1 Introduction
1. On 26 June 2003 the Agriculture Ministers of the
European Union, meeting in Luxembourg, reached agreement on the
package of reforms to the Common Agricultural Policy (CAP) put
forward by the European Commission. This brought to a conclusion
a lengthy process of reform, on which we have commented in previous
reports.[1] The reform
agreed was given legal effect in regulations agreed on 29 September.[2]
Main points of the reform of the CAP agreed at the Council meeting in Luxembourg, June 2003[3]
(1) breaking the link between farm subsidies and production by "decoupling" direct subsidies to agriculture;
(2) cross compliance to make subsidies dependent on meeting standards in key areas like environment, and animal health and welfare, underpinned by a new Farm Advisory System;
(3) a further switch of resources to the 2nd pillar and an earlier start date for modulation. For the first time, modulation applies on an EU-wide basis, switching support from production subsidies to targeted support for environmental and rural development objectives;
(4) national envelopes which provide for the possibility to develop targeted schemes to promote sustainable and environmentally friendly farming;
(5) changes to the Rural Development Regulation to widen the options for expenditure;
(6) reduced support prices for butter and rice bringing them closer to world prices to the benefit of consumers;
(7) a new financial discipline which will trigger action to reduce subsidies if CAP expenditure looks to be in danger of exceeding the agreed ceilings.
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2. In October 2003 we decided that we would look
at the implementation in the United Kingdom of the reform agreed.
Our terms of reference were:
The Committee will consider: (a) following what
principles and by what method the United Kingdom should implement
the proposals contained in the regulations formally adopted at
the Council meeting in September 2003; (b) what impact implementation
will have on the agricultural sector, particularly when taking
account of approaches to CAP Reform in other European Union Member
States; and (c) what progress has been made in implementing the
proposals made by the Policy Commission on the Future of Farming
and Food, and how that work meshes with wider reform of the CAP.
3. Despite these wide-ranging terms of reference
it became apparent that our inquiry would be limited due to decisions
already taken by the Government. Soon after the reform was agreed
the Government announced three decisions about the way it would
implement it in the United Kingdom:
· that
it would adopt from the earliest opportunity, 1 January 2005,
a Single Payment Scheme, under which a single payment decoupled
from production would replace a number of existing CAP payments;[4]
· that the Single
Payment Scheme would be implemented on a country by country basis
within the United Kingdom - Scotland, Wales and Northern Ireland
would make their own decisions, just as England would do; and
· that the main
options for partial coupling of the payment to production would
not be taken up in England (although some relevant decisions remained
to be taken).[5]
Thus our inquiry focussed on the basis on which payments
would be made under the Single Payment Scheme. This had been the
subject of a consultation exercise undertaken by the Government
between July and October 2003,[6]
and a decision was expected early in 2004. Discussion of other
aspects of the reform was to a large extent redundant until the
principal decision had been taken.
4. In the course of our inquiry we received evidence
from 32 organisations and individuals. We took oral evidence in
January and February 2004 from farmers, landowners and tenants,
as well as surveyors and bankers. Our sessions concluded with
a meeting with Lord Whitty, Minister for Farming, on 11 February.
We are most grateful to all of those who gave us evidence or otherwise
assisted us during the course of our inquiry.
1 See Third Report from the Environment, Food and Rural
Affairs Committee, Session 2002-03, The Mid-Term Review
of the Common Agricultural Policy, HC 151, and Ninth Report
from the Environment, Food and Rural Affairs Committee, Session
2001-02, The Future of UK Agriculture in a Changing World,
HC 550-I. Back
2
Council Regulations (EC) 1782/2003 to 1788/2003 Back
3
According to Defra, in its memorandum; Ev 99, para.5 Back
4
The Single Payment Scheme will replace a number of other schemes,
including: the Arable Area Payments Scheme (AAPS); the Beef Special
Premium (BSP); the Extensification Payment Scheme (EPS); Sheep
Annual Premium Scheme (SAPS); Suckler Cow Premium Scheme (SCPS);
Slaughter Premium Scheme (SPS); the Veal Calf Slaughter Premium
Scheme (VCSPS); Dairy Premium; and Dairy additional payments. Back
5
See the speech delivered by Lord Whitty to the Oxford Farming
Conference on 6 January 2004; the text of the speech is available
via www.defra.gov.uk/corporate Back
6
Consultation on options under the CAP reform agreement (third
consultation), see www.defra.gov.uk Back
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