ORGANIC FARMING SUPPORT IN THE EUROPEAN UNION AND CENTRAL-EAST EUROPEAN COUNTRIES

Władysława Łuczka-Bakuła
Department of Economics, Agricultural University of Poznan, Poland

ABSTRACT

The paper presents an analysis of the utilisation support by the organic farmers in the EU countries based on the data originating from the elaborations of the European Commission in years 1993-2001. Partial data concerning this kind of farming in Central-East countries were shown. The support related to quantitative changes, which occurred in organic countries of those countries.

Key words: Common Agricultural Policy, organic farming, European Union.

INTRODUCTION

The dynamics acceleration of organic agriculture development in the European Union countries, particularly in the 90’s of the last century is a result of the evolution of the Common Agricultural Policy, which has reached the aims connected with support of conventional agriculture, in greatest degree than so far, on organic agriculture. At the end of the 80’s, it reached the key aims, which were generating higher productiveness in agriculture and assurance of food self-sufficiency. These achievements were an economic basis for accepting the additional aims, particularly such as integration of environmental and economic functions of agriculture, biodiversity maintenance as well as preservation of ecosystem in country areas. The point of departure of these changes was the beginning of last decade of 20^th century when MacSharry’s reform was introduced and it initiated organic agriculture support in whole European Community area. At the same time, parallel with realization of new support policy, the regulations concerning the unified criteria of production and indication of organic food came in force. That created the essential element of its credibility improvement.

The inclusion of the new countries into the European integration stream, what follows that, into the influence area of the Common Agricultural Policy environmental instruments, creates the possibility of the acceleration of the dynamics of not the development organic agriculture only, but also the market of the products as well. In front of many countries, including Poland, in effect of organic agriculture incorporating into the support policy, the new possibilities of growth and more dynamics of participation to the European market appeared. This also means that organic producers are put under stronger pressure of internal European competition, extorting the increased economy activity exceeding the borders of the country.

THE COMMON AGRICULTURE POLICY AND ORGANIC AGRICULTURE – THE EXPERIENCE OF COUNTRIES OF THE EUROPEAN UNION

The ecological agriculture economy became an integral element of regional development strategy in the European Union countries in the 90’s. That created the opportunity of joining many aims, especially the sustainable agriculture with perspectives for economy development at the local level. The experiences of many countries show that it had the influence on making processing development more dynamic, cooperative links between producers and manufacturers as well as the production and distribution connections. The special role in the process of forming of this economy was attributed to the community system of support resulting from two basic regulations in this range:

• Council Regulation (EEC) No 2078/92 on agricultural production methods compatible with the requirements of the protection of the environment and the maintenance of the countryside,

• Council Regulation (EC) No 1257/99 on support for rural development from the European Agriculture Guidance and Guarantee Fund (EAGGF) and amending and repealing certain Regulations.

Council Regulation (EEC) No 2078/92 had particularly significant meaning. It began with an introduction of the agri–environmental programmes creating the financial encouragement for undertaking the protective activity in agriculture and rural areas (CAP-Reform).

Financial support was granted for such activities as:

• applying organic methods to production,

• transition to extensive farming or extensive grasslands,

• reduction of cattle and sheep stock,

• protection of local breeds in danger of extinction,

• managing land for public access and leisure activities.

These programmes were set for the following environmental aims:

• application and popularisation of agriculture practices that would reduce agricultural contamination,

• making production more extensive by converting arable land into grasslands,

• agriculture lands utilization to make them coherent with environmental protection programmes, preservation of rural landscape and biodiversity,

• ground conservation,

• managing permanent set-aside lands,

• farmers’ education and training in production methods compatible with environmental protection requirements.

Farmers participating in agri-environmental programs who applied different methods of management, both organic and conventional, were eligible for payments under Council Regulation (EEC) No 2078/92. By granting the aid, the way of management was not the only decisive factor, but also the undertaking by farmers strictly specified activities included in the directory of environmental services considerably exceeding Good Agricultural Practises.

