1. CMO introduction and main legal framework
Technical Assistance for Development of a Strategy for Alignment with
Common Market Organisation (CMO) Requirements
TR2014/AG/10-A1-01/001
This Project is co-financed by the European Union and the Republic of Turkey
CMO introduction and main legal framework
Antalya, March 1st, 2018

2. Introduction to CMO What is the CMO?
Theory on income problem and role of CMO
Current legislative framework and key measures
CMO challenges in the new CAP

3. What is a „Common Market Organisation”?
The shortest possible and legally ‘corect’ answer would be:
set of very different measures applied in different agricultural sectors in the EU
measures of the 1st pillar of the CAP, except the direct payments
CMO measures are the result of a very long evolution of the CAP (first CAP measures in the 1960s were CMO)
In the past: 90% of CAP expenditures Today: only 4%
Is there a future for CMO measures? ...

4. Theory Why do we need to organize markets?
Most reasons for governments to intervene in the economy:
Correction of market failures (price volatility)
Redistribution of incomes (from industry to agriculture)
Non-economic objectives (standardisation, fitosanitary, health, food security)
Interventions could be monetary and non-monetary
In the EU and most developed countries the main reason for intervention is redistribution of income because of
Income problem in agriculture!

5. Income problem in agriculture
Old fashioned approach combination of:
Market oriented price support:
Minimum prices, production quotas, export subsidies, import / export tariffs,…
Structural policy measures: to help farmers to leave farming
The choice of price support without structural policy is not a sound policy in the long-run (old CMO policy!)
Self-sufficiency in agriculture vs. farm income → both directions!
Structural adjustment policy is seen as the only solution!

6. CMO was efficient in doing things right but were the things chosen right ?

7. Many dairy plants were producing butter and SMP for public stocks

8. Producer Support Estimates as % of gross farm incomes, 2014 – 2016 average
Source: own analysis based on OECD data

9. CMO in CAP policy perspective
CMO through specific policy tools helps in functioning of markets and ultimately contributes to the competitiveness of agri-food sector;
Unlike the direct payments and the rural development, not all CMO measures are linked to financial support to beneficiaries (farmers are not the only beneficiaries of the measure as for direct payments);
Beneficiaries are sometimes only ’obliged persons’ for certain rules;
For most measures Paying Agency is the implementing body

10. Legal framework
Single CMO Regulation = Regulation (EU) No 1308/2013 of the EP & of the Council of 17 December 2013 establishing a common organisation of the markets in agricultural products and repealing Council Regulations (EEC) No. 922/72, (EEC) No. 234/79, (EC) No. 1037/2001 and (EC) No. 1234/2007
Adopted as part of the CMO reform package,
proposed by the ECin October 2011
In application since 1 January 2014
232 Articles and 14 Annexes
32 Implementing regulations

11. „Umbrella” CMO Regulation 1308/2013
Part I. INTRODUCTORY PROVISIONS
Definitions
Scope
Marketing years
Reference thresholds
Part II. INTERNAL MARKET
Market intervention
Public intervention and private storage aid
Aid schemes
Authorisation for vine plantings
Marketing and producer organisations
Marketing standards
Designations in wine sector
Specific provisions for individual sectors
Producer organisations
Part III. TRADE WITH THIRD COUNTRIES
Import and export licences
Import duties
Tariff quotas
Special provisions for certain sectors
Export refunds
Inward and outward processing
Part IV. COMPETITION RULES
Rules that apply to undertakings
State aid rules
Part V. GENERAL PROVISIONS
Exceptional measures
Communication and reporting
Crisis reserve
Part VI. DELEGATION OF POWER, IMPLEMENTING PROVISIONS, TRANSITIONAL AND FINAL PROVISIONS

12. Structure of CMO expenditures: Total EUR 2.67 billion for 201512

13. New intervention logic for CMO: challenges, objectives & instruments
The main issues regarding the future CMO relate to the:
Volatility of agricultural prices and
Instability of agricultural markets
Role of farmers in the food supply chain
General opinion is that the current safety net system is not adequate in periods of severe market crises, for which appropriate measures must be developed
The crisis reserve mechanism should also be improved
Some Member States consider that the establishment of efficient market stabilisation measures justifies the introduction of a separate 3rd pillar of CAP

14. The most recent challenges for EU farmers after Reform 2013 was adopted
Russian import ban from August 2014 showed how vulnerable the agricultural sector is to market instabilities
Market crisis in EU dominated discussions of EU agricultural ministers in 2014, 2015 and 2016
Market stabilisation and support to producers facing a market crisis cannot be achieved by other policy measures
For this reason, despite its lower share in the agricultural budget, CMO will continue to be an important part of CAP!

15. P1 - prilagoditi
Source: DG AGRI, 2015

16. Recommendations of AMTF *
Reduce unfair trade practices !
Increase market transparency to help farmers negotiate their contracts
Written contracts must be offered to farmers
Producer cooperation → reduce complexity
Improve the use of risk management tools by farmers
Facilitate access to finance for farmers
* Agricultural Markets Task Force → high level group established by the EC and led by former Duch Minister Veerman, issued its report in November 2016

17. CMO and accession to the EU
Highly demanding in terms of capacity building and institutional setup
Extremely limited possibility for derogations of CMO acquis

18. This publication has been produced with the financial assistance of the European Union
The contents of this publication is the sole responsibility of NIRAS IC Sp. z o.o. and can in no way be taken to reflect the views of the European Union