the eu agro-food system in transition linking the common agricultural policy (cap), research and...
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The EU agro-food system in transition
Linking the Common Agricultural Policy (CAP), research and innovation
Bologna18 September 2013
Pierluigi Londero
DG Agriculture and Rural DevelopmentEuropean Commission
Outline
1. Main drivers of world and EU agriculture
2. Structural change vs. productivity 3. Linking the CAP, Research and Innovation
2
3
The shifting balance of constant needs…
Food
Feed
Fibre Fuel
Population, incomeand demand driversPopulation, incomeand demand drivers
Policy challengesin globalised
markets
Policy challengesin globalised
markets
Supply constraints and productivity
Supply constraints and productivity
4
Domestic and trade policies (from G-2 and 3 pillars to G-20 and
export bans)
Weather variability increased due to climate change
… and the new realities of agricultural markets
Food supply and demand interaction
Financialisation of
commodities
Energy links (high energy prices,
biofuels)
Domestic and trade policies (from G-2 and 3 pillars to G-20 and
export bans)
Weather variability increased due to climate change
Macro linkages (GDP, interest
rates, exchange rates)
Macro linkages (GDP, interest
rates, exchange rates)
Energy links (high energy prices,
biofuels)
5
Long term commodity price trends1948
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
0
50
100
150
200
250
300
350
400
450(World Bank MUV-deflated indices, 2005 = 100)
Agriculture Polynomial (Agriculture) Fertilizers Energy
Metals & minerals
Source: World Bank..
2.Impact on structural change and productivity in EU agriculture
6
The agricultural area has stayed stable
7Source: Eurostat, Farm Structure Survey
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
160,000,000
180,000,000
200,000,000
2005 2007 2010
ha U
AA EU-27
EU-15
EU-N12
EU-27: -0.05% / year
… but the number of farms in the EU continues to decrease
8Source: Eurostat, Farm Structure Survey
14,482,01013,627,230
12,014,570
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
2005 2007 2010
Num
ber
of
farm
s
EU-27
EU-15
EU-N12
EU-27: -3.7%/year
And agricultural* employment is still declining, but at a lower rate
9Source: Eurostat, National Accounts* Branch A of NACE R2: agriculture, forestry and
fishing; employment in number of persons
-3.00-2.93
-2.32
-1.78
-2.24
-1.78
-3.50
-3.00
-2.50
-2.00
-1.50
-1.00
-0.50
0.00
European Union (27countries)
European Union (25countries)
European Union (15countries)
% d
eclin
e i
n a
gri
cu
ltu
ral
job
s (
pers
on
s)/
year
2000-2006
2006-2012
And labour use in agriculture is declining …
10Source: Eurostat, Farm Structure Survey
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
2005 2007 2010
Annual
work
unit
s (A
WU
)
EU-27
EU-15
EU-N12
EU-27: -5.2% / year
In countries most affected by the debt crisis, people try to hold on to their farms
11Source: Eurostat, Farm Structure Survey
-3.67
-2.22
-4.70
-1.70 -1.87 -1.93-2.46
-3.12
-4.00
-5.85
-8.39-9.00
-8.00
-7.00
-6.00
-5.00
-4.00
-3.00
-2.00
-1.00
0.00
% loss o
f fa
rms p
er
year
(20
05
-20
10
)
Farms that remain are bigger in both ha UAA/farm…
12Source: Eurostat, Farm Structure Survey
11.912.7
14.3
21.422.3
23.6
5.5 6.07.1
0
5
10
15
20
25
2005 2007 2010
ha/h
old
ing
EU-27
EU-15
EU-N12
EU-27: +3.8%/year
… and in economic terms (Standard Output/farm)
13Source: Eurostat, Farm Structure Survey
0
10,000
20,000
30,000
40,000
50,000
60,000
2005 2007 2010
Sta
ndard
Outp
ut
(EU
R)/
farm
EU-27
EU-15
EU-N12
EU-27: +5.2% / year
…but slow down in labour productivity* growth
14
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
60
70
80
90
100
110
120
EU-27EU-15EU-N12
Labour productivity annual growth
1995-2002 2002-2011
EU-15 +3.1% +2.1%
EU-N12 +4.2%
EU-27 +2.2%
* Labour productivity index, 2005=100, 3 year moving average, 2011 = avg(2009,2010,2011), calculation based mainly on the EAA
…while most TFP gain comes from labour productivityand capital productivity decreases in the EU-15
15
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
60
70
80
90
100
110
120
Int. cons. Labour Land Capital TFP
2011 = avg(09/10/11)
…yields are already very high in the EU-15
AT BG DE EE ES FR IE LT LV PL RO SI UK
EU-1
2-1%0%1%2%3%4%5%
0
2
4
6
8
10
Cereal yield, avg(09-11) Annual yield growth, btw 00-02 and 09-11
16
Cereals
Milk
AT BG DE EE ES FR IE LT LV PL RO SI UK
EU-1
2-1%0%1%2%3%4%5%
0
2
4
6
8
10
Milk yield, avg(09-11) Annual yield growth, btw 00-02 and 09-11
t/ha
t/ha
Still some large margins of improvement of TFP in the EU-N12
17
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
80
85
90
95
100
105
110
EU-15 EU-12 EU-27
And already a higher TFP growth in the EU-12…
18
LV RO SI AT SK PL UK NL BE FR DE IE
EU-1
5
EU-2
7-1%
0%
1%
2%
3%
4%
Annual growthbetween 2000-02 and 2009-11
…mainly driven by an increase in labour productivity
19
LV EE LT RO DK CZ HU SK EL SI FI AT BE NL SE PT DE FR UK PL ES LU IT IE EU-
15
EU-
12
EU-
27
-1%
1%
3%
5%
7%
9%
Annual growthbetween 2000-02 and 2009-11
3. Linking the Common Agricultural Policy (CAP), research and innovation
