House of Commons - Agriculture

Select Committee on Agriculture Second Report

V. AGRI-ENVIRONMENTAL AND RURAL POLICY

84. In Agenda 2000 the Commission briefly surveys the past development of rural policy within the EU, and concludes that it "still appears as a juxtaposition of agricultural market policy, structural policy and environmental policy with rather complex instruments and lacking overall coherence".[119] The Commission has therefore come forward with proposals to re-organise rural and agri-environmental policy instruments, within the context of the wider rationalisation of structural funding proposed in Agenda 2000. MAFF summarised the Commission's proposals as follows:

(ii) in all rural areas, outside Objective 1 and the new Objective 2, rural development measures to be available alongside the measures referred to above, co-financed under the EAGGF guarantee section

(iii) in regions designated as Objective 1, support for rural development would form part of the integrated development programmes for those areas, as at present

(iv) in rural areas under the new Objective 2 (urban and rural areas with particular structural difficulties) measures similar to those currently funded under Objective 5a and 5b to be co-financed by the EAGGF guarantee section. ERDF and ESF aid also to be available.[120]

85. MAFF generally welcomed the Commission's plans, although they cautioned that the lack of detail made it necessary to reserve judgement on many aspects of the policy.[121] Others were equally cautious. Many witnesses pointed to the apparent contradiction between the rhetoric of Agenda 2000 and the level of resources to be applied specifically to rural development accompanying measures in the Commission's forward projection of expenditure under the agricultural guideline. This expenditure is estimated to stand at 2.1 billion ecu for the existing 15 member states at current prices by 2006, in addition to 2.8 billion ecu for the existing accompanying measures (agri-environment, early retirement and afforestation).[122] Total agricultural expenditure within the existing 15 member states in 2006 is forecast to be 50 billion ecu, so market support and direct compensation payments are still expected to form the predominant share of expenditure at the end of the Agenda 2000 reform process.

86. The Countryside Commission claimed that "substantial increases" in agri-environmental spending were required,[123] as did the CPRE.[124] The RSPB said that the increase in funding for existing accompanying measures, from 1.8 billion ecu in 1997 to 2.8 billion ecu, from 4.3 per cent to 5.4 per cent of total CAP spending, was "modest", and said that it was "unclear whether there will be any significant growth in agri-environment spending".[125] They argued that Agenda 2000 continued to demonstrate "evident pre-occupation with market regimes at the expense of attention to environment and rural development policies".[126]

87. The proposal to establish rural development funding within the agricultural guideline is a significant one, holding out the prospect that budgetary resources could more easily be switched away from market support and direct payments towards rural and agri-environmental measures in the future, given the political will. Likewise, the margin between estimated expenditure and the agricultural guideline will provide scope for potential increases in rural and agri-environmental expenditure in the years before 2006. The inherent flexibility of the new funding arrangements under the agricultural guideline will allow the EU to adjust expenditure in response to internal and external political pressures, and is an important first step towards establishing the necessary mechanism for the implementation of an integrated rural policy. This is recognised by, for example, the Countryside Commission, who have put forward constructive and substantive comments to the European Commission on how the new horizontal rural and agri-environmental measure might best operate in achieving a transition towards a policy balancing the "environmental, social and economic needs of rural Europe".[127]

88. On the other hand, the arguments previously advanced by the Commission in its 1995 Agricultural Strategy Paper, and the outcome of the Cork Conference on Rural Development, led many to believe that the broad strategy for the future development of the CAP was in the direction of a more integrated rural policy. In such a policy, at the same time as price supports were brought down, the support to rural areas under the headings of payments for rural environmental services and for rural development would be significantly stepped up and made available to the whole rural territory. In short, policy was moving away from a sectoral policy for agriculture towards a more balanced policy for rural areas. There are disappointingly few signs in Agenda 2000, taken as a whole, that this is the grand strategy. Whilst welcome increases in the scope and volume of provision for agri-environment and rural development are proposed, and price support for some major commodities is reduced, there are few signs that a truly integrated rural policy will emerge from the implementation of this package. In this sense, though it prepares the ground for an integrated rural policy to be established in the future, Agenda 2000 is a missed opportunity.

