Memorandum submitted by English Nature
(H15)
INTRODUCTION TO
ENGLISH NATURE
English Nature is the statutory body that champions
the conservation and enhancement of the wildlife and natural features
of England. We work for wildlife in partnership with others by:
— advising—government, other
agencies, local authorities, interest groups, business communities,
individuals on nature conservation in England;
— regulating—activities affecting
protected species and the special nature conservation sites in
England;
— enabling—helping others to
manage land for nature conservation, through grants, projects
and information; and
— enthusing—and advocating nature
conservation for all and biodiversity as a key test of sustainable
development.
We have statutory duties for nationally and
internationally important nature conservation sites including
Sites of Special Scientific Interest (SSSIs), the most important
of which are managed as National Nature Reserves (NNRs); Special
Areas of Conservation (SACs); and Special Protection Areas (SPAs).
Through the Joint Nature Conservation Committee,
English Nature works with sister organisations in Scotland, Wales
and Northern Ireland to advise Government on UK and international
nature conservation issues.
THE CAP: THE
NEED FOR
REFORM
Much of England's biodiversity is associated
with agricultural land, and major losses have been recorded over
the past few decades. These have been primarily associated with
agricultural intensification: the use of herbicides and pesticides,
increased mechanisation, specialisation and loss of farmland features
such as hedges. Whilst much of this change is associated with
technological development and market pressures, the CAP is widely
accepted as having accelerated and magnified the intensification
activity of farmers and thereby the losses to biodiversity.
The demands of a more liberalised world trade
regime, and the constraints imposed on the CAP by the impending
enlargement of the EU, combined with concerns over the sustainability
of the current policy, are leading to irresistible pressure for
change in the policy.
In advance of the Commission proposals, the
Land Use Policy Group of GB countryside and conservation agencies
prepared some Reflections on the Mid-Term Review of the CAP (published
at www.lupg.org.uk ). This provides a useful benchmark against
which the Commission proposals can be viewed. The LUPG has commissioned
a number of other relevant reports, chiefly on the environmental
impacts of decoupling support, and these are also available at
this site. .
THE MTR PROPOSALS
AND ENGLISH
NATURE'S
INITIAL RESPONSE
English Nature has provided an initial response
to DEFRA on the Commission proposals published on 10 July 2002.
This is published at www.english-nature.org.uk and is attached
to this submission [not printed]. In our submission to the EFRA
Committee, we refer to relevant passages from our response to
DEFRA to avoid unnecessary repetition.
Due to the scope of the Commission document,
and the lack of detail at this stage, our response should be not
be regarded as a definitive position and is likely to evolve over
the next few months as more details emerge. At this stage English
Nature's overall view is that the proposals as a package should
be welcomed, as a step towards a more sustainable and responsive
European agriculture policy (para 1.1).
In our response to DEFRA we commented on the
three strands of the Commission proposals as follows (para 1.6):
— Strand 1 (Market reforms)—proposals
noted, along with disappointment that no firm measure is put forward
for reform of the dairy regime (para 1.7).
— Strand 2 (Creation of Single Income
Payment)—broadly welcomed as a stage towards a reformed
CAP, but with concerns about the need for effective cross-compliance
(para 1.8).
— Strand 3 (Rural development)—emphasised
the importance of a strong and equitably allocated second pillar
for the CAP (para 1.8).
ENGLISH NATURE'S
RESPONSE TO
THE COMMITTEE'S
FOUR QUESTIONS
The extent to which the proposed reforms to the
CAP address concerns about the future direction of the Policy—in
particular whether they will encourage a more liberalised agricultural
sector within Europe, and what impact the reforms will have on
negotiations for the enlargement of the European Union.
English Nature supports the decoupling of subsidies
from the current complex set of eligibility criteria and commodity
regime mechanisms, and the creation of a "single income payment"
as a means of shortcutting the incremental modification of support
regimes commodity by commodity. We believe it would immediately
remove a number of perverse incentives to intensive production,
particularly with regard to overgrazing driven by the livestock
regimes. We also believe it would make support more transparent
(para 3.1).
It would appear that the proposed single income
payment is fully decoupled from production and is a major step
towards more liberalised European agricultural markets. We believe
that they are likely to be far more compatible with the requirements
of the WTO than the current commodity related payments and , if
adopted, would put the EU into a strong negotiating position in
forthcoming trade talks. However, we do not see a decoupling of
support and the creation of a single income payment based on a
historic level of subsidy as an end point in the process of CAP
reform. We see the MTR proposals as an further important step
in separating the market and public good functions of agriculture
and in further developing the basis for EU support for farming
and rural areas. It is important that the resources for decoupled
Pillar I payments are progressively shifted to the second pillar—up
to and beyond 2006. These should be used to reward management
of existing habitats and other landscape, cultural and natural
features and to ensure farmers considering enterprise changes
are encouraged into environmentally sustainable activities.