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From linear to complex innovation systems
• Old linear model of science push: basic science leads to applied science which causes innovation and wealth – popular approach in post second world war years. This approach established a link between the flow of new knowledge and economic innovation
• However, innovation often does not come straight from science. Actually, sometimes it comes before science (steam engines and thermodynamics)
• Innovation uses a vast pool of existing knowledge, recent or old, whether it is with scientists or practitioners or in other places
• In this context, Research and Development should not be seen as a process of discovery that initiates innovation but as a problem-solving activity within already-existing innovation processes
• Hence the linear model has to be replaced by complex innovation systems implying a variety of actors interacting in networks
• In agriculture this implies to recognise the importance of various actors, to acknowledge the importance of tacit knowledge, the importance of networks, the role of facilitators of innovation (brokerage activity) and the importance of putting (part of) agricultural research into a problem-solving mode
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European Innovation Partnership (EIP)Closing The Innovation GAP
Research
Farming Practice
Interactio
n
23
EU research in agriculture
• EU funded research represents less than 10% of agricultural research done directly by the Member States
• About €2 bio spent on agriculture and forestry, food chain and biotechnologies in 2007-2013, of which roughly €700 mio for agriculture and forestry
• Proposal by the Commission for 2014-2020 to double the above amount (€4.7 bio for the Societal Challenge 2)
FP 1
FP 2
FP 3
FP 4
FP 5
FP 6
FP 7
H2020
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
Total budget of FP (€ bio, H2020 Commission proposal)
24
Europe 2020 Priorities
Tackling Societal Challenges- Health, demographic change and wellbeing- Food sec., sust. agri., mar. res. & bioeconomy- Secure, clean and efficient energy- Smart, green and integrated transport- Supply of raw materials, resource efficiency
and climate action- Inclusive, innovative and secure societies
Creating Industrial Leadership and Competitive Frameworks
- Leadership in enabling and industrial technologies (Biotechnology,…)
- Access to risk finance - Innovation in SMEs
Excellence in the Science Base- Frontier research (ERC)- Future and Emerging Technologies (FET)- Skills and career development (Marie Curie)- Research infrastructures
Common rules, toolkit of funding schemes
European Research Area
Simplified access
International cooperation
Coherence with other
EU and MS actions
EIT will contribute to addressing these challenges
Shared objectives and principles
Framework Programme for Research and Innovation
Horizon 2020
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Horizon 2020Societal Challenge "Food security, sustainable agriculture,
marine and maritime resources & the bioeconomy"
• Sustainable agriculture and forestry
• Sustainable and competitive agri-food sector for a safe and healthy diet
• Unlocking the potential of aquatic living resources
• Sustainable and competitive bio-based industries
• Cross-cutting marine and maritime research
What's new with Horizon 2020?
• Covers research and innovation
• Larger topics, more challenge-based and less prescriptive
• SME instrument
• Financial instruments
• Rules for participation:• 100% of direct costs, 20% of direct cost envelope to cover indirect costs
• Up to 100% co-funding in case of primarily research, up to 70% when it is primarily innovation activities
• One project = one rate of funding
• All entities participating refunded at the same level (NGOs, Research Organisations, SMEs, big businesses, farmer organisations, Universities, etc.)
26
Fostering innovation with the EIP
•Rural Development programmes
• Cooperation (Article 35), including pilot and demonstration projects "OPERATIONAL GROUPS"
• Knowledge exchange, training and advisory services
• Business development
• Investments in physical assets, quality schemes, etc.
•European Union Research policy (Horizon 2020)
• Basic and applied research enhancing the knowledge base
• Close-to-user activities (farm experiments, demonstrations and pilots)
• Collaborative projects with a "multi-actor approach" and networks
27
Some concluding comments
• Challenges (to be) faced by agriculture call for ambitious research and innovation at national and EU levels
• The new CAP and Horizon 2020 are coming with instruments and resources to contribute to this endeavour
• Innovation is a priority in the new rural development policy. Due attention to the relevant measures by MS is necessary (in particular Article 36 on cooperation)
• AGRI will be directly involved in management of part of the resources of Societal Challenge 2. "Phasing in" in 2014 and 2015
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Thank you for your attention!