Chairman, Minister, honourable members of the Joint Committee on Agriculture, Fisheries and Food, I am very happy to be here and have the opportunity for a frank exchange of ideas about the future of the Common Agricultural Policy. I know we share at least two fundamental ideas. First, the EU agriculture sector needs a strong Common Agricultural Policy and second, a heavy purse makes light heart, as we can see in Ireland. We need to work on the issue together.
Before getting into the debate, allow me to give a brief overview of where we stand with the reform of the Common Agricultural Policy. As has been mentioned, a broad public debate on the future of the Common Agricultural Policy ended in July. The debate received a high level of response, not just from farmers — which is important — but also from think tanks, non-governmental organisations, environmental protection organisations, development and consumer rights bodies and so on.
During the public debate, in response to questions on why we need a Common Agricultural Policy, various contributions identified seven major challenges. I will share these with members. They are food security, the competitiveness of our agriculture, globalisation, environmental challenge, territorial balance, diversity and the simplicity of the CAP.
Based on our discussions at the conference and with member states we can summarise the main objectives of the CAP into three main priorities. The first is food production. We still need to have a strong capacity to ensure food production in terms of quantity, quality and diversity. The sustainable management of natural resources is an important element also, not alone for society but for farmers in whose interest it is, economically speaking, to have a high quality of soil, water and biodiversity. The third objective is the maintenance of the social fabric and landscape of rural areas, or territorial balance. The future of the Common Agricultural Policy can contribute to these three main objectives of food security, management of natural resources and territorial balance.
I shall say a few extra words about some of these challenges. Regarding food production, it is clear we need to ensure capacity and the supply of our internal market but in addition the European Union must contribute to the supply of food at international level, especially taking into account the FAO forecasts. Global food demand will increase by more than 50% in the coming years until 2030. We also have a responsibility towards the citizens of the world and to not create problems by way of our CAP for other regions as they develop their own agricultural policies.
The European Union should not become too dependent on imports. We all agree on this. Members will know what happened this summer on the international markets when, due to a decrease in cereal production, Russia decided to impose a ban on exports. There is no risk for Europe at this stage, thanks to our Common Agricultural Policy, but we must be careful in the future not to be in a situation where we base our food supply too much on importation thereby running the risk of a food crisis and not being able to ensure our food supply.
On international trade, I ask members to allow me one digression. I am well aware of their concerns relating to the relaunched negotiations with MERCOSUR. Last May the Commission as a whole decided it was worth restarting talks with MERCOSUR countries, estimating that it would be a net gain to the European economy. The progress is not fast. Aware of the concerns expressed — not least Irish concerns — about the impact this agreement could have on certain sectors of our agriculture, I have called for a more detailed up-to-date analysis of costs. I want to make it clear I am not ready to make a proposal on these negotiations before we receive this analysis on the impact a potential agreement would have. However, whatever happens with MERCOSUR, my intention is to make sure we have sufficient mechanisms in place to support vulnerable European producers. I am aware also that we cannot take risks with this kind of agreement that might make agriculture disappear in some regions. We have certain limits regarding these potential negotiations; some red lights which we must respect. I do not think we can ignore the fact that we expend a great deal of money from the European budget to support agriculture in certain regions because it is important for our citizens, and then destroy this with trade agreements. Members can be sure I will be very careful in this regard.
I have absolutely no doubt that agriculture can provide a major response to several challenges the European Union faces, not only in the area of food security but also in environmental challenges, climate change, biodiversity loss and water scarcity. In their activities, farmers can provide answers to these challenges to society. In the future, the Common Agricultural Policy must be an instrument for farmers, giving them the possibility of providing answers to the new challenges for society.
We have to maintain our production capacity in all regions of Europe and cannot concentrate agricultural production only in certain favourable regions. With the CAP, we must give instruments to member states and the regions in order that they will be able to maintain agriculture in all regions, taking into account the specificity of each region. I do not really like to talk about natural handicaps because that would mean some regions have handicaps while others are more favourable for agriculture. All regions in Europe are favourable for agriculture. We simply must provide instruments so that we can maintain this production capacity in all European regions. Ireland is a very good example. With its extensive agriculture it is also able to be competitive in the markets, having, of course, certain specific instruments that support farmers. Members can be sure than in the future we will try to maintain and develop this kind of instrument.
I wish to underline my opinion that any future Common Agricultural Policy must be maintained with two strong pillars that are complementary. We cannot have a good pillar and a bad pillar, reinforce the good pillar and weaken the bad one. We must have two good pillars that are complementary. Direct payments are crucial for the future of European agriculture. The direct payments of today are income support for farmers. The principle of maintaining this pillar is not for discussion. We must also consider how we can place this first pillar more in line with specific situations in the 27 EU member states and with the diversity of agriculture while ensuring a clear complementarity between this first pillar of direct payments and the second pillar. We must also ensure a more equitable repartition of the budget for direct payments. We discussed this issue with the Minister this morning. My intention is not to make a revolution in this direction but to have an evolution in order to be more clear regarding the expectations made by our contribution and to have a clear justification for this first pillar.
Preserving the diversity of our agriculture does not mean reactivating national policies to the detriment of EU policy. The renationalisation of the CAP is not acceptable because this would destabilise the only truly integrated European policy. That is why we must give flexibility to the regions and member states but must maintain this coherence at European level and maintain the Common Agricultural Policy as a real common agricultural policy.
Direct payments must be seconded by a strong package of market measures. In this regard we need to maintain a strong safety net to give the market the possibility of playing this role but also to have the capacity to act when the market fails and to avoid loss of income for farmers. That is why we must not only maintain a strong market measures package with the possibility of intervention to avoid crisis but must also develop a parallel system in order to solve the problem of volatility of both prices and incomes of farmers. I am open to proposals and opinions but it is clear that we will propose some new instruments in this direction.