Supplementary memorandum submitted by
the Department for Environment, Food and Rural Affairs
FORMAL STAKEHOLDER ENGAGEMENT PROCESS LEADING
TO THE DECISION ON CAP REFORM IMPLEMENTATION ANNOUNCED 12 FEBRUARY
Two main stakeholder groups met to discuss CAP
reform implementation in the period between the end of the formal
3rd consultation on 24 October 2003 and the decision taken by
the Secretary of State on 12 February 2004. Their meetings are
logged here, including one meeting before the end of the formal
consultation. An outline of the process involved is also included.
The Secretary of State and Lord Whitty separately
also held bilateral meetings and engaged in correspondence with
a range of stakeholder organizations throughout the process that
served to inform the decision making process that led up to the
12 February announcement. These are not logged here.
1. STAKEHOLDER
GROUPS
David Hunter is Director of European and
International Affairs in Defra. His stakeholder group meetings
are generally informal. There are often no papers and minutes
are not taken.
Lord Whitty's stakeholder group meetings
are more formal and meet quarterly. Agendas are circulated and
minutes are taken.
The membership list of each group is shown in
annexes 1 and 2.
2. MEETING DATES
AND PAPERS
17 October 2003 Meeting of David
Hunter's group. Papers circulated in advance on options for regional
implementation (annex 3) and on distributional impacts of area
vs historic payment methods (annex 4[3]).
http://www.defra.gov.uk/corporate/capreformthree/econanalysis-031031.pdf
14 November 2003 Meeting of David
Hunter's group. A table outlining an initial analysis of consultation
responses was handed out at the meeting (annex 5[4])
and Defra tabled a paper about the CLA hybrid model (annex 6).
1 December 2003 Meeting of Lord Whitty's
group. The only paper sent out in advance was the agenda (annex
7[5]).
Minutes were taken (annex 8[6]).
15 January 2004 Meeting of David
Hunter's group. No papers were circulated.
9 February 2004 Meeting of Lord Whitty's
group. The agenda (annex 9[7])
and minutes (annex 10[8])
are included.
3. OUTLINE OF
THE "ITERATIVE
PROCESS" REFERRED
TO BY
MR HUNTER
After the June agreement on reform of the CAP,
stakeholder groups continued to meet within Defra. They provided—and
continues to provide—a useful forum for the informal exchange
of questions and comments on single payment issues. Defra had
also gone out to consultation on certain aspects of the June deal.
In parallel to all this, officials were examining the scope which
the Luxembourg package afforded member states. Officials identified
a range of possibilities beyond the basic historic model of implementation
which is the default setting in the Council Regulation. There
was discussion of these in David Hunter's group, within which
there were conflicting views on the merits of historic as against
flat rate aid.
At the same time, officials were analysing the
results of the consultation and negotiating the first of the implementing
regulations. Discussion in the stakeholder groups regularly returned
to the basis for implementation of the single payment, taking
account of the new possibilities identified. All these different
and interlocking processes contributed to the papers that were
eventually put to Ministers for their consideration and to subsequent
exchanges between officials and Ministers before decisions were
announced on February 12.
