WEDNESDAY 5 DECEMBER 2007

Mr Valentin Almansa de Lara

  Q540  Lord Cameron of Dillington: Which proposals in the Health Check put forward by the Commissioner do you favour and which ones do you find difficult?

  Mr Almansa de Lara: On the official point of view it is too early for me to say because at the last Council my minister made this clear separation between what we think are deeper reforms and technical reforms. The technical reforms we are okay with if we want to change the scope or adjust the scope of the cross-compliance that is okay, we can do it. We want to remove set-aside definitely, but we have removed now so that we can do it.

  Q541  Lord Cameron of Dillington: How do you see milk quotas?

  Mr Almansa de Lara: We are open to the debate but we think we need more information. In the last Council most of the Member States were more or less in favour of a debate but other Member States wondered what would happen with these difficult regions, mountain regions, the production in these regions. We are open to this debate, we are not saying we do not want it, but we need an impact analysis as to what will happen in some areas.

  Q542  Lord Cameron of Dillington: What about capping of large farms, where do you stand on that?

  Mr Almansa de Lara: I have no definite opinion but I do not know that we have a very big problem with this. I have no official opinion. I do not think that we have a big problem with this.

  Q543  Lord Cameron of Dillington: You have got quite big farms.

  Mr Almansa de Lara: Yes, but the amount is not very big. We have made some calculations and this capping will cost nothing because the money remains in the first pillar and in the country. It is something like €72 million for Spain which is not a very high quantity. The modulation is much more important for us than this. It is more important that we debate modulation.

  Q544  Chairman: Modulation is more important than capping?

  Mr Almansa de Lara: It is much more money. The modulation is something like €240 million for us per year. This debate is three times more important than the other in terms of money. Again, this 72 million will remain in the first pillar under Article 69 so we can manage the money. Other Member States have more problems with this than us, but I am not sure if this will be our definitive position. This is a general overview.

  Q545  Viscount Ullswater: Modulation brings us on to the funding under Pillar II and it forms part of the very crucial element of the CAP and its reform. Could you comment on what Spain's experience of implementing the EAFRD is? You were talking about the autonomous communities, is there any difference in their ability to apply these funds in different axes amongst those various communities?

  Mr Almansa de Lara: I am not an expert on rural development. I am more of an expert on the CAP in general because I have been involved in this kind of reform since 1992.

  Lord Cameron of Dillington: Here we go again!

  Q546  Chairman: You look remarkably young and youthful!

  Mr Almansa de Lara: I have good experience of that but that is not the case in rural development so I have checked with my colleagues. They told me that in rural development we have a system that is very similar to yours. We have 17 regions and we have 17 different regional programmes more or less. It is a very complicated exercise because we have 17 regions plus central government and then we have some regions which are competence regions and some that are not which have less money in rural development. In the beginning the exercise was very complicated to try to distribute the money between the 17 regions and central government. We succeeded in the end and obtained a framework for the distribution of money. Now we have 17 regional programmes plus one, which is the National Rural Network and they tell me it is the same in the UK, you have these national rural networks, more or less with the same competence as in the UK. We put more money in this National Rural Network because we are putting in national money in co-operation with local action groups in inter-territorial and trans-national programmes. I do not know what these programmes are but we are putting more money than you in this National Rural Network because of these inter-territorial and trans-national programmes. Then we have the national programme with six programmes which are compulsory for all the regions. All the regions are obliged to put these six programmes in place. The national funds have priority in relation to these six programmes. We spend the national funds first in these six programmes and if there is more money we distribute that around the other regional programmes. We try to maintain a national agricultural policy and it is not easy with 17 but we do our best. In the different regional programmes the distribution between axes is different and there are some figures and an average on the first axis, competitivity, could be between 50 and 55%; the second axis, environment, between 35 and 40%; the third axis, diversification, between ten and 15% more or less; and around all these axes the LEADER approach has 12% of the money. We put a lot more money at a national and regional level into rural development because we obtain less money from Brussels and we try to maintain the same level of expenditure so we put more national money in that. For this programme we have €1,800 million more than in the past framework. We have put more national and regional money into the system and we receive less money from the Union because we have these two or three big regions which have met the convergence objectives. I would like to make a comment. People say that rural development funds are very important but what we saw what happen in the last budgetary perspective, where the prime ministers took the money because the bigger reduction of the budget was made in this area. This is a personal opinion but it seemed a strange exercise to take money from the first pillar, send the money to rural development because it is very important and then take money out from the rural development. I need to reflect about this kind of exercise. This is a personal opinion.

  Q547  Lord Plumb: Could I follow up on this question. My impression is that Spain has done better out of the CAP than any other country in Europe and you therefore rely to a large extent on support, and now the support under the Single Payment from the old system. You are giving the regions responsibility for dealing with this, they are autonomous, and moving money from Pillar I to Pillar II which is a matter of concern for this Committee because we are hearing from all over the place that this should be done. I think we would all agree with you that you do not want it moved to Pillar II and then taken away, but take a region where you have got a lot of mountainous areas, a lot of room for development in those areas perhaps, would you not think that it is probably a good thing to move the money from Pillar I to Pillar II so that in that particular region you can use the funds better in areas of need, because it is need not just for farming those areas necessarily but for maintaining the areas, probably stocking them with whatever and making them much more interesting for the tourists, et cetera, in other words partly social?

