Memorandum submitted by the Countryside
Agency
IMPLEMENTATION OF CAP REFORM IN THE UK
INTRODUCTION
The Countryside Agency's duty is to advise from
what is effectively a sustainable development perspective—looking
at the impact of the CAP changes on the quality of life for people
living in the countryside and on the quality of the countryside
itself (our statutory responsibilities in respect of landscape
protection and enjoyment of the countryside).
In this memorandum, we have focused on theme
a. of the Inquiry, namely:
"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"
The Memorandum is written from the perspective
of England.
THE MEMORANDUM
1. The Countryside Agency is pleased to
make a submission to this Inquiry. The implementation of CAP reform
is likely to have significant implications for England's rural
areas. In this submission we identify three issues, which we consider
to be particularly important:
— the need for a clear policy framework
within which to implement the 2003 CAP reforms;
— criteria for choosing the methods
of implementation;
— using this opportunity to integrate
these reforms with other policy tools, to maximise benefits for
the English countryside.
The need for a clear policy framework
2. Neither Defra nor the European Commission
has explained what the decoupled Pillar I Single Farm Payment
is for. It is clearly not:
— an environmental payment, as it is
not directly linked to environmental outcomes;
— a social payment, as there is no
attempt to direct funds on the basis of need;
— a market support payment, as there
is no requirement to produce anything.
We can only conclude that it is meant to be
some kind of transitional payment. In our view, there can be no
long-term justification for annual payments from the public purse
to farm businesses, but not to other rural businesses. Such payments
are justified only where they provide clearly identifiable public
benefits such as long term management of habitats and landscape
features or new or improved public access.
3. The 2003 CAP package should therefore
be seen as a stage towards phasing out Pillar I decoupled payments
altogether and replacing them with transparent payments for public
goods, funded under the Rural Development Regulation (Pillar II)
through the England Rural Development Programme (ERDP). So long
as decoupled payments exist they should be linked to meaningful
baseline environmental standards through cross-compliance on a
whole farm basis.
4. This reform package is the biggest change
in the purpose and structure of agricultural support since the
UK joined the European Community, but attention has immediately
focused on the detail without first considering the wider policy
context. We would like to see Defra define their long-term goals
for public funding of agriculture, and to explain how the £1.7
billion of annual payments to farmers in England could best be
used to help deliver not only the Strategy for Sustainable Farming
and Food but other UK government policies for rural communities
and the environment.
5. We are concerned that, so far, the emphasis
in thinking about implementing CAP reform in the UK has been not
on achieving a wide range of policy objectives for the countryside
but rather on minimising the delivery costs of the package. We
suggest the aim should be achieving maximum public benefits from
the decoupled payments but in a cost effective way.
Criteria for choosing methods of implementation
6. The decisions which must be made to implement
the Single Farm Payment, national envelopes (if used), cross-compliance
and modulation are not clear cut and have wider effects, particularly
on agri-environment and other ERDP schemes. It would be helpful
first to define criteria to guide these choices.
SINGLE FARM
PAYMENT
7. There is an issue of short term pain
for long term gain. There are two distinct stages of implementation—introducing
decoupled payments and delivering the payments in the medium to
long term. A Single Farm Payment system which is more efficient
in the long term, both administratively and in support of other
government policies, may be more difficult to introduce in the
short term because it involves greater changes. This should not
be a reason for rejecting it.
8. We are concerned that there will be a
temptation to make the transition from coupled to decoupled payments
as easy as possible in the short term to ensure minimum disruption
to the farming industry. The Government needs to consider very
carefully how they will justify to taxpayers, in (say) five years
time, the basis chosen for allocation of the Single Farm Payment.
The allocation method needs to be transparent, equitable and defensible.
The delivery system will need to be simple to understand and cost
effective for Defra to administer. We are particularly concerned
that Defra resources should not be diverted from the important
task of monitoring the new environmental cross-compliance requirements
into avoidable and burdensome scheme administration for the Single
Farm Payment.
9. It should also be noted that an historic
rather than a regional allocation of the Single Farm Payment could
make it more difficult to set appropriate payment rates for agri-environment
schemes in the medium term and to target schemes effectively.
Although the farmer's Single Farm Payment will be completely independent
of other income, the financial security provided by the Single
Farm Payment may influence business decisions, including the uptake
of the new Higher Level Environmental Stewardship Scheme options.
Agri-environment schemes have standard rates of payment, but the
greater the variation in Single Farm Payment rates per hectare
on similar farms (due to trading or varying historic allocations)
the more difficult it will be to set agri-environment payment
rates or target uptake.
NATIONAL ENVELOPES
10. National envelopes offer an opportunity
to address environmental problems which may arise from decoupling.
We support their use in England but recognise that the sectoral
requirement may limit their usefulness. They should be used in
a way which complements and not duplicates measures in the ERDP.
Although it may take time for some effects of decoupling to show,
it will be important to be able to respond quickly and imaginatively
when problems do arise; national envelopes offer this flexibility,
and their use and level of funding should be reviewed each year.
