House of Commons - Environment, Food and Rural Affairs

Select Committee on Environment, Food and Rural Affairs Fourth Report

8 IS THE UK GOVERNMENT'S VISION ACHIEVABLE?

Assessment of whether the Vision has achieved its objective of stimulating debate

97. Defra and HM Treasury told us that the Vision paper "was designed as a contribution to the debate already underway on how to achieve a sustainable future for agriculture and to help answer those who have asked what the UK Government means when it calls for further CAP reform".[162] Defra's own assessment of how well the Vision document had achieved its aim was extremely positive. In its Autumn 2006 Performance Report it described how "very successful" the Vision had been because now there was "significant talk of future reform", with the debate shifting from "'whether' to 'how fast'" changes would take place. Defra also boasted that "the Vision has stimulated the publication of vision papers in other Member States, and has provided the foundation for a range of activity across Europe, including seminars, meetings, conferences, and in the media".[163]

98. Most other witnesses, however, failed to share this rosy picture of the success of the Vision. The general opinion was summed up by the NFU when it described how the "lack of focus, the content and timing of the document" had antagonised some Member States and the Commission.[164] The NFU also argued that developments since the publication of the Vision had "confirmed the lack of success of the UK Government strategy to date" and called for a "reconsideration" of those strategies and priorities.[165]

99. Even if the European Commission had been antagonised by the publication of the Vision, there seems little doubt that the report encouraged it to engage with the UK over its plans for reform. Since Commissioner Fischer Boel gave oral evidence in support of our inquiry, in October 2006, she has travelled to the UK on at least three further occasions, addressing the Oxford Farming Conference, the NFU's Annual Conference and Agra Europe's Outlook Conference. One might argue that, given the 'Britishness' of the report, the Commission might have to be seen to distance itself from the proposals. However, the potential for a less counterproductive outcome, from the UK Government's point of view, suggested itself earlier this year during a public spat between the Commissioner and France's Farm Minister, Dominique Bussereau. With political sensitivities running high, in the run up to the French election, Mr Bussereau had criticised Fischer Boel for appearing to pre-empt the post-2013 budget discussions in an interview with the Financial Times, published on 29 December 2006. According to a subsequent edition of the same newspaper, the Commissioner's robust defence made reference to the fact she was "fighting an attempt to have spending cut as part of a budget review in 2008-09, as the UK wished, and to keep the agreed settlement until 2013".[166] This example suggested that the Commission may have found the Vision's radical proposals at least partly useful as an extreme comparison that could play down the significance of its own ideas for reform.

OUR CONCLUSIONS

100. Further reform of the CAP is very necessary. However, for British ideas to succeed, it is important that the UK adopts a less naive approach to its agenda than when it launched its Vision document on an unsuspecting audience and without prior effort to prepare the farm ministers for its arrival. This approach was counterproductive and caused a negative reaction. A more consensual approach must be developed if success for the British reform agenda is to be secured in the future.

101. For all its revolutionary rhetoric, the Government's paper was ultimately disappointing. It merely described an evolution of the existing policy, primarily motivated by budget savings, rather than presenting a truly revolutionary vision, directing the debate towards scrapping the existing CAP and replacing it with a 'Rural Policy for the EU'. The failure of the Government to consult stakeholders prior to the launch of the Vision, or to debate its proposals on the floor of the House, or to encourage a wider debate after the Vision's publication, represents a regrettable lost opportunity for engagement. We, therefore, believe that the Government should publish, as soon as possible, a Vision 'mark 2' to address the deficiencies in the original document outlined above and to redirect the debate towards a more visionary replacement for the existing, outdated policy.

Analysis of whether the Vision is politically achievable

102. As the CLA noted, the CAP can only be reformed when a qualified majority of the EU Council can be persuaded of the case for, and direction of, reform.[167] Trans-national alliances have to be established. When the CLA was asked about how the UK Government's Vision had been received in the rest of the EU, it said that "with the Swedes and Danes there was a flicker of recognition and with everybody else blank and innocent".[168] However, in advance of the final negotiations on the EU Financial Perspectives and just one week after the publication of the Vision document, the Prime Minister described the balance of those for and against CAP reform as being "about half and half in Europe".[169]

103. It is encouraging to note that Defra recently seemed to have recognised and acted on the need to build a wider coalition. Evidence of this came from an accord, signed in the margins of the March 2007 Agriculture Council, between the Secretary of State, David Miliband, and his Italian counterpart, Paulo de Castro, outlining their joint position on the future of the CAP.[170] In April 2007, the Secretary of State also described how his "recent discussions suggest that the UK agenda for CAP reform has growing support".[171]

104. The fact that the CAP results in a substantial reallocation of resources between Member States is acknowledged in paragraph 2.15 of the Vision document.[172] These vested interests have historically made it very difficult to secure change, as inevitably there will be winners and losers. The radical changes advocated by the UK Government's Vision are therefore likely to be resisted by those Member States that benefit most from the status quo.

105. Our visit to the French Ministry of Agriculture left us in no doubt about its opposition to the proposals contained in the UK Government's Vision for the CAP. France's own ides for the future development of EU agricultural policy had been presented to the EU Agriculture Council in March 2006, in what some believed was a riposte to the more 'liberal' economic agenda presented by the UK's Vision.[173] The nine-page French memorandum was, as David Miliband pointed out, not exactly an alternative vision.[174] However, its calls for the development of agricultural policies to shore up the incomes of farmers in increasingly tough markets did succeed in securing the support of the majority of the other Member States.[175] The scale of this support for the French paper illustrated the sort of sea change that would be required for the UK Government's Vision to become politically achievable and showed how isolated the well-established core group of reform-minded countries (UK, Denmark, Netherlands and Sweden) seemed to have become.

