Select Committee on European Legislation First Report


EWE AND SUCKLER COW PREMIUM SCHEMES

26.   We consider that the following raises questions of political importance. We make no recommendation for its further consideration, but suggest that it would be relevant to a debate covering reforms of the Common Agricultural Policy:--

MINISTRY OF AGRICULTURE, FISHERIES AND FOOD

(17528) 9876/96 COM(96)430	Commission Report on the application of the individual producer limits in the annual ewe and suckler cow premium schemes.
Legal base:	--

Background

26.1  The Commission was required to submit to the Council by 1 July 1996 a report on the application of the quota arrangements in the sheep and suckler cow sectors since their introduction in 1993, together with proposals for reform.

The Commission report

26.2  The report takes a narrow view of the objectives of the schemes and in its concluding remarks states:

"individual producer limits have so far been a successful policy tool for controlling production and expenditure in the sheep sector but not in the suckler cow segment of the beef sector. Therefore, given that the changes in the ewe premium régime are not justified and that the whole beef régime is under review in the light of the current BSE crisis, the Commission considers that it is not an appropriate moment to make any proposals in respect of the quota régimes in either of the premium schemes."

This is a disappointing document since it pays no attention to any adverse affects of farm-based quotas on efficient production, or on the need to make Community agriculture better able to compete in the post-GATT Uruguay Round environment.

26.3  The report underlines the increasing complexity of these subsidies, the reliance on reference years, the bureaucratic nature of adjustments. It highlights the point that, while the rising trend in the cost of the sheepmeat régime has been checked, data on the beef sector does not show the same degree of curtailment in production.

The Government's view

26.4  In his Explanatory Memorandum of 22 October, the Minister of State at the Ministry of Agriculture, Fisheries and Food (Mr Baldry) points out that expenditure under the sheepmeat régime has remained more or less constant since 1993 because quotas were introduced in effect at the maximum flock size for each Member State following a period of rapid expansion. In the suckler cow sector producers were able to anticipate the introduction of quotas and the level of claims in the reference year rose by 15%. Not all the available quota has yet been utilised and the costs of the suckler cow régime have continued to rise. The Minister tells us:

"The report has not addressed the fundamental question of whether there are alternative, less administratively complex, but equally or more effective methods of controlling expenditure and production. It does not consider the problems for producers and national administrations of quotas or the scope for simplifying and improving the current system.
"The Government has always recognised the need to constrain expenditure on the sheepmeat and suckler cow régimes but has argued that quotas were not the best way to achieve this. They are inflexible and prevent the rational development of the farming industry, adding an extra hurdle to those entering the industry. Livestock quotas have proved to be administratively burdensome for both producers and authorities."

26.5  The Minister considers that the replacement of quotas by regional ceilings similar to those in the Beef Special Premium Scheme would be preferable if the system is to continue, and finds it disappointing that the report has failed to address any of the UK concerns -- particularly the discrepancy in the treatment of producer groups between the sheep and suckler cow sectors. He indicates that the Government will press the Commission to consider the issues which it has glossed over in the report.

Conclusion

26.6  We considered whether a debate on this document would be appropriate, but came to the view that since it was a report and made no proposals, any debate would be narrowly focused. We agree with the view of the Minister of State that the report does not address the major issues which the Commission itself has recognised in other documents, such as the effect of farm quotas on new entrants into agriculture (the "young farmer problem") and the negative effect of quota arrangements generally on the encouragement of productivity and appropriate livestock management. We therefore consider that, while the report itself does not merit debate, it would be relevant to any wider debate on the reform of the CAP or on support for the livestock sector.

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Prepared 12th November 1996