89. The Commission's proposal that consideration should be given to the practical transformation of the support scheme in Less Favoured Areas (LFAs) into "a basic instrument to maintain and promote low-input farming systems", to be included within the new horizontal measure,[128] aroused much interest amongst witnesses to our inquiry, despite its vagueness. MAFF said that it would be possible to envisage "a revised HLCA scheme offering area payments in the Less Favoured Areas for farmers observing simple environmental conditions. But without further details it is probably too early to assess whether and how such a change.... might be applied in the UK and there could be considerable technical and economic difficulties A key issue would be how such a measure would integrate with existing agri-environment programmes".[129] Such a measure would be analogous to the basic tier of an Environmentally Sensitive Area.[130] Mr McLaughlin of the NFU expressed some concern that support in LFAs should not solely be seen in an environmental context, neglecting the socio-economic and market dimensions: "the Commission needs to try to get a better relationship between environmental support and the market place for the products of that environmental support regime".[131] The CLA questioned the Commissions's proposal on the grounds that it could result in "a ghetto-isation" of agriculture, with on one side low-input environmentally benign holdings receiving environment payments, and on the other, intensive, unsupported farming systems".[132] Hitherto HLCAs, as their name suggests, have been allowances to compensate farmers for the economic disadvantages experienced in farming difficult terrains. It is appropriate that, in accordance with the general direction of reform of the CAP, the rationale for supporting farming in LFAs should be re-examined. We welcome the proposal to convert the basis for LFA payments from compensation for permanent handicap to explicitly pay farmers for environmental and landscape services in these areas.

90. MAFF drew our attention to a further uncertainty about the Commission's plans for the re-organisation of structural funding: the possible effects on certain rural areas of the discontinuation of Objective 5b, providing aid for rural areas with special structural problems, and the inclusion of such areas together with industrial and urban areas in the new Objective 2. MAFF pointed out that it would be necessary to ensure that rural areas received an appropriate share of the support available under the new Objective 2;[133] the NFU argued that there might be merit "in seeking to establish an agreed proportion for the rural component of these programmes".[134] Arrangements for co-ordination of rural funding between the EAGGF Guarantee Section and the reshaped Structural Funds will also need to be effective.[135]

91. Even after the Commission's concrete proposals for rural and agri-environmental policy have been presented, together with more detailed information on associated expenditure levels, there will still be formidable political and institutional obstacles to the development of an effective and adequately-resourced integrated rural policy. Professor Philip Lowe and Dr Neil Ward of the Centre for Rural Economy at the University of Newcastle upon Tyne, for example, identified one such obstacle as the "narrowness" of agricultural establishments and the failure of national agriculture ministries to "engage with the range of rural interests".[136] It is precisely for this reason that we have already recommended, in our First Report of this Session, that MAFF should be reformed, both in name and culture, to adopt broader responsibilities for environmental and rural development issues as well as agriculture.[137]

92. Until a clearer picture of the European Commission's intentions with regard to agri-environmental and rural policy has become available, we do not feel it would be appropriate for us to advance firm and detailed conclusions on the subject. Our general view is that it seems possible that a promising framework will be established which will provide the means for the EU, should it so desire, to effect the gradual transformation of the Common Agricultural Policy into an integrated rural policy. We will be particularly interested to see, in the Commission's published proposals:

how the new horizontal measure within the Guarantee Section will be constructed, what its elements will be, and how it will accommodate the existing agri-environmental, early retirement and afforestation accompanying measures together with rural development measures;

what changes, if any, will be brought forward for the targeting and co-financing of agri-environmental schemes;

what form is proposed for the new LFA support scheme;

how Guarantee Section funding will be co-ordinated with other structural funding applicable to rural areas; and

how expenditure will be broken down across the various measures.

93. Certain clear principles must underlie the construction of an integrated rural policy within the EU. The transformation of the CAP into such a policy must not become merely a system of maintaining current levels of CAP spending by other means, nor should spending on rural policy goals allow any element of subsidy to be linked directly to agricultural production. However, successful reform of the CAP should not be regarded by EU Governments as a solution to all the problems of rural communities, nor as a reason to forget about them. We also favour the maximum possible level of national responsibility for agri-environment and rural policy instruments. Rural policy and its needs are different in each country and are not best advanced by broad lowest common denominator policy which does not fit the realities or priorities of each individual EU member state. Responsibility for the administration and funding for such policies should, as far as possible, be devolved to member states, with the European Commission's role restricted to ensuring that policies are not implemented in such a way that they distort competition within the EU.

119 Agenda 2000 Vol I, p 24 Back

120 Ev p 4 Back

121 Ev p 7, para 41 Back

122 Agenda 2000, Vol I, p 75 and p 87, Table 2 Back

123 Ev, p 83, para 18 Back

124 Ev p 103 Back

125 Ev p 110 Back

126 ibid Back

127 Ev p 94, para 2 Back

128 Agenda 2000, Vol I, pp 32-3 Back

129 Ev p 7, para 44 Back

130 Q103 Back