Department for Environment, Food and Rural Affairs
April 2004
Annex 1
David Hunter's stakeholder group members
Clunie Keenleyside
The Countryside Agency
| Mr Nick Way
Director of Policy & Advisory Services
Country Land & Business Association
|
Mr Alastair Dickie
Director of Crop Marketing
or Gerald Mason, HGCA Senior Economist
Home-Grown Cereals Authority (HGCA)
| Mr Bob Bansback, Corporate Strategy Director
or Jane Connor, Senior Economic Analyst
Meat and Livestock Commission (MLC)
|
George Dunn,
Chief Executive
Tenant Farmers' Association
| Alastair Rutherford
Head of Agricultural Policy
English Nature
|
Dr Sue Armstrong-Brown
Agricultural Policy Officer
Royal Society for the Protection of Birds (RSPB)
| Ms Katja Borjesson
Policy Officer
The Royal Institution of Chartered Surveyors
|
Mr Martin Haworth
National Farmers' Union
| Jeremy Moody
CAAV |
Helen Richardson
Environment Agency |
Anna Shiel
Policy and Campaigns Officer (Environment & Land Use)
National Trust
|
Jonathan Peel
Food and Drink Federation
| Pippa Langford
Wildlife and Countryside Link
|
Vicki Hird
Policy Director
Sustain: The alliance for better food and farming
| Scott Ghagan
Sustainable Development Commission
|
Dr Judy MacArthur Clark
Chair, Farm Animal Welfare Council
| |
| |
Annex 2
Lord Whitty's group members
| Organisation | Nominee |
| British Retail Consortium | Richard Ali, Director of Food Policy
|
| Central Association of Agricultural Valuers
| Jeremy Moody |
| Country Land and Business Association | Professor Alan Buckwell, Chief Economist
|
| Countryside Agency | Richard Wakeford, Chief Executive
Cc all to: Joanne Quayle and Clunie Keenleyside
|
| Countryside Alliance | Richard Burge, President
Dr Helen Szamuely Director, Honest Food
|
| English Nature | Mark Felton
Director, Agriculture Programme
|
| Environment Agency | Paul Leinster, Director of Environmental Protection
|
| Farm Animal Welfare Council | Dr Judy MacArthur Clark, Chair-woman
|
| Farmcare | Christine Tacon |
| Food and Drink Federation | Sylvia Jay, Director General,
Jonathan Peel
|
| Forestry Commission | Edwin Rowlands
|
| Home Grown Cereals Authority | Dr Paul Biscoe
Chief Executive
|
| Institute of Grocery Distribution | Joanne Denney, Chief Executive
Deputy Peter Whitehead
|
| Meat and Livestock Commission | Bob Bansback, Corporate Strategy Director
|
| National Consumer Council | Jill Johnstone, Head of Policy Research and Strategy
|
| National Farmers Union | Tim Bennett, Deputy President
|
| National Trust | Tony Burton Director of Policy and Strategy
+ Ellie Robinson Ass Director Policy and Campaigns (Environment and Land Use)
|
| OXFAM | Barbara Stocking
Director.
Claire Godfrey
EU Policy Adviser
|
| RDAs | Vincent Watts
Marie Skinner deputising
|
| RICS | Katja Borjesson, Policy Officer,
|
| RSPB | Graham Wynne |
| Soil Association | Peter Melchett, Policy Director
|
| Sustain: The Alliance for Better Food and Farming
| Ms Vicki Hird
Policy Director |
| Sustainable Development Commission | Graham Wynne
|
| Tenant Farmers Association | George Dunn, Chief Executive
|
| Trades Union Congress | Peter Allenson
National Secretary, Agricultural Trade Group
|
| Wildlife and Countryside LINK | Pippa Langford
Director
|
| |
Annex 3
CAP REFORM—SINGLE PAYMENT SCHEME
OPTIONS FOR REGIONAL IMPLEMENTATION
1. This paper attempts, as far as is possible at this
stage, to explain the various layers of options that are available
to implement the Single Payment Scheme (SPS) on a regional
basis. (Illustrative examples are set out in the attached
Annex A to aid understanding.) The views expressed here are subject
to change in the light of the forthcoming proposals for Commission
implementing legislation.
What is a region?
2. The Regulation requires that Member States define
regions according to objective criteria. During the negotiations,
the Commission made clear that it envisaged regions defined in
administrative (eg constitutional boundaries) or ecological (eg
LFA/non-LFA) terms. In subsequent bilateral contact, they have
stated that regions which are not a defined territory or are defined
with regard to an agricultural activity would be unacceptable.
This would appear to rule out all arable parcels and all grassland
parcels being defined as regions.
3. Ministers have already indicated that they will, as
a minimum, designate England, Wales, Scotland and Northern Ireland
as UK regions.
4. As the words imply, "regional implementation"
is intended to provide Member States with the flexibility to operate
the SPS in different ways in different regions. (The Commission
has subsequently confirmed this in bilateral contact.) Two basic
models of operation are foreseen, although hybrids are possible.
Regional historical payment model
5. In its simplest form regional implementation would
allow regions within a Member States to administer the SPS in
exactly as the same way as described in Chapters 1 to 4 of the
Horizontal Regulation, i.e. with entitlements allocated to farmers
on the basis of individual subsidy claims under existing schemes
during the 2000-02 reference period. (N.B. Regionalisation in
this form would have no effect on the number or value of entitlements
that a farmer would receive.) However, Member States may affect
the value of the individual entitlements by:
— Sub-dividing the national ceiling between regions
according to objective criteria other than, or in addition to,
the proportion of the ceiling that was derived from those regions
(Article 58.3);
— Progressively modifying entitlements within a
region according to pre-established steps and objective criteria
(Article 63.3.)
