CAP Reform Profile - Greece

The Greek Government's Position on Future CAP Reform

The Balance Between Pillar 1 and Pillar 2

A Continued Need for Public Intervention

Support Must Remain in Place for Cotton and Tobacco

Support for Capping Direct Payments

A Need to Simplify Cross Compliance

Cohesion Policy Should be Boosted

A Need to Develop a Common Energy Policy

Final Comments

Notes

Sources

The Greek Government's Position on Future CAP Reform

The Greek position is that the expenditure for agriculture should remain at the present level, at least up to 2013. It is argued that European agriculture can play a multi-functional role. Agriculture is very important - in economic, social as well as environmental terms - for the sustainable development of rural areas in Greece. Farming – particularly family farming – is considered as a public service, and the CAP should treat farms and farmers as public resources. A reformed CAP should guarantee a fair agricultural income and decent living conditions for all small-scale farmers, taking into account their production costs as well as production levels and imports.

Besides its contribution to safeguarding the socio-economic stability of the countryside and decelerating if not stopping its depopulation, agriculture plays a strategic role in food safety, in periods of serious turbulence of the world food market. Agriculture is also important in areas such as consumer protection, safeguarding the European pattern of agriculture, broadening trade flows and safeguarding the natural environment.

Thus, according to the Greek national position, the EU should provide a policy framework that ensures stability and security for its agricultural population. Greece therefore argues that the EU must have sufficient financial resources to fulfill its objectives and priorities. It is not considered realistic to expect Europe to respond, in a satisfactory way, to the challenges that have been set when limited resources are available for the main European policies.

The Balance Between Pillar 1 and Pillar 2

All stakeholders involved in the agricultural sector argue that inequalities due to the excessive funding of large-scale agricultural businesses should be mitigated. Around 18% of the largest European farms are receiving about 85% of the total CAP payments. The current situation not only contributes to disparities within the agricultural sector, but also undermines public and political support of the CAP.

Within this context the national position is strongly in favour of reinforcing and expanding the rural development measures of the CAP (i.e. Pillar 2), especially since this Pillar covers new actions that are meant to deal with climate change together with the challenges arising from globalisation. However, any strengthening of Pillar 2 should take place by using additional community funding from the EU budget and not by simply using transfers from Pillar 1. There is a strong opposition to any increase in modulation because it means a direct cut of farmers’ income. Additionally, according to the main organisation representing farmers, PASEGES (the Confederation of Unions of Agricultural Co-operatives), farmers cannot maintain their competitive position, in the face of EU policy to open markets to imports, and, at the same time, meet high EU standards of sustainability if their direct payments are constantly cut.

A review of the Pillar 2 measures planned for the 2007-2013 period reveals a tendency to keep the implementation of measures as uncomplicated as possible. Whilst there are some merits to simplicity, some new elements introduced or emphasised by the Rural Development Regulation – such as measures related to forest areas, High Nature Value farming, Natura 2000 sites, and the implementation of the Water Framework Directive, were practically ignored during the implementation of measures.

A Continued Need for Public Intervention

The current intervention tools (public intervention, private storage, export refunds) must be maintained because they effectively reduce market instability and benefit both consumers and producers. The cereals intervention is of significant importance since it provides an important safety net at times of serious disruption on the world market.

Support Must Remain in Place for Cotton and Tobacco

One of the major national priorities is to ensure that direct payments provided by the CAP for tobacco and cotton remain at the current level. These two sectors are considered of significant importance in financial and social terms (for a brief description of these sectors refer to the notes at the end of this article).

Regarding tobacco, PASEGES argues that the proposed 50% cut in subsidies from 2010 will result in massive job losses across the industry. The negative impacts of the last 2003 reform are already visible. According to the International Tobacco Growers’ Union, production has fallen by 80% since 2006 and the number of growers has shrunk from around 50,000 to 15,000. Thus, there is a demand that existing coupled subsidies, be extended to 2013 to give tobacco growers more time to adjust to EU agricultural sector reforms.

In Favour of Capping Direct Payments

There is a strong opposition in Greece to any proposals for the imposition of a lower limit to the Single Payment. Both the Ministry of Rural Development and Food and PASEGES recognise that in the case of very small payments the administrative cost can exceed the payment. However, the introduction of lower limits would be detrimental to farms contributing to employment and quality production in many vulnerable (less favoured, mountainous and semi-mountainous) areas. A possible solution to these problems is the reduction of administrative costs but definitely not the abolition of the payment itself. On the other hand, all stakeholders are in favour of an upper limit to the direct payments that are received by a single farm. According to PASEGES, this limit should be set at €100,000.