In the literature of main research centres engaged in the organic agriculture problems, there is lack of elaborations in the area of influence of the Common Agricultural Policy on organic farming in the European Union countries in the period starting from the MacSharry’s reform and lasting until the entering of the new countries in 2004. Although there are a few elaborations of well-known and valuable researchers, which were ordered by the European Commission, but generally they contain the discussion of this policy in two periods: in years 1993-1998 and 1999-2001 [4, 5]. However, there is a lack of recognition on the policy influence on organic agriculture after 2001, whereas the knowledge on that issue has a fundamental meaning for analysis and evaluation of environmental Common Agricultural Policy elements realisation until the affiliation of the new countries.

On the base of available data and investigations on funds utilization in years 1993-1998 one can assume that expenses incurred on environmental aims within European Agriculture Guidance and Guarantee Fund grew up from 100 million ECU in 1993 to 1.7 billion ECU in 1998. Their share in this Fund, which value came to 38.8 billion ECU in 1998, was insignificant and reached the level of 4.4%. The European Union member countries were the beneficiaries of these means in different degree. In compared period of six years, four countries took the greatest advantage of these funds. They were Germany, Austria, Italy and France. They obtained 69% of total amount of support paid by the operation of Regulation No 2078/92.

The largest number of organic farms under the support in years 1993-1998 occurred in Italy, Austria, Sweden and Germany. In 1998, the share of farms situated in these four countries in total number of supported organic farms amounted 80%. The share of these farms in total number of organic farms reached the same level.

Spatial distribution of organic land area under the support was similar. It was concentrated in Italy, Germany, Austria, and Sweden and in 1998 exceeded 200 thousand hectares in each of these countries. In 1998, they occupied about 72% of total organic land area amounting over 1 million hectares. The significant place was taken – as well as in case of number of farms – by the three first mentioned countries, which played the leading role in organic agriculture of that period.

In 1999 there was resolved the Regulation No 1257/99. It created more favourable conditions of support for organic farmers than the Regulation (EEC) No 2078, which can be proved with the growth of average payment per hectare from 183 to 186 euro. That amount was over twice higher than the payment for other farmers under agri-environmental programmes. In 2001 about 250 million euro were spent on programmes connected with this kind of agriculture under the Regulation (EC) 1257/99 and over 270 million under the Regulation (EC) 2078/99. There were 3 million of organic land area and 118,000 farms under the support. Four countries: Italy, Germany, Sweden and Austria took the most advantage of the support. Their share in the total size of the support was about 73%.

THE QUANTITATIVE CHANGES IN AREA AND NUMBER OF ORGANIC FARMS

The European Union countries were characterized by diverse growth dynamics of number of organic farms, arable land and its share in period of 1993-2002, which resulted in different significance of this kind of farming. Due to that fact, several groups of countries with varied scale of organic agriculture can be distinguished, taking total organic land area, number of farms and their share as criteria of the division.

The first principal group, so called the hard core of organic agriculture, is formed by fours countries: Italy, Germany, Austria and France. This group of countries is characterised by the largest organic area land, but various number of farms and their share. During the ten years of the analysed period, the significant regrouping took place inside this group. Firstly, until 1997, the leader of organic farming in respect of arable land area was Germany – the country in considerable measure creating the European legislative and organizational bases. In 1997, this position was taken over by Italy consequently holding the first place during the whole discussed period. In 2002, organic area land exceeded in that country the 1,200,000 hectares, but the number of organic farms reached the level of over 49.000.

In the second half of the 90’s and at the beginning of the first decade of the XXI century the significant occurrences were stagnant trends in some countries of the hard core of European organic agriculture (Germany, France), which had problems with preservation or increase of former growth dynamics.