106. France has been a dominant force in EU agricultural policy, with its influence stretching back to the origins of the CAP. Jacques Chirac's announcement that he was not standing for re-election as France's President in the 2007 elections has potential significance for the future of the CAP. President Chirac has had what commentators described as a "near-umbilical attachment to the country's farmers" throughout his career, which included a spell as Agriculture Minister.[176] He received much domestic acclaim for his role in securing the 2002 agreement to protect CAP Pillar 1 spending until 2013; so much so that it would have been politically difficult for him to have considered renegotiating the deal during his period of office. Now his presidency has come to an end there does seem to be the promise of some openness to new ideas on agricultural policy in France, if our own discussions with the Finance Ministry and French farmers are anything to go by. President Chirac's replacement, Nicolas Sarkozy, is unlikely to be quite as stubborn in defending the interests of French farmers as the man who has held this office since 1995.[177] The French attitude to CAP reform also has added significance since at least part of the budget review process, scheduled for 2008/09, will fall under France's leadership as it will hold the six-month rotating EU Presidency of the EU in the second half of 2008.

107. The Committee's visit to Poland and Romania brought home to us how different the priorities of the new Member States were when it comes to the CAP, given their small farm structures and higher than average reliance on the rural economy. In Romania, the then Minster of Agriculture described how the restructuring of its agricultural sector would necessitate two million of his fellow citizens to quit farming.[178] There is also likely to be a reluctance among the new Member States to begin talking about further changes until the level of direct payments received by their farmers reaches parity with that of producers in the rest of the EU, at the end of their transitional phase-in (see paragraph 16). Evidence to our inquiry also suggested that the new Member States may not be ready yet to move to a CAP where Pillar 2 schemes dominate, as Pillar 1 funding is progressively removed.[179] Defra did, however, assure us that there were some countries amongst the new Member States who were very open to what the UK Government was saying on the subject of CAP reform.[180]

OUR CONCLUSIONS

108. Defra's problems in introducing the Single Payment System in England and its demands for the ability to modulate voluntarily funds between the two CAP Pillars in the absence of match-funding may be perceived by some as having a direct relationship with its impatience to move the CAP reform process on at a faster rate. This is unfortunate, as it may well have undermined the Government's negotiating position on further CAP reform as we enter what will be a crucial time for the development of future EU policy. The UK Government must also recognise the differing priorities of many of the new Member States and the need for major restructuring of their agricultural industries.

109. We welcome the recent accord signed with Italy on the future of the CAP and encourage the UK Government to make further attempts to establish alliances with likeminded Member States, as these will be essential in attempting to achieve the most far-reaching reform possible. Despite assurances from the Prime Minister as to the balanced nature of the argument, the majority of the evidence suggests that the political consensus currently lies closer to those wishing to preserve the status quo than with the reformist camp of those sympathetic to the UK Government's Vision for the CAP. However, political changes in influential Member States, such as France, combined with a build up of pressure for reform going into the 2008/09 budget review, have the potential to shift the balance in the other direction.

Future prospects for CAP 'health checks' and the EU budget review

110. Mariann Fischer Boel admits that she has much to do in the second half of her five-year mandate, a period which will determine whether or not her legacy will be that of a reformist Commissioner. She is looking ahead with the regularly repeated motto: 'one vision, two steps'.[181] The first of these steps is the CAP 'health checks', meeting the terms of a series of clauses introduced into the final agreements of the CAP reforms of 2003, 2004 and the sugar reform of 2005. Over the period 2007 to 2009, the Commission must report on cross-compliance, the consequences of partial coupling and the choice of model for implementing the Single Payments Scheme, as well as reporting on certain agricultural markets, most notably the dairy sector.[182] The second of the two steps is the EU budget review, which the European Commission has been requested to undertake in 2008/09, explicitly including the CAP and its financing.

111. Commissioner Fischer Boel began to outline her thinking in advance of the CAP 'health checks' in September 2006, when she addressed agriculture ministers at an informal Council meeting in Finland. In that speech, she launched a thinly-veiled attack on the UK's reformist position, when she said:

rendez-vous

183

Since then, she has used speeches at numerous meetings (several of which have been in the UK) to emphasise that a 'health check' should not imply sickness, or the need for radical surgery. Rather, the process is to make sure that the recently reformed CAP is working as it should, in an EU of 27 Member States and in the foreseeable international context.[184]

112. Commissioner Fischer Boel seems to have employed the same tactic as used by her predecessor, Franz Fischler, of using public fora to hint at ideas for change and then to repeat the messages until they gained familiarity and listeners started to accept them as the prevailing orthodoxy. From her oral evidence and the other speeches she has made around Europe, we know that the 'health checks' will in all probability recommend:

the abolition of set-aside

the elimination of most, if not all, of the existing derogations from the principle of full decoupling of the Single Payment Scheme

an increase in the rate of mandatory modulation (above the current 5%)

a formal commitment not to prolong the milk quota regime once it expires in 2015.[185]

Looking ahead to the CAP beyond 2013 and the budget review of 2008/09, Commissioner Fischer Boel has used her recent speeches to suggest that payments to farmers would likely remain, though full decoupling would be necessary. In the Doha Development Agenda talks at the WTO, the EU has already pledged to end agricultural export subsidies by 2013 and Mrs Fischer Boel has hinted that the Commission will be examining closely whether other market interventions should be phased out as well.

113. The 'one vision, two steps' approach has potential to create confusion. Commissioner Fischer Boel insisted to us that "they are two different exercises […] they might be going back-to-back but they are two different steps".[186] She has also insisted that the EU must decide what kind of policy it wants, before then finding the money to pay for it:

187

However, the pursuit of this objective does not seem compatible with her other pronouncements regarding only minor adjustments being made with the operations of an already quite 'healthy' CAP, during the first part of her