Dr. Franz FISCHLER

Member of the European Commission responsible for Agriculture, Rural Development and Fisheries

Romania and the EU: Making the most of EU membership

Participation at the AGROFIN Agricultural Business Forum
Bucharest, 14 October 2004

Ambassador Ettiene, Minister Steriu, Mr. Manson,

Ladies and Gentlemen,

Something I learned when I came to Romania three years ago was that 24 hours is never enough to do justice to such a beautiful and varied country; mountains, lakes, a rugged coastline, and a rich environmental and cultural heritage. Bucharest only begins to tell the long story of this nation; I am looking forward to being able to venture a little further this afternoon into what I am sure many of you would refer to as the `real' Romania, not to mention having the opportunity to return and explore it more thoroughly when I am not limited to an official visit.

In the meantime however, let me capitalise on the time I have available and begin by thanking you for your invitation here today. I understand that last year's forum was a great success and this year's again seems to have drawn together a number of actors from different fields and it is a pleasure to be able to join you. Three years has certainly seen considerable change over here, not least, from my point of view, the closing of the agricultural chapter, and the agreement on a fair and balanced agricultural accession package. This was a complicated and time consuming process I know, but one that has marked an important step towards accession.

And, as EU membership edges ever closer, meetings such as these have a crucial role to play in building confidence and awareness amongst the farming community in the closing hours of your preparations. The next couple of years in particular will involve some fairly intense dialogue, I remember from my own experience in Austria, and in our case, the part played by organisations similar to AGROFIN was essential in getting the message about what EU membership meant, and what it could offer, right into the heart of the countryside.

`What does accession really mean for individuals?' was one of the questions we were most frequently asked by members of the farm community, to which the reply was, and still is, solidarity, support and a stronger voice in the international arena. The common agricultural policy is just one of many mechanisms that becomes available from day one of membership that seeks to both stabilise - in this case agricultural markets, and revitalise rural areas and economies. Restructuring, diversification and modernisation are all essential for building a strong and competitive agricultural sector and the various CAP tools available, in particular the broad spectrum of rural development measures, will facilitate and accelerate Romania's efforts in the years following accession.

On top of this, as was the case for the ten new Member States, direct payments for farmers will be gradually phased in, in order to allow for the necessary restructuring of the agricultural sector to take place. More support and more measures, compared to the current Sapard instrument, will also be available under rural development for the first ten years of membership and Romania should prepare itself to manage this. Income support to build semi-subsistence farms into commercially viable units, professional advice and financial assistance to help farmers form producer groups, and capacity building measures for the creation of local development partnerships are all specific tools available to new member states that can, and should, be used to bring different actors in the agricultural industry together and maximise the opportunities that come with membership.

Special dispensations have also been granted to take account of the necessary adjustment and restructuring in certain market organisations.

Your wine sector is a good case in point here, having been granted an eight-year transition period in which to remove prohibited (hybrid) grape varieties from some 30 000 hectares of land, and replant it with quality grape varieties (vitis vinifera) which will increase the production of quality wine. Wine production comprises an important part of Romanian agriculture, and has valuable export potential.

And, as a typical example of a potentially high quality product for which EU demand is high, I would encourage you to accelerate the necessary adjustments, from vineyards to wineries and the ancillary wine industry, and strengthen your marketing and promotion capcity in this respect.

It is not only some high value added speciality products that will benefit from enlargement however. Market opportunities for all agricultural commodities will improve, have already improved in fact, as Romania's trade relations with the EU have been consolidated in the build up to accession. Gradual liberalisation under the "double zero" and "double profit" agreements have secured a steady growth in trade over the last few years, and 2003 in particular saw a marked change in the trade balance, with a significant increase in Romania's agricultural exports to the EU and a consequent reduction in its trade deficit. And, as further improvements are made, in infrastructure, marketing and the promotion, and as further trade agreements are concluded with the new Member States over the remainder of this year, more and more market opportunities will present themselves.

Ladies and Gentlemen,

You know as well as I however, that market opportunity is dependent on many other factors above and beyond the question of trade ties which brings me onto my next point today, which is standards. If these fall short of requirements, if capacity is insufficient to meet demand or if the infrastructure is not in place to get goods from A to B, you will not be able to access the new outlets that come with accession, no matter how many free trade agreements there are in place. And the fact that while EU export quotas are, in general, fully utilised, Romania's are, in many cases, not fully utilised draws attention to the fact that other changes must take place as well.

Most important for you is to continue upgrading your production and processing facilities and working towards a higher quality end product. EU citizens have made it explicitly clear, on numerous occasions, that these cannot be compromised upon and there is simply no market for agricultural goods which fall short of the EU benchmarks. Romania has great potential - we both know that and when I referred earlier to wine, I chose just one from what could have been many examples. Fruit too is another of potential export strengths, but one that is currently limited because of quality issues. And you must also be fully aware that this potential, your position and your prospects in the EU marketplace will be jeopardised as long as your agri-food establishments and veterinary and phytosanitary standards fall below par and your infrastructure remains underdeveloped.

Ladies and Gentlemen,

I do not wish to undervalue all the very positive progress that you have made. Progress has indeed been made, but I have seen comments in this year's Regular Reports that are a real point of concern for all of us, and that need to be addressed efficiently. It is clear that substantial efforts are still required to reduce the "considerable number of non-compliant establishments," and to upgrade dairy plants in the run up to accession, both shortfalls which the report identifies and which Sapard can, in part, be used to overcome.