In some countries, the process of catching up the countries of the hard core took place. One can also classify the Great Britain and Spain to this group. Recently these countries have made a significant progress in this field. During four years (1999-2002), they increased the area of organic farms adequately by over 330,000 and 312,000 hectares. Therefore, in 2002 they took the second and the fourth place in the European Union. The characteristic occurrence is the fact that their share in European means of support was quite small until 1999. In further perspective, Portugal has quite big chances for entering into this group of countries. It reveals relatively high dynamics of organic agriculture growth.

The second group, in respect of the organic agriculture development, is formed by so-called small centre countries of relatively large share in organic land area in total arable land reaching from about 6 to 7% and large share of the number of organic farms from about 4 to 7%. Denmark, Finland and Sweden can be classified to this group.

Peripheral countries of organic agriculture belong to the third group, which are characterized both by small organic land area and by number of farms. They are Belgium, the Netherlands, Ireland and Luxembourg. In 2002, these countries occupied 120,000 hectares of organic land area with share at the level of barely 2.6%.

ORGANIC FARMING IN THE CENTRAL-EAST EUROPEAN COUNTRIES

Transition to market economy caused drastic changes in economical situation of agriculture in the Central-East European countries. First, big differences between prices of farm produce and yielding productive resources caused strong shocks. It had a reflection in the sudden fall of external resources supply, especially plant protection means and mineral fertilizers. The fall of the use of artificial fertilizers reaching over 50% in this part of Europe in 1990 was not the effect of environmental intentions and farmers choices, but the consequence of agricultural politics liberalisation. The positive environmental results would always seem to be caused by low use of external resources, whereas in fact it can be just the opposite, for example in the instance when it leads to development of monocultures, soil fertility decrease and negative influence on biodiversity. Not high earth erosion only, but also contaminated water coming from agriculture in many of these countries (for example Danube’s water is polluted by nitrogen which in 50% comes from agricultural activity of these countries) show that this kind of agriculture is sustainable neither from economical nor organic point of view.

At the threshold of a new century, these countries are still at the crossroads, because they are characterized by the variety of organic development visions as well as the diversity of key aims and inconsequence in their realization, which is generally a derivative of lack of agriculture policy continuity overall, and especially a structural policy. A huge number of aims realised in these countries relatively in short time and importance of conversion (which these aims are submitted) causes that trial of the evaluation of this policy encounters many difficulties. However, the policy in majority of these countries, which have been the European Union members since 2004, seems to aim towards quantity reinstatement of the chemical means used in agriculture to the level existing before 1989.

Environmentally friendly agriculture is not perceived as a one of the real options of rural areas development. A proof for these assumptions can be politicians’ approach towards organic farming, which in spite of large contribution to solving many of environmental problems is still treated marginally. This is the one of fundamental premises explaining the low level of its development considering the area, number of farms and market immaturity.

On the base of the former organic farming development dynamics, these countries can be divided into two basic groups:

• the leader countries of about comparable tradition of organic farming reaching the turn of the 80’s and 90’s (Czech Republic, Poland, Hungary)

• the countries with increasing organic farming (Estonia, Lithuania, Latvia, Slovakia, Slovenia)

The basic feature of the first group of countries was the legislation acceptance in the range of organic farming consistent with the International Federation of Organic Agriculture Movements (IFOAM) system that increased the credibility of its control and certification. In 2002, these countries occupied 76% of total organic land area of East-Central European countries being candidates to the European Union. Total quantity of this area was relatively small and figured out about 400,000 hectares, when in the meantime in the European Union countries (15) it exceeded the level of 4.7 million hectares.

Until the end of the 90’s the second group was characterised by law and institutional vacuum in the area of organic farming. No matter how the control and certification system of organic farming functioned in these countries, nevertheless it was too liberal in comparison to the ones operating in the European Union countries. This situation started to change under the influence of integration aspirations and necessity of harmonisation of national regulations with the European requirements. These have extorted the positive adjusting processes in these countries in result of which the credibility of organic food offered by them has risen.