6. Member States could also restrict transfer or use
of entitlements to within a given region (Article 46.1.)
Regional Area Payment model
7. A more extensive range of options is available if
Member States choose to operate the SPS according to what is generally
referred to as the area payment model. At its simplest form, this
would mean allocating entitlements of equal value to all farmers
in a given region on the basis of the number of hectares they
farmed in the year the scheme is introduced (Article 59.4.) However,
Member States may then vary the value of entitlements by:
— the possibilities identified above for the historical
payment option (Articles 58.3 & 63.3); and
— Setting different unit values for grassland (or
permanent pasture) and the remaining land within the region (Article
61.) The Commission has indicated bilaterally that the values
would have to be set above zero.
8. Use of this model also has a number of implications
for how the scheme is operated:
— Farmers may grow crops on the "negative list"
in support of their SPS claims, but only up to individual limits
set initially at the level of 2003 production and within a regional
limit set at the level of average production over 2000-02 (Article
60);
— Set-aside entitlements would have to be allocated
to all farmers with arable land, including that on which negative
list crops are grown (Article 63.2);
— Transfer and use of entitlements would have to
be restricted to within the region concerned or another region
with the same unit value of entitlement (Article 63.1.)
Hybrid Model
9. It is also possible to combine the two models. This
can be done in two basic ways:
— A percentage of the regional ceiling may be used
to allocate entitlements of a flat rate unit value (above zero)
to all farmers in the given region. The unit value of those entitlements
would then be increased by adding, in proportion to the remaining
part of the regional ceiling, the amounts farmers would be due
under the historical model ("Horizontal hybrid") (Article
59.1&3);
— A percentage of the regional ceiling may be used
to allocate entitlements of a flat rate unit value (above zero)
to all farmers in the given region. The unit value of those entitlements
would then be increased, where appropriate, by 100% of the amounts
farmers would be due under the historical model in respect of
one or more of the existing schemes ("Vertical Hybrid")
(Article 59.1&3.)
10. It is also possible to conceive of a mix of the vertical
and hybrid options.
Annex A
ILLUSTRATIVE EXAMPLES
OF REGIONAL
PAYMENT MODELS
The following examples are purely for illustrative purposes
and do not represent any indication that the Department favours
any of the options listed above any other that are possible.
HISTORICAL OPTIONS
A. Create English LFA and non-LFA regions, with co-efficient
used in setting the regional ceilings so that the values of LFA
entitlements was x% greater (with proportionate reduction in value
of non-LFA entitlements) than farmers would have otherwise received.
B. Within a single English region move in set stages
over the period 2005-10 to the point where the value of all entitlements
was no more than x% above or below the regional average.
AREA OPTIONS
C. Allocation of entitlements of a single common value
to all farmers in England according to number of eligible hectares
farmed.
D. Allocation of entitlements of different values for
grassland and arable land to all farmers in England according
to number of eligible hectares farmed.
HYBRID OPTIONS
E. Allocate 50% of English regional ceiling on a flat
rate basis as at C, with the remaining 50% allocated on an historical
basis.
F. Allocate that part of English regional ceiling that
derives from arable payments on a flat rate basis as at C, with
the remaining part of the ceiling allocated on an historical basis.
The historical element would then be added to unit value of farmers'
area entitlements.
G. As at F, with value of area payments differentiated
as at D.
H. As at F, with the percentage of livestock payments
paid on an historical basis originally set at 100% and moving
in set stages from 2005-08 to 50% and a corresponding increase
in area element of the payment.
(NB All percentages and dates mentioned above are entirely
illustrative and are not set requirements of the legislation.)
Annex 6
CAP IMPLEMENTATION: DISTRIBUTIONAL CONSEQUENCES OF
DIFFERENT PAYMENT METHODS
FLAT RATE/HISTORIC HYBRID
Description of Scheme
— All crop payments are paid on a flat rate basis
spread over all eligible crop area.
— £20 per hectare (approximately 10% of livestock
payments including dairy) paid on a flat rate basis and spread
over all grassland (including common rough grazing).
— The remaining livestock payments (ie approx 90%)
are paid on a historic basis.