  Mr Almansa de Lara: Again, this is a personal comment. We must take account of the fact that we are speaking about regions and we need to distribute the money between regions. We are not a central government with all the power. These things could be easy with central government that has the money and decides to fix a priority on milk production in mountain areas, for example, and send the money to this and it is the same for you if it is one region or another because this is your priority. But when you have autonomous regions, and I do not know if it is the same for you in the UK, you need to distribute the money first and then speak about the programmes. The exercise to distribute the money is at the beginning so it is difficult to fix priorities. The only way we can do that is with national programmes. We can make a national programme and say it is compulsory and we will put money in, but at the end you are obliged to meet the figures and see what happens. If with these programmes there is a big distortion of the distribution of money and the other autonomous regions will complain and say, "You are making a programme for one region, not for all". This is the reason why it is so difficult. We are putting in place a national programme but we must take care that this national programme does not change the distribution of the money. A little, yes, but if this national programme produces a movement of the money from one community to another in a big amount I am sure we will have problems.

  Q548  Lord Greaves: Within each region is the amount that is allocated to Pillar I and Pillar II, the amount to modulation, is set at national level or can that change at regional level?

  Mr Almansa de Lara: I do not know. I can ask but I do not know.

  Q549  Lord Greaves: That seems to be crucial.

  Mr Almansa de Lara: It is not possible because in the last framework we lost one of our biggest regions from convergence, Castilla y Leo«n. This was the second biggest region for money. The first was Andalusia and the second was Castilla y Leo«n. We lost the money from the Union for this region because it has met convergence criteria and we were obliged to put national money in to cover this. The distribution is not in the same way that we are receiving the money from the modulation, we redistribute the money. I am not sure about the system. It is difficult because we have to maintain a balance between the 17 regions.

  Q550  Earl of Dundee: Rethinking priorities in agriculture forms part of the budget and in that context, therefore, what are Spain's future priorities in the field of agriculture?

  Mr Almansa de Lara: For CAP or the budget?

  Q551  Earl of Dundee: If you would like to comment in general.

  Mr Almansa de Lara: We think we need to reflect on the future and we prefer to reflect first in principle and then on the budget. I heard Guy Legras a long time ago, who was Director General for Agriculture for a long time, say that a politician who does not put in place policies which explain the budget is obliged to put in place policies which the budgets allow. We are in favour of discussing the principles first and then the budget. Now the situation is different than in the past, we are facing new challenges about supply and we think we have a problem with supply. We are not sure that for political and security reasons it is good to have these problems and this level of prices because now we are dependent on third-countries for a lot of commodities. What happens if we have a big drought in Australia or South America or the United States? At the end we are rich countries so we will pay, our consumers will pay a higher price, but what happens with the poorest countries. The supply is a matter of concern for us and we need to reflect on this and change our minds perhaps because in the last 30 years we have only spoken about surplus. This was the only thing we were focused on, surplus, and this was the aim of the 1992 reform and the 2000 reform. Now we are in a different situation and have a problem with supplies. We need to reflect on supplies first and whether the policy we have in place now is good enough to solve this problem. We want to reflect on that. We also want to reflect on this so-called quality European standard. The consumers are not prepared to pay for it and when they go to a supermarket they prefer the cheapest. It is the same whether it is from Brazil or wherever, they prefer the cheapest. It is not clear that the Europeans prefer to pay for this standard of quality. It is not clear that the WTO will take on board these concerns. We need to take a decision. We can leave this European standard or we will have to pay for it. If the consumer does not want to pay then it is the taxpayers who will have to pay. This is a crucial decision for the future and we need to have a debate about this. We cannot say that we want a very high standard of quality if nobody is prepared to pay for it. This is the second point that we think we need to reflect on. We defend the highest possible standard for Europeans. We also want to reflect on the protection of the environment. The market is the word and if you read the Communication the market alone could solve all the problems, but we have some doubts about that. First of all, we are speaking about food, we are not speaking about tables or chairs, so what happens if the market makes a mistake. We need to reflect on this to see if we need to maintain some tools to control the market. We have no final position but we need to reflect on that. In relation to the protection of the environment, we are sure that bad use of the surface produces problems but we are also sure that under-use of the surface produces also problems for the environment. We can see that in Spain or in other areas. Is the market the best tool to manage the environment? Will the market pay the farmer for his role or will ask the farmer only to produce more? It is okay because the market will lead? Another problem is the management of the territory. Can the market assure us that people will be in all the territories around all the countries in Europe or do we need some measures to help the people to be there. If we leave it to the market, who will produce 2,000 litres per year or 20,000 litres per year in the high mountains? Nobody. The market will never pay for this production. We have no definitive opinion but we think before we go ahead with this exercise we need to reflect in a different way on where we want to go and what we want to do with our policy.