Low level of agriculture support or even its lack was the common feature of both groups of countries until the integration. A proof for these assumptions can be the fact that in 2001 the highest government support per 1 hectare of organic land area amounted a little over 1 euro and was noted only in Slovenia and Czech Republic. At the beginning of this century, governments’ engagement in promotion of organic farming had mainly a declarative character in most of the countries.

Until the integration, connections of the Central-East European countries with the European Union in the area of organic food trade were quite weak. Former level of export to European Union in most of the analysed countries was low. Hungary was the only country of high organic products’ export level, which reached over 90% of the total organic production in this country. The reasons for such low export in these countries were quite different.

Firstly, only the countries that fulfilled the formal-legal requirements (among others, the ones concerning the control and certification of organic food production) and were included into the third countries list had free access to European Union organic food market. The entry to this list assured, in some frames, free access to this market, which was opened to the definite group of countries and limited for others. All countries being candidates to European Union were out of the list, with the exception of Hungary and Czech Republic.

Secondly, the relevant export limitation was small supply offer lacking a range of features, which possessing was essential from the point of sales possibilities on the competitive market. Their weaknesses were both relatively small quantity of offered products and unsatisfactory assortment variety. They had so significant influence on evaluation of this offer that in spite of existing comparative advantage coming from price competitiveness of these products so that they created a significant export blockade.

Fast development of organic farming in the Central-East European countries can be achieved only with the state participation which activation is necessary in this filed for various reasons.

Firstly, the accession to the European Union creates potential possibilities for organic farming development because of farmers’ participation in agri-environmental programmes. So that the increased production would not get into the demand emptiness on the domestic markets of the new European Union countries, there should be prepared the organic food promotion program on the example of the old Union countries, which would be directed both to the domestic and European market. In the first case, it is a result of domestic market immaturity, which occurs in low or even very low demand level for organic food. On the second hand, the significant meaning has also promoting this kind of food on the European markets considering its low recognisability by consumers of the European Union old countries.

Secondly, there is a need for state participation growth in creating public statistics and monitoring of organic farming, especially within the support from the Common Agriculture Policy.

CONCLUSIONS

One can expect that Central-East European countries integration with the European Union will bring a lot of relevant both environmental and economical advantages. The expected growth support of this kind of farming under agri-environmental programs will result in increase of both organic land area and number of farms in further perspective. Nevertheless, in terms of low dynamic of demand for organic food in these countries, with simultaneous achieving the comparative advantage, producers must take into account the necessity of the sale growth on the common European market, and what follows that, they have to increase the assortment offer attractiveness, efficiency of making contracts’ realisation and sales more professional.

REFERENCES

1. Council Regulation (EEC) No 2078/92 of 30^th June on agricultural production methods compatible with the requirements of the protection of the environment and the maintenance of the countryside.

2. Council Regulation (EC) No 1257/99 of 17^th May on support for rural development from the European Agriculture Guidance and Guarantee Fund (EAGGF) and amending and repealing certain Regulations.

3. CAP-Reform, 2003: A comparison of Current Situation [in:] http://europa.eu.int/rapid/star/cgi/ 12.6.2003.

4. Foster Carolyn, Lampkin Nicolas (2000) Effects of the CAP-reform and possible further developments on organic farming in the EU, FAIR3-CT96-1794 2078/92, Brussels.

5. Häring A. M., Dabbert S., Aurbacher J., Bichler B., Eichert C., Gambelli D., Lampkin N., Offermann F., Olmos S., Tuson J., Zanoli R., 2004: Organic farming and measures of European agricultural policy, vol.11, Stuttgart-Hohenheim.

6. State of Application Regulation (EEC) No.2078/92. Evaluation of agri-environment programmes. GGVI Commission Working Document VI/7655/98.

7. Znaor D., 2001: Overview of Development of Organic Food and Farming in the CEE – Elements for a Regional Action Plan. Organic Food and Farming, Towards Partnership and Action in Europe, Copenhagen.

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