 14 15 16 17

Supporting rural economy and populationProviding environmental and societal benefitsImproving the competitiveness of agro-food sectorTOTAL % of output (right scale)

C. ASSESSMENT OF THE EUAPPROXIMATION PROCESS OF WB AGRICULTURE

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EU Total budgetary support

EU/WB agricultural policy comparison

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Composition of total budgetary support to agriculture in the EU

by financial sources, 2017

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

CAP EU CAP nat CAP total State aid EU total

State aid

CAP nat

CAP EU

• Only presented EU CAP financial resources! (less than 70 % of available funds for CAP EU!)

• National co-financing (CAP nat) and State aid important!

EU and WB: Total budgetary support


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Relative level of total budgetary support to agriculture

(% of agricultural output; EUR/ha), 2017

0

50

100

150

200

250

300

350

400

450

500

02468

1012141618202224

AL BA XK MK ME RS EU total CAP total

EUR/ha%

% of total support in output total EUR/ha (right scale)

• Lower support for agriculture in WB in comparison with the EU. • The highest support: MK (around half of average total support in

EU 28).

EU Member states: relative level of total budgetary support


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Differences

between

Member states!

Co-financing of

CAP (mostly RD,

top-up for DP not

included) is about

2-4 % of output!

WB countries

have already

reached this

level.

EU and WB: Relative level of total budgetary support


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(by APM Pillars, % of agricultural output; EUR/ha), 2017

0

50

100

150

200

250

300

350

400

450

500

0

5

10

15

20

25

AL BA XK MK ME RS EUtotal

EUR/ha%

OTHER MEASURES RELATED TO AGRICULTURE

STRUCTURAL AND RURAL DEVELOPMENT MEASURES

MARKET AND DIRECT PRODUCER SUPPORT MEASURES

total EUR/ha (right scale)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


• Composition of support is different within the WB and compared to the EU. • However, Member states in the EU have very different structures of support.

EU and WB: Relative level of direct payments to producers


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0

50

100

150

200

250

0

2

4

6

8

10

12


EUR/ha%

Production decoupled direct payments

Direct payments based on other criteria

Direct payments based on current area/animal

Direct payments based on output (price aids)


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


• No decoupled support in WB. Area and headage payments prevail. • Output payments are a challenge for policy reforms!

EU and WB: Relative level of structural and rural

development measures


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0

20

40

60

80

100

120

140

160

0

1

2

3

4

5

6

7


EUR/ha%

Miscellaneous rural development measures

Supporting rural economy and population

Providing environmental and societal benefits

Improving the competitiveness of agro-food sector


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


• The EU is seeking to balance the main elements of sustainability. • In the WB, only MN is following this path at the moment.

EU and WB: Relative level of support for the

provision of environmental and societal benefits


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0

10

20

30

40

50

60

70

80

0

0.5

1

1.5

2

2.5

3

3.5


EUR/ha%

Other ecosystem related payments

Agro-environment, organic and animal welfare payments to farmers

Payments to farmers in areas with natural and environmental constraints


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


D. QUALITATIVE ASSESSMENT OF POLICY AND RECOMMENDATIONS

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Policy assessment and recommendations

1. Sustainable policy concept– Commitment to sustainability, however production orientation prevails in

implementation, weak AKIS and role of knowledge and development

Recommendation:Increase role of democratic decision-making and transparent functioning; improve/introduce training and a good personnel policy in the public administration; foster rediscovery of the role of knowledge

2. Strategic policy framework– Clearly set strategic framework for agricultural policy, but announced

changes do not appear; political willingness for change?

– Quality of analytical support? Quality of planning?

Recommendation: Improve national planning and analytical structures and adopt the strategic logic thinking; modernisation of implementation and monitoring

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3. Size and allocation of financial resources– The funding level in the WB is not critical for the start of the accession

process,

– … however there is significant room for improvement for the finalisation!

– Certain countries are neglecting their rural development policies and favouring direct support, diminishing their absorption capacity.

RecommendationIt is necessary to invest into agriculture and rural areas to prevent too great a shock due to increased competition and to increase absorption in the pre-and post-accession period.

This includes sufficient funding for rural development and a sufficiently broad array of measures.

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4. Direct producer support– In the WB, area and headage payments prevail. These can be converted

into decoupled payments. Serious problem: output payments and support for sectors for which the EU does not grant support.

RecommendationPrepare a clear policy action plan for the period until accession and then implement it. Strong political will is necessary!

5. Measures to improve competitiveness– The impacts of existing policies is unknown. Most of the support is for

mechanisation and equipment.

– Support for small farms, creation of efficient agri-food chain is mostly missing.

RecommendationIncrease funding and broaden the array of measures (for small farms, cooperation, supply chain integration, quality schemes), increase the role of support systems and invest into public and private advisory services. 35


6. Environmental measures and public goods– Exist only in traces. Challenges for funding and public awareness. Low

absorption capacity after accession.

RecommendationAction plans should be prepared and pilot measures should be implemented. Shifts are demanding and time-consuming. A matter of modernizing the policy; the shift should be made regardless of the accession process.

7. Quality of life and employment– Some good cases. Not prioritized and insignificant in budgetary terms

(except MK).

RecommendationStrengthen the LEADER approach, support the creation and functioning of local action groups. More should be done to diversify activities, especially on farms (e.g. supplemental activities).

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Policy assessment and recommendation

Thank you for your attention!

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