Support schemes for farmers (support for cotton) (debate) 
President
The next item is the report by Ioannis Gklavakis, on behalf of the Committee on Agriculture and Rural Development, on the proposal for a Council regulation amending Regulation (EC) No 1782/2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers, as regards the support scheme for cotton - C6-0447/2007 -.
Mariann Fischer Boel
Member of the Commission. - Mr President, before going into the content of the report, I want to thank the rapporteur, Mr Gklavakis, and the Agriculture Committee members for the very good job they have done on this extremely sensitive issue of cotton reform.
In 2006, as you know, the Court of Justice annulled the cotton reform that we agreed in 2004, ruling that it was in breach of the proportionality principle. The Court also ruled that a new regime should be adopted within a reasonable time. The Commission therefore immediately responded to the ruling by commissioning several studies, launching a comprehensive consultation process and carrying out the impact assessments.
On this basis, the Commission proposes to continue coupling 35% of the aid, which allows for maintaining cotton production and respecting the Accession Treaties of Greece, Portugal and Spain. At the same time, decoupling of 65% is in line with the CAP reform process and the commitments of the European Union to its international partners, specifically in the developing countries.
Against this background, I very much welcome the support in the report for the 35% coupled rate as a balanced way forward. Your report correctly draws attention to the process of restructuring which the cotton sector within the European Union is undergoing. I understand the needs of the sector and therefore I am positive about amendments proposing to support this process, for example through lowering the national base area and thereby increasing the coupled aid per hectare. On this point, I find your suggestions very reasonable.
However, you also call for increased aid per hectare where the cotton area falls below the defined area at national level, and this poses a problem. I have to say that this is actually a countercyclical system that would make the aid within the European cotton sector more trade-distorting and would be in clear contradiction of our multilateral trade negotiation mandate within the DOHA Development Round.
I can support the amendments regarding a national envelope. I specially welcome the measure aimed at restructuring of the ginning sector and improving the quality of production. However, all restructuring measures should be compatible with the WTO Green Box and not overlap with measures that we already have in place within rural development policy.
Finally, it may not come as a surprise that I oppose a transfer of aid for cotton regions from the second pillar to the first pillar. I think it is obvious - and I have had the chance to express this opinion on several occasions here in Parliament - that we need to strengthen our rural development policy. I would like to underline that in cotton regions in Spain and Greece rural development programmes are actually efficiently used, for example the different agri-environmental schemes.
I am looking forward to a fruitful discussion on this very important issue.
Ioannis Gklavakis
Mr President, I have listened carefully to the Commissioner.
There are four cotton-growing countries in the EU: Greece, Spain, Bulgaria and, on a very small scale, Portugal. When I embarked on this report, I worked closely with a great number of people, received recommendations and took part in discussions, so I can say that it is the product of long, extensive cooperation.
I worked with members of my committee, whom I thank, with Spanish representatives of the manufacturing and cotton-ginning sectors, and, of course, with my compatriots from Greece.
I should like to point out that the report was approved by the Committee on Agriculture by 28 votes to 6. This shows a high level of acceptance.
Allow me to mention briefly the 2004 proposal to support cotton. It was annulled by the European Court of Justice. It called for a 35% coupled payment and a 65% decoupled one. Then in subsequent years cotton-growing went into decline, and there was eventually a 50% decrease in Spain and one of about 20% in Greece.
Cotton farms in Spain shrunk by 25% and in Greece by 11%.
The aim of this report is that cotton should continue to be grown in Europe: the EU as a whole accounts for only 2% of world production. We have therefore agreed that the funding earmarked for the cotton-growing Member States will be maintained in full.
Of course, to avoid the risk of cotton-growing going into decline or becoming uneconomical, we have requested a small increase in the funding per hectare and I am delighted to hear that you accept. It necessarily follows that as the overall sum remains the same, the cultivated area will be reduced. There is, of course, absolutely no implication that problems will arise if a Member State wishes to increase the cultivated area as it pleases without any defined upper ceiling.
The ratio between coupled and decoupled aid remains at 35-65%. However, we have requested that Member States should, if they wish, be allowed to change their proportion of coupled aid, without going below the lower limit of 35%.