Methodology
As before using 2000-01 Farm Business Survey except that
common rough grazing has now been included in the grassland area.
All other caveats and qualifications apply (eg sample survey based
on single year; England payment ceiling generated by FBS is a
little higher than actual is expected to be; aggregate areas from
FBS do not match June Census exactly etc; subsidies reflect 2002
rates generally but 2007 for dairy; no deductions for national
reserve, national envelope, modulation or financial discipline;
exchange rate £0.7/
).
Results
Table 1 Summary table
| % of farms | total amount
| % of farms | % of farms |
% of farms | % of farms |
| losing | lost/gained
| Losing >
£2000 | Losing >
20% of
payment
| Losing
20% of NFI | Losing
100% NFI
|
| % | £m
| % | % | % |
% |
| Flat rate | 51 | 283
| 37 | 19 | 27 |
4 |
| Crops/Grass | 51 | 270
| 36 | 21 | 26 |
5 |
| LFA/Non LFA | 46 | 240
| 31 | 17 | 22 |
4 |
| Hybrid (see above) | 54 | 98
| 20 | 1 | 11 |
2 |
| | |
| | | |
Table 2 Changes in total subsidy receipts from hybrid
option in absolute (£m) and proportional terms.
| Farm Type | Farm Size
| | | |
| Small | Medium
| Large | All Sizes
|
| Cattle and Sheep (LFA) | 2.9
| 6.8(a) | -(a) | 9.7
|
| (6%) | (9%) (a)
| -(a) | (8%) |
| Cattle and Sheep (Lowland) | -1.4
| -2.3 | 0.5 | -5.8
|
| (-1%) | (-4%)
| (5%) | (-3%) |
| Dairy | 0.2 | -3.5
| -11.3 | -14.5 |
| (2%) | (-3%)
| (-3%) | (-5%) |
| Mixed | -0.9 | -3.1
| -7.1 | -11.1 |
| (-3%) | (-5%)
| (-6%) | (-5%) |
| Cereals | -3.5 | -14.0
| -23.5 | -40.9 |
| (-4%) | (-6%)
| (-6%) | (-6%) |
| Pigs and Poultry | 0.02 |
0.02 | 0.01 | 0.02
|
| (3%) | (2%)
| (2%) | (2%) |
| General Cropping | 1.5 |
9.5 | 47.9 | 59.0
|
| (12%) | (16%)
| (21%) | (19%) |
| Horticulture | 0.7 | 1.1
| 1.7 | 3.5 |
| (2232%) | (146%)
| (257%) | (246%) |
| | |
| |
(a) The small number of large LFA cattle and sheep farms in the
sample means that results for this category cannot be separately
identified. Results for large and medium LFA farms have therefore
been combined.
Table 3 Changes in total subsidy receipts by Region (flat
rate payment minus historic payment) in absolute (£m) and
proportional terms
| Region | Uniform Flat Rate Payment
| Crops/Grass | LFA/Non LFA
| Hybrid (see above) |
| East Midlands | -30.0 | -22.5
| -15.8 | 2.3 |
| (-13.9%) | (-10.4%)
| (-7.3%) | (1.1%) |
| Eastern | -16.0 | 11.1
| 16.2 | 18.6 |
| (-3.9%) | (2.7%)
| (4.0%) | (4.6%) |
| North East | 5.9 | 1.4
| -11.6 | -3.5 |
| (6.0%) | (1.4%)
| (-13.3%) | (-3.5%) |
| North West | 87.4 | 68.4
| 22.4 | 8.7 |
| (59.1%) | (46.3%)
| (13.2%) | (5.9%) |
| South East | -3.5 | -1.6
| 15.0 | -7.3 |
| (-1.5%) | (-0.7%)
| (6.2%) | (-3.2%) |
| South West | -28.2 | -39.4
| -13.3 | -20.2 |
| (-8.0%) | (-11.2%)
| (-3.9%) | (-5.7%) |
| West Midland | -13.8 | -16.1
| -3.5 | -1.3 |
| (-7.0%) | (-8.1%)
| (-1.8%) | (-0.7%) |
| Yorkshire and Humber | -1.8
| -1.4 | -9.5 | 2.8
|
| (-0.7%) | (-0.6%)
| (-4.1%) | (1.2%) |
Department for Environment, Food and Rural Affairs
April 2004
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