While decoupling would bring with it some important
immediate environmental benefits, particularly relating to reducing
the intensity of production, there are at the same environmental
risks inherent in a more liberalised approach which could lead
to potentially damaging land use changes. This is recognised by
the Commission, which proposes that decoupling needs to be accompanied
with compulsory cross-compliance measures to ensure that removing
the commodity regime constraints does not lead to environmentally
damaging activity. This linkage is of critical importance, and
is borne out by earlier English Nature research. Other proposals
in the package provide additional complementary means of ensuring
environmentally positive outcomes. These include:
— increased resources for Pillar II
measures, particularly agri-environment schemes;
— farm audits and transitional aid;
and
— an explicit environmental role for
set-aside.
These measures must be regarded as an essential
component of decoupling, and must be carefully thought through
if they are to mitigate potential harmful environmental side-effects
of decoupling (para 3.2).
The Commission's proposals for decoupled payments
also create many detailed technical problems, such as the attachment
of aid to land or the producer, the transfer of the right to aid,
the impact on land prices and tenancy agreements the problems
of supported farmers moving into sectors that compete with established
unsupported farmers. The impact of many of these are hard to quantify,
but are likely to lead to significant business restructuring,
which is often associated with changes to existing habitats, field
boundaries and the patterns of land use. This increases the importance
of securing a properly funded CAP second pillar, where the resources
to mitigate the impact of these changes will be found. We comment
further on this issue below. Further information on the potential
environmental impacts of decoupling can be found in reports at
the Land Use Policy Group website www.lupg.org.uk
How the proposed reforms will affect British farmers,
in particular what will be the effect of capping aid for larger
farms and decoupling subsidies from production levels.
As already indicated, English Nature supports
the principle of decoupling subsidies from production as a step
towards a market system where farmers are paid by the taxpayer
for the provision of specific public goods and are enabled to
respond to genuine market signals in their production decisions.
We believe the creation of a Single Income Payment represents
a step in the right direction, which would immediately remove
perverse incentives to production.
However, the decoupling proposals carry serious
environmental risks which must be addressed as part of the package
of reforms. It is therefore essential that the Single Income Payment
is made conditional on compliance with a range of standards. Although
the Commission appears to recognise this in the proposals, the
signals to date have not been encouraging and the Commission appears
to be uncertain about the exact role of cross-compliance. There
is a further, and less quantifiable risk, of rapid and uncontrolled
structural change in the industry.
Concern has been expressed about the proposal
for a 300,000 euro ceiling on payments. However, it is important
to recognise that this payment will now become a means of income
support, and not a production subsidy. It is likely to affect
at most a few hundred farms in the UK. It is also likely that
affected farms will consider ways of escaping the impact of the
ceiling by business restructuring. English Nature believes it
is much more important for the UK to focus on the long term benefits
of a further move to reform, the redistribution of Pillar II support
and the immediate and significant issue of the potential impact
of decoupling on the environment (and indeed on rural communities)
(para 4.2.2).
What will be the practical effect of new cross-compliance
conditions to be applied to the receipt of aid and whether the
conditions adequately balance environmental and commercial concerns.
Whilst English Nature supports the principle
of decoupling as a transitional stage towards a system where public
support is clearly linked to public benefit, we have highlighted
above our concerns about the environmental risks of this approach
and how these might be managed.
There is some confusion in the Commission's
text over the extent to which cross-compliance should be applied
to decoupled payments. On page 16 of the MTR proposals the Commission
argues for "reinforced cross compliance conditions including
land management obligations", whilst later suggesting payments
would be subject to meeting "statutory environmental, food
safety and animal health and welfare standards" (p19) along
with an obligation "to maintain land in good agricultural
condition" (p21). English Nature believes cross-compliance
should be based on good land management standards and not just
statutory minima (para 3.2.1). We agree with the Commission assertion
that "public expenditure must yield something in return".
We contend that compliance with existing standards only requires
farmers to respect standards that are required whether the producer
is in receipt of public subsidy or not and does not represent
an appropriate or equitable return for expenditure. The Commission's
assertion that the main purpose of cross compliance will be to
support the implementation of relevant (European) legislation
is therefore unacceptable.
English Nature considers that the decoupling
proposal is welcome—but only it involves a rigorous approach
to cross-compliance and other environmental measures: these are
not incidental but rather integral to the proposals. It will be
essential to look closely at the forthcoming European framework
for cross compliance and the extent to which this will allow for
Member State discretion in the standards applied.