  Q552  Earl of Dundee: You have explained to us how reflection is required and you need to analyse the results of recent changes. You have also pointed out how important it is to be fair-minded between the 17 regions in your country. That apart, after 2013, taking into account the direction which your regions are already moving in, what changes do you anticipate in farming, in systems, that you would like to see that you anticipate will occur in the next ten or 15 years after 2013?

  Mr Almansa de Lara: I am sorry, I do not understand.

  Q553  Earl of Dundee: I am talking about your 17 regions. I am taking your point about how one cannot jump to conclusions too readily, you need to analyse the results from recent changes.

  Mr Almansa de Lara: Yes.

  Q554  Earl of Dundee: You have also explained to us how important it is in your country with your federal system of the 17 regions to be fair-minded and to be seen to be fair-minded among those regions. Apart from that, you and your countrymen will have some ideas of what you would like to see happening in farming after 2013 and I wonder if you would like to say a few words about that.

  Mr Almansa de Lara: Of course we want to see farmers in the country, we want to see people living in the countryside. We want to have an active and profitable agriculture. If we have an active and profitable agriculture we will have farmers, we will have people managing the territory and protecting the environment, and also people making money in rural areas. Our aim is that people in rural areas have money, have benefits, and can live there with their activities. This is our task.

  Q555  Lord Cameron of Dillington: Do you mean outside agriculture?

  Mr Almansa de Lara: We think agriculture must be the engine. It is possible to have other activities. Spain is a very big country and if you travel 300 kilometres from Madrid the alternatives are tourism but that is for weekends and not the rest of the week, you know.

  Q556  Lord Cameron of Dillington: With broadband technology you can be a stockbroker.

  Mr Almansa de Lara: It is possible. We saw a big change in Ireland but Ireland is a smaller country and the distances are smaller. I do not know if that is possible in Spain.

  Q557  Lord Cameron of Dillington: You have mentioned all the reasons why: the environment, the social implications of keeping people on the territory, and there could be lots of other reasons, but can you see a situation where agriculture is in a free market, no support, and the state buys goods such as habitats, maybe even land management, in other words the state says, "We want the land in these mountains, a poor region, maintained, therefore we will pay you just to maintain the land" but agriculture itself is in a free market? Do you see that?

  Mr Almansa de Lara: It is difficult because you need to be active in a business. I do not know how to explain it really. It is like the Indians in North America who are paid to be Indians on a reserve. You need some economic activity. They need to be active in their business and their business is agriculture. Again, we can pay more or differently if they maintain rules about the environment or whatever but you are obliged to maintain economic activity otherwise I cannot see people living in the countryside.

  Q558  Lord Greaves: I am interested in disadvantaged areas and particularly upland areas, but is it not the case that in quite a lot of Spain this battle has been lost already, that a lot of areas that used to be pastures, used to be grazing land for animals, are no longer and are being taken over by scrub and areas that used to be arable, the terraces on the hillsides and so on, again a lot of it has been abandoned and taken over by scrub. In a lot of Spain in difficult areas the farmers have gone and that process is still continuing in a lot of Spain and in practice agriculture in Spain is going to be concentrated in future in the better areas, particularly if it is going to get hotter and even drier.

  Mr Almansa de Lara: We will see what happens with climate change. It is clear if the rain leaves we will have big problems because Spain has problems now with the rain and if it rains less we will have big problems. You are right, Spain is in the same general trend as other Member States and we have fewer farmers. For instance, in milk we used to have something like 250,000 farmers in 1992 and now we have less than 25,000. It is clear the decrease of arable farmers is going on. We are seeing more and more older farmers on the farms and no young people. The problem is not only agricultural, it is related to other things. In the very remote areas of Spain you will have no cinema, no hospital, no disco, no girls, and it is a real problem in parts of Spain, so young people do not want to stay there because there are no girls and they prefer to go to a city or a big village. Some co-operatives are now forming programmes to put in place employment only for girls to be sure that the girls stay on the spot and the boys stay as well. These are the kinds of problems we are facing in the rural areas. They are not typically agricultural problems but related to lack of discos, cinemas. We need to try to stop this trend and if there is economic improvement on the land and we are spending a lot of money on infrastructure, the roads in Spain today are nothing like the roads ten or 20 years ago, and now you can have the Internet in most of the country. We are spending a lot of money and building hospitals in the countryside. We are trying to provide this to allow the people to be there.

  Q559  Lord Greaves: That does not make it possible for people to make money out of farming, does it? It might make it better to live in those areas so that people might go and run little businesses on the Internet and so on, or buy second homes and set up tourist things, but it is still impossible to make a living from the traditional ways of grazing their sheep or cultivating the terraces.

  Mr Almansa de Lara: It is clear if we were still producing like our grandfathers we would be totally lost. Our livestock system is a very intensive one, only our suckler cows are in extensive production. All of our beef production is intensive and our pig production is intensive. The system of production must change and it must be more efficient.

  Chairman: Let us go back to the relationship between agricultural support and structural funds.