They are points that are holding you back when you should be propelling yourselves forward in the final build-up to accession. And I cannot stress enough that the upgrading of non-compliant food and processing plants must be accelerated if you want to make the most of the new outlets that are available to you, and capitalise on the opportunities that they offer.

Equally important is establishing the necessary administrative capacity, for the handling of CAP related payments and for the efficient management of the common market organisations. Preparations for these too could do with being stepped up a gear; if they are not fully functioning by the time of accession, then not only will there be difficulties in the direct payment process, but the institutions dealing with the so-called trade mechanisms - export and import licences - will also be upset. Both would have enormous implications for the whole of your agricultural industry.

Ladies and Gentlemen,

Another important point worth mentioning in more detail here is Sapard, not only because of the support it provides in implementing the necessary pre-accession changes, but also because it too has yet to reach full speed. I am sure that I do not need to stress what an important scheme this is, nor that it will be a lost opportunity should you not manage to use it to its full potential. Not only is it a key tool for capacity building, it also provides very valuable and necessary support for rural restructuring as well as preparing you for the management of EU rural development programmes in a few years time.

And despite the fact that it is another area in which you have made marked progress, I would nevertheless strongly encourage you to continue with your intensive efforts to make the most of not only the programmes which it supports, but also the funds which it provides. I think it is fair to say that the absorption of the money available has perhaps been slower than expected, despite the considerable work put in, but I am pleased that intensive efforts over the last few months have now put you in a position where you should be able to use the remaining 2000 funds by the end of this year. I trust that this progress will continue you over the next couple of years, and that you will make full use of the other Sapard funds to continue to build on your road to accession.

But it is not just a question of Sapard money. It is also a question of getting the relevant measures accredited and of the five remaining, there are three which particularly concern me. The first is "Improving the structures for quality, veterinary and plant health controls, foodstuffs and consumer protection," for the obvious reason to which I have already referred. The second is the "setting up of producer groups," important for the pooling of resources and sharing of information. And the third is "agri-environment," a measure that will form an important part of post-accession rural development programmes, and one that underlines the importance of using Sapard as a tool to gain experience and develop expertise in rural programme management.

Ladies and Gentlemen,

You may think I have been too critical in the discussion so far, but my intention today has not been to chastise so much as it has been to motivate. I see the drive and desire amongst all of you here today to make the most of membership, and I stand here today reiterating the words of encouragement that come almost daily out of Brussels. But I wish to stress that much still remains to be done and there is no time to lose.

And I come now to the importance of rural development, not just in terms of it being second pillar of the CAP and finishing off the job that Sapard has started, but also, and perhaps more importantly in Romania's case, in terms of your very real need to bring your countryside into the 21^st century. Your rural areas are, and always will be, an important part of your national identity and heritage, but there will have to be some shift in the economic balance if they are to thrive and prosper in the future.

The restructuring of regions in which almost half the population live and in which a disproportionately high percentage - 34%, is engaged in agriculture is a situation that would have to change with or without EU accession. They are already lagging behind the likes of Bucharest and Timisoara and they are already in a situation where depopulation and land abandonment pose a very real threat unless alternative forms of more profitable employment are created, and a better quality of rural life generated.

Both Sapard and, in your case, World Bank financed projects have already contributed to vast improvements in your infrastructure and rural business environment, and EU rural development programmes will continue to do so in the future. But rural sustainability requires more diversification opportunities, better education facilities and vocational training opportunities as well, to name but a few, if it is going to keep people in the countryside. Sapard has started the ball rolling, but rural development is an ongoing and evolutionary process that must build daily on past experience and future objectives.

Ladies and Gentlemen,

A final word before I conclude concerns the relatively recent CAP reform, a project whose specific objective was just this: the creation of rural sustainability and an environment for long-term investment. And, far from compromising any of the measures specifically agreed to support your accession, the changes it has introduced will also assist in Romania's drive towards a profitable rural future.

You will of course know that two of the principles on which it is founded are decoupling - the separation of support from production quantities, and cross-compliance, the fact that support, under the principles of CAP reform, will be dependent on meeting mandatory animal welfare, food safety and environmental standards. You will also have heard of modulation, the mechanism which we are using to shift money from direct payments into rural development, but will not apply to new Member States until the end of the transition period, to make more money available for the overall management of our rural areas and promotion of the products that come out of them. Quality and sustainability are its key objectives, and although I do not want to go into it in more detail now, I do want you to take this into account in your pre-accession preparations.

Ladies and Gentlemen,

Enlargement and the common agricultural policy are both such broad and important topics, that it is very difficult to do either of them justice in such a short space of time. However, if you only take away one message with you from today's meeting, I hope it is this: that both of them are there to create opportunity, and that success, for both of them is dependent on quality - of effort, of investment, and most importantly of end product.

Neither of them have the time for a `wait and see' attitude, and how much you as individuals, farmers, or processors are prepared to go and get now, will determine how much you will earn from the larger project in the mid to long-term.

As the Romanian proverb says, "he that soweth good seed shall reap good corn,^[1]" and with this in mind, I hope that you will continue to intensify your efforts in the build up to enlargement, and that you will continue to do the very important job of bringing the heart of your rural areas closer to the heart of the EU each day. We are behind you all the way.

Thank you.

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^[1] Samânta buna, bun rod îti da.