A Need to Simplify Cross Compliance

Farmers and the administration have made great efforts to meet cross compliance requirements. It is strongly believed that there is a need to simplify the system of cross compliance. PASEGES suggests that although farmers wish to comply with cross compliance rules, existing legislation hindered, rather than helped them, from doing so. Therefore, the specific measure should be in the future much less bureaucratic and less complex, without of course, endangering the existing public health and environmental production standards.

Cohesion Policy Should be Boosted

The cohesion policy should be empowered since it constitutes the fundamental expression of solidarity and the tool to stimulate economic activity in all the Union’s areas, in order to meet increased needs. The Greek position was that the territorial dimension, within the broader framework of cohesion policy, plays an extremely significant role. A policy focusing on territorial cohesion may contribute to regional development and the promotion of competitiveness and quality of life. This could be attempted through interventions of an explicitly territorial dimension.

A Need to Develop a Common Energy Policy

The Greek government gave full support to efforts to combat climate change and believes that the EU must maintain a leading role within the context of UN negotiations, as well as in its contacts with international partners, in the direction of attaining a global agreement on climate and environment for the post 2012 period. The national position is in favour of the gradual development of a common energy policy based on the principles of solidarity among states, on the security of supply, together with the diversification of suppliers and transit routes of energy resources.

Final Comments

There is a clear focus of attention of the agricultural policy makers in Greece towards the Common Market Organisations, either within the framework of the Single Payment Scheme or in terms of the remaining coupled payments. One can observe a clear reluctance, if not a negative stance, towards change. A strong agricultural influence resisting the shift of emphasis from support to agriculture towards a rural policy, the increased difficulties faced by the administration in the process of implementing RDPs when compared to the Single Payment Scheme, and the general inertia to change could be some of the obvious reasons for this reluctance. This opposition to change indicates the future position of the Greek agricultural policy making complex vis-à-vis any future proposals for reform.

Notes

Cotton

Greece is the largest producer of cotton in the Community (381,586 ha in 2006) with 79,700 cotton farmers, mainly in three regions (Makedonia, Thessalia and Sterea Ellada). Cotton accounts for 9.1% of final Greek agricultural output. Most farmers grow between 2 and 5 hectares of cotton. Cotton is grown on fertile arable land. Over 99% of Greek cotton uses irrigation. Following the CAP reform in 2003 a large number of cotton producers chose the optimal production decision to move to a low input-low output system without harvesting. This option has lower costs per hectare and producers face less risk. It could be characterised as “no risk farming” since the total amount of coupled and decoupled payments per hectare is almost €1,500 and the same time the inputs costs are negligible. This is possible since the receipt of the coupled payment is not dependent on harvesting the crop.

Tobacco

Following the adoption of total decoupling for the tobacco sector in Greece production fell by 80%.Only four, or perhaps even three, processing plants will operate in 2009 and the remaining 19 or 20 will stay closed. Concerning employment, existing estimates suggest that the number of permanent employees has reduced by 50%, whilst the number of seasonal workers will reduce from pre-reform levels of 7,000 to about 2,000.

Sugar Beet

According to the Hellenic Sugar Industry, almost 45,000 hectares with sugar beets with an average yield 62 tonnes per hectare are cultivated in Greece. The entire production of sugar beets are used by the Hellenic Sugar Industry for the production of sugar and its by products. The Hellenic Sugar Industry is the sole sugar producer in Greece and ranks among the biggest sugar industries in Europe. It constitutes the most significant agricultural industry of Greece, since more than 20,000 beet-growers depend upon its operation for their income.The Greek Ministry of Rural Development and Food is planning to convert two of Greece’s five existing sugar plants into bioethanol production facilities.

Sources

Greek positions at the Council of Ministers for Agriculture and Fisheries.

The contribution of the Greek government in the consultation concerning the budget reform (available here).

Hellenic Confederation of Unions of Agricultural Cooperatives. Resolution of February 2008 (available here in Greek).

Hellenic Confederation of Unions of Agricultural Cooperatives. Conference C.A.P. Developments and Perspectives, September 2008 (available here in Greek).

UNITAB, 2008 The reform of the tobacco CMO 2004-2007 - An overview of the important economic and social impact of tobacco growing in the poorest regions of the European Union.

PUBLICATION DATE

23 Feb 2009

AUTHOR

George Vlahos, Stathis Klonaris, Dimitris Dimopoulos

FURTHER INFORMATION

George Vlahos and Stathis Klonaris are based at the Agricultural University of Athens. Dimitris Dimopoulos is an official at Ministry of Rural Development and Food.


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