Let me say here that one thing should be made clear. The new area of land will not represent a defined ceiling, with penalties imposed for exceeding it as before. On the contrary, it is a way of safeguarding the current overall aid to the sector. Indeed, we believe the proposed increase in aid will be a strong incentive to retain the crop.
We also propose the creation of a national envelope of 1% funded by a deduction from the coupled aid, by unabsorbed appropriations, and from the EUR 22 million transferred to the 2nd pillar.
What will the national envelope achieve? Firstly, its aims are ambitious: for instance, aid will be provided for research into new varieties requiring less water and lower pesticide use, thus greatly benefiting the environment. Secondly, the quality of cotton produced will be improved, and the ginning industry will be modernised.
The draft report meets the needs of cotton growers in the Member States while complying with the goals of the EU. It deals with actual funding and at the same time introduces environmental measures, which are vital in the EU.
Allow me in conclusion to mention the excellent cooperation and support I enjoyed from all my fellow Members in drafting the report, which enabled us to introduce new ideas and recommendations.
I am confident that the implementation of the new scheme will help preserve a flourishing cotton-producing sector in the EU and a viable ginning industry.
Lastly, I would like to thank the Commission once again for the constructive way in which it has responded to the needs of the cotton-producing countries. We have finally achieved a result and will be able to point the Council in the right direction.
Carmen Fraga Estévez
on behalf of the PPE-DE Group. - (ES) Mr President, it is surprising that the response from the European Commission to the judgment of the Court of Justice was a new proposal amending the support scheme for cotton, which is practically identical to the previous one, except in relation to linking the support to the cotton harvested.
Due to all this, we warmly welcome the excellent report drawn up by Mr Gklavakis, which has put the finger on the main problems affecting the production and processing sector.
Firstly, the Commission's proposal to maintain the 35% of coupled aid is, as has been demonstrated in recent years by the reduction in production in a country such as Spain, entirely inadequate; therefore, we think that the solution provided by the report to leave the maximum limit to subsidiarity is the most appropriate.
Mr Gklavakis has given some figures, and I can tell you, Commissioner, that Andalusia, which is the main producing region in my country, has lost 65% of its production in the last three years.
Also, contrary to what you said, Commissioner, and I am sorry to contradict you, I think that Amendment 17, which I tabled myself and which has been included in the report, is very positive, as it rightly states that aid to producers can be increased when the cultivated area is less than the size of the base area for production, which I do think will benefit the sector, maintaining financial neutrality, as well as resulting in full use of resources, and obviously giving great flexibility to the sector.
Finally, Commissioner, I would like to point out, in relation to the ginning industry, that I believe was the great oversight in the 2004 reform and whose restructuring is an indisputable fact, that it is essential that a restructuring fund be created, which is mentioned in Mr Gklavakis's report.
In addition, I do think that Amendment 39, which we tabled on behalf of the Group of the European People's Party (Christian Democrats) and European Democrats, would help, through Article 69, to provide greater funding for this processing industry.
Finally, Mr President, I would like to express my rejection of the agreement reached this week by the Special Committee on Agriculture, because I think that it still does not provide an adequate response to the problems in the sector, and, above all, to the problems in the ginning industry; I must tell you that today I received a note from the Spanish ginning industry stating that if the Council does not amend this proposal, it will cause the 27 ginning factories to cease activity.
I hope that the Council will change all these things and I thank the Commissioner for being here.
María Isabel Salinas García
on behalf of the PSE Group. - (ES) Mr President, Commissioner, I would also like to join in what I think are deserved congratulations for the rapporteur and thank him for his availability and cooperation at all times, especially in terms of meeting with all the producers in my region, Andalusia, as he did.
I would like to say that we are dealing with a new reform of the cotton sector, because my country, Spain, and especially my region, Andalusia, appealed against the previous reform at the Court of Justice, and I would like to point out that this is the first time that a Commission reform has been thrown out.
What is surprising, as has already been said, is that in response to this situation, the Commission has inexplicably presented a proposal similar to the previous one when, of course, what has not changed is the position of Spain. The Spanish cotton growers want - we want - to continue growing cotton. There has already been mention of the serious damage that has been caused to my region.