The Commission cites the Small Farmers Scheme
(SFS) as an important precedent for reducing the administrative
burden on farmers. Although the UK chose not to participate in
this scheme, it is now operating within the EU on a trail basis
and the Commission must be pressed for interim findings. Although
the scheme varies in key details from the MTR proposals, the findings
in relation to cross-compliance and attaching obligations across
land-holdings will be very pertinent. While the UK was considering
and consulting on the SFS English Nature raised very similar concerns
regarding the importance of cross compliance and ensuring that
simplification did not lead to environmentally damaging land management.
Whether the proposed reallocation of funds from
direct aids to farmers (Pillar I) to rural development (Pillar
II) will provide sufficient resources to achieve environmental
goals and to support rural areas.
English Nature has consistently supported shifting
resources for Pillar I to Pillar II of the CAP , up to and beyond
2006, where they can be used to reward management of existing
habitats and other landscape, cultural and natural features and
to ensure farmers considering enterprise changes are encouraged
into environmentally sustainable activities. We therefore welcome
the Commission's proposal for compulsory dynamic modulation, although
our support is qualified by uncertainties over the precise way
this will operate and its consequences for the operation of the
England Rural Development Programme (para 3.2.2). We also believe
that the model proposed by the Commission is more complex to operate
than the current UK model and its efficiency in transferring resources
is compromised through the use of franchises for small farms.
We would rather see the EU adopt a model similar to the UK system.
Adequate resources need to be available under
Pillar II and the England Rural Development Programme to reward
farmers for the management of existing habitats and other landscape,
cultural and natural features and to ensure farmers considering
enterprise changes are encouraged into environmentally sustainable
activities. This should help to address the environmental risks
of a move to a Single Income Payment. The Commission's proposals
for dynamic modulation must provide the UK with a sufficient share
of the RDR budget to meet these needs in the medium to longer
term.
Of crucial importance for the UK will be the
formula used to distribute Pillar II resources between Member
States. This must be done based on an assessment of need, both
for the existing RDR (which currently disadvantages the UK) and
for the modulated receipts. English Nature supports the principle
of the Commission's proposal to distribute Pillar II funds according
to three criteria of need: agricultural area; agricultural employment;
and a rural deprivation index. The majority—we recommend
at least 60 per cent—should be allocated on the basis of
total agricultural area as a proxy of "need": this is
a good overall indicator of the overall magnitude of need in terms
of resource protection, cultural landscapes and wildlife character
and distribution (para 4.2.1). Since farmers will be the main
route for delivering these objectives via agri-environment schemes
this would tie in well with the socio-economic objectives.
There is a particular immediate issue for the
UK, in that the proposed 3 per cent annual rate of EU modulation
into Pillar II is less than the proposed UK rate already agreed.
If the proposed EU rate is adopted this could lead to a shortfall
in the planned resources available to the RDR in 2005, seriously
compromising the ability to implement many of the findings of
the recent Curry Commission report. Transitional arrangements
to avoid this scenario must be agreed as a priority (para 4.2.2).
The ERDP budget must be sufficient to cover
the requirement for agricultural SSSI protection, the delivery
of specific Habitat and Species Action Plan targets requiring
land management, the protection of further semi-natural habitats,
the delivery of biodiversity on arable and improved grassland
habitats, the achievement of Natural Area objectives and development
of ecosystem robustness to accommodate climate change. The ERDP
also needs to accommodate socio-economic and rural development
objectives, which may be delivered concurrently with environmental
activity or require additional funding.
The actual sum required is hard to quantify:
it will depend on the level of the regulatory/cross-compliance
baseline, the economic incentive from the market, and subsidies
for damaging or beneficial activities. As an indication, English
Nature calculated for our submission to the Curry Commission (published
at www.english-nature.org.uk) that the annual requirement for
agri-environment schemes might be £1billion. However, this
figure is intended to be indicative and should be used with great
caution.
CONCLUSION
In summary the Commission's proposals for the
MTR represent a bold and important step forward in the process
of reforming the CAP. English Nature supports the overall direction
of both the Agenda 2000 reforms and the MTR proposals.
The central, and most radical, proposal is for
decoupling of aid from an incentive to produce and we welcome
this as both a way of creating a more market orientated agriculture
and in removing a number of damaging environmental consequences
of production subsides. Decoupling, however is only part of a
solution to creating a more sustainable land management and rural
development policy for Europe and must be accompanied by both
environmental protection measures and better funded and more effective
support that rewards the provision of public goods and encourages
sustainable rural development. We believe the Commission has recognised
this need and it is very important that during negotiations these
two aspects of the package are not separated.
The monitoring and assessing the consequences
of many of the details of the Commission's proposals will also
be of critical importance in ensuring the MTR is both positive
for the environment and that the UK is a net beneficiary. We have
commented on some of our concerns over these details above, but
it is not possible to be definitive until the Commission has published
further draft legal texts later in the year. We, therefore, view
the MTR as a very dynamic process that will need the UK to adopt
well argued, coherent, robust and politically winnable negotiation
tactics over the next few months.
30 September 2002
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