CROSS COMPLIANCE
AND GOOD
AGRICULTURAL AND
ENVIRONMENTAL CONDITION
(GAEC)
11. Cross-compliance requirements should
go beyond a minimalist approach. We argued the case during the
CAP reform negotiations that cross-compliance should include an
environmental component, so we warmly welcome the requirement
to maintain Good Agricultural and Environmental Condition and
believe that it should cover all of the following elements on
a whole farm basis:
— retaining landscape character and
distinctiveness,
— protecting public access rights,
— safeguarding historic/archaeological/cultural
features,
— conserving biodiversity, and
— ensuring basic resource protection.
12. We are concerned that an emphasis on
reducing delivery costs and minimising regulation could mean that
cross-compliance requirements may be implemented in too minimalist
a way, and with insufficient enforcement. In relation to our special
responsibilities for the landscape, just complying with existing
legislation will not be good enough. There are more appropriate
cross compliance requirements relating to landscape features which
already apply to agri-environment and hill farming allowance payments
under the ERDP. These are defined as part of Good Farming Practice
(GFP). We note, from the recent Rural Development Conference hosted
by DG Agriculture, that there is wide support across the EU for
the harmonisation of cross compliance requirements for GAEC and
GFP and we support this direction of thinking.
FARM ADVISORY
SYSTEM (FAS)
13. Introducing the new Farm Advisory System
from 2005 should be a priority. Good advice and information to
farmers will be an essential part of supporting the implementation
of cross compliance and GAEC from 2005 and should reduce the burden
to Defra of enforcement. We are very disappointed that Defra are
not planning to introduce the full FAS until 2007.
14. A key issue will be how to fund the
FAS. It could be supported under the RDR but the current limited
ERDP budget would be insufficient to allow for this. We propose
that, given the importance of developing the FAS, a case is made
now through the 2004 Comprehensive Spending Review for funding
from 2005. It is be important to emphasise the whole farm approach
and that FAS should go beyond agricultural issues and address
other issues related to sustainable land management, including
forestry and woodlands.
MONITORING AND
EVALUATION
15. It is impossible to predict the effects
of implementing the Single Farm Payment system and it will be
vital to put in place good monitoring and evaluation arrangements
to give early warning of changes in land use and management which
may require new policy responses, including use of national envelopes.
These arrangements should, as far as possible, be built into the
administration of the scheme. We have offered to discuss with
Defra, and other relevant agencies, requirements for monitoring,
including the environmental, economic and social effects of decoupling
and the introduction of the Single Farm Payment.
ADDITIONAL VOLUNTARY
MODULATION
16. Significant additional funding will
be needed to implement the proposed new Entry Level Environmental
Stewardship Scheme to be rolled out from 2005-06, as recommended
by the Policy Commission on the Future of Farming and Food. It
will be necessary to use the voluntary modulation option available
to the UK to meet this commitment. The planned expansion of the
agri-environment programme should be given priority over implementing
any of the new RDR measures in the 2003 reforms, with the possible
exception of the new measure to "provide aid for the management
of integrated rural development strategies by local partnerships"
which seems to offer the prospect of improved scheme delivery.
17. We were disappointed that the CAP reform
package makes no provision for transferring resources from Pillar
I to Pillar II beyond a 5% rate of compulsory modulation. Such
a transfer is needed to fund an expanded England Rural Development
Programme. In its negotiations over the CAP budget post 2006,
we look to the UK government to press for higher rates of compulsory
modulation, as a stage in phasing out the Single Farm Payment.
Using this opportunity to integrate the 2003 CAP
reforms with other policy tools, to maximise benefits for the
English countryside
18. It is rare for Defra to have the opportunity
to introduce or review so many policy tools together. In the next
few months decisions will be made on introducing the Single Farm
Payment, a new agri-environment scheme package (Environmental
Stewardship with its component parts of Entry Level Stewardship
and Higher Level Stewardship), the future of the Hill Farm Allowance,
and defining the Good Agricultural and Environmental Condition
cross-compliance requirements which will underpin all the other
schemes.
19. We recognise that there are problems
caused by the Commission's tight timetable, and by the delay in
agreeing the Implementing Regulations, but there has been little
discussion of how all of the tools can best fit together to deliver
government policies in a cost effective way. We feel this is an
opportunity which should be seized before the final shape of the
Single Farm Payment and cross-compliance is decided. We have been
greatly encouraged by Defra's efforts to involve stakeholders
in the development of the various options. What is missing is
the bigger picture. How does it all fit together?
20. We are also concerned by the apparent
lack of consideration of value for money from CAP expenditure
as a whole (ie the Single Farm Payment/national envelopes wholly
funded from the EU budget, plus national and EU funding for the
ERDP, plus delivery costs). At the moment attention seems unduly
focused on delivery costs. Both the EU and the national elements
of the CAP budget are ultimately funded by UK tax payers. The
whole budget should be assessed in terms of value for money against
UK government policies for rural areas.
The Countryside Agency
December 2003
| 