In order to do this we need a reform that is different from the previous one and will enable us to keep growing. I therefore think that the report by Mr Gklavakis is appropriate and is a solution that should be taken into account.
The report proposes ranges for the level of coupling of the more extensive aid and greater subsidiarity for the Member States. I think that the rapporteur has understood the different situation of the sector in Greece and Spain. I therefore think that the solution given in the Gklavakis report could enable cotton-growing to continue in the two main producing countries.
It is also clear that we need an industry-restructuring plan. Last time the Commission did not take this into account, as Parliament asked.
The industry is thinking about compensation for the damage caused, which is quantifiable and it would be good to take this into account.
Finally, it is important to support the amendment from the Socialist Group in the European Parliament asking for a transitional period in order to adapt to the new situation. It is not about maintaining the current situation, which is unsustainable. I would like to remind you that this is not a CMO. We need to reach an agreement that will enable us to continue producing cotton in the European Union.
Although unfortunately we still do not have codecision, I hope that on this occasion the work done and the opinion of Parliament will be taken into account. Otherwise, and following the reports that are coming from the Council, Spain is not ruling out asking for a revision of the judgment if Parliament's opinion is not taken into account.
Diamanto Manolakou
Mr President, the EU has a 70% deficit in cotton. The sector should therefore receive more aid. This would also help to develop the whole industry, from growing cotton to manufacturing fabric and clothing. Instead of this, what with quotas and co-responsibility levies, production, agricultural income and jobs are in decline.
Since the last CAP reform, the consequences of this decline have been felt more acutely, owing to the introduction of partial decoupling from the volume of production at 65%. In Greece, a year after implementation of the new Common Market Organisation (CMO) in cotton, production is down by 20%, and in Spain by more than 50%.
In Greece 11% of small- and medium-sized agricultural holdings have disappeared; the figure is 25% in Spain. A fair number of ginning plants are unviable and about to close down, and many jobs have been lost. The increase in production costs should have been matched by an increase in aid, which instead has been reduced.
Despite the positive proposals it contains, Mr Gklavakis's recommendation does not solve the problem; it accepts the Commission's proposal. We disagree with reducing the quota in Greece in order to increase the coupled aid per hectare. This will cause yet more small and medium cotton-growers to disappear. Nobody else can count on finding a definite solution to their problems.
Nils Lundgren
Mr President, whenever we discuss the EU's agricultural policy in this Chamber, rational citizens are reminded how unreasonable it still is, in spite of certain improvements in recent years. We face continuous demands from interest groups for continued protection against foreign competition. The regime has been in force for so long that it has even distorted the way we think and talk about these issues. That is why the rapporteur is able to say the following with a straight face: 'It is vital for Community cotton production to remain prosperous, ensuring satisfactory production levels that allow for the continued viability of the ginning industry, which accounts for 3 200 jobs in Greece and 920 in Spain.'
If we applied the same reasoning to other areas, Europe would be on the road to ruin. The truth is that Spain is a highly successful industrial country with a labour force of around 20 million people. Such a country can have no problem guiding 920 people from cotton ginning to other more productive activities. The rapporteur also has no hesitation in using phrases like 'safeguarding a prosperous sector of Community agriculture such as cotton production is crucial.' This is an extreme example of contradictio in adjecto. Common sense tells us that if cotton production is prosperous it does not require any support. The cold truth is that cotton production in the EU is unprofitable and should therefore be closed down. Such adaptation may be difficult and require State aid, but the support should be used for change, not to protect production which is clearly better carried out in other countries outside of the EU.
Katerina Batzeli
(EL) Mr President, let me first congratulate the rapporteur on his work, and the shadow rapporteurs, who have cooperated with the rapporteur in compiling this report.
Unfortunately, the report we are discussing today has come about due to pressure from the European Court of Justice's ruling rather than to a political wish to ensure a long-term and stable scheme in the cotton sector until 2013 or to bring about a reform respecting the terms and rules of the WTO and CAP.
It is difficult to accept that eligible land in Greece will be reduced to 270 000 hectares from last year's 340 000 hectares under cultivation. The reduced area of land will result in a further curtailment of aid. It is also difficult to accept that ginning plants will receive aid under the 1st pillar. We might support an improvement in quality, but not for measures included in the 2nd pillar.
We should naturally prefer stability, so that both decoupled and coupled aid as well as rural development come under the 1st pillar, and would be within the scope of the national envelope as covered by Annex VIII to Council Regulation (EC) No 1782/2003, according to which Member States would be allowed flexibility in the enforcement of this Regulation.
Lastly, I should especially like to congratulate the Spanish Government for taking the cotton issue to the European Court of Justice, as the Greek Government should have done in the case of tobacco.
Friedrich-Wilhelm Graefe zu Baringdorf
(DE) Mr President, Commissioner, in the reply you are about to give, would you please clarify that, when 65 and 35 are mentioned, the 65% is not deleted but that businesses receive this money? If, according to this distribution of 35%, no more cotton will be grown, then it becomes more worthwhile to take just the 65% and grow something else, or even to grow nothing at all, because the 35% is not sufficient to cover production costs in such a way that the cotton will be accepted at the prices that the industry pays.
If it is now a matter of jobs in the processing area, there is no denying that it would be necessary to discuss with the industry again whether it is in a position to pay growers an appropriate price for this cotton so that growing cotton is worthwhile.
Of course, it is important that the 65% that is de-coupled continues to be paid to producers, whether they are growing or not. That is the de-coupling system. It seems to me that this has been somewhat confused in the previous speeches.
Mariann Fischer Boel
Member of the Commission. - Mr President, I have listened carefully to the different concerns, the different ideas raised by the honourable Members. I think that we are not that far apart, and I am sure that, at the end of the day, it will be possible to find an acceptable compromise.
I think that we have to keep in mind that, when the Court of Justice annulled the cotton reform, they did not put into question the coupled/decoupled part, the 35/65: not at all. The reason for the position of the Court of Justice was the fact that they concluded that we needed to make a more in-depth impact assessment. That is actually what we have been doing now. But that does not mean that we have seen any reason to change the coupled/decoupled part, and if farmers should stop producing, they will, of course, not use the decoupled part. They can continue with their money, although they are not producing cotton in the future.
I think that we might end up in a situation, because I think some of the difficulties the sector has been facing are actually rooted before the cotton reform was made in 2004. But I hope that the result of this reform will be that we will have a cotton sector. It will be probably with the development that we have seen - it will be smaller, but I hope that it will be more competitive as well.
I think that quite a lot can be done - this was mentioned by Mrs Batzeli - to improve the quality of the production. Here we are contributing to adding value to the product with a label of origin. Here I think the cotton-producing Member States should take advantage of this possibility to get a better price for their products so that we can maintain a prosperous, competitive cotton sector within the European Union.
Ioannis Gklavakis
Mr President, as I understand it, we all agree that cotton growing must continue in the EU. How could we not? The EU has a 70% deficit in cotton. If cotton production continues to decline at all levels, the EU is going to be deficient in everything.
In the EU, we grow only 2% of the world's production, which we must protect at all costs. Let us not forget that cotton represents only 0.15% of the EU's agricultural production. Furthermore, this report makes a special effort; significantly, in the cotton-growing countries I have visited, the producers themselves have assured me that they are keen to produce quality cotton.
All the proposals put forward should make for considerable achievements. However, I need to point out again something that I realise has not been understood. The area of land has been reduced in order to increase subsidies, and the overall amount of funding per country has been retained. There is no prohibition on increasing the cultivated area, although this would, of course, be at the cost of reducing the funding per hectare.
Thus in the case of Greece we have moved from 370 000 hectares at a subsidy of EUR 594 per hectare, to 270 000 hectares at EUR 750; but if we cultivate more than 270 000 hectares, opting for 370 000 hectares, which we are perfectly entitled to do, no one will come and tell us, as they used to, that there is an upper ceiling or a penalty. This means that there is essentially no prohibition.
(Interjection from the floor)
Please address the House and explain. Be so good as to read the report, and you will see that it is absolutely correct, for if we exceed 270 000 hectares, we will receive a smaller amount instead of EUR 750. Please see this for yourself in the report.
President
The debate is closed.
The vote will take place tomorrow at 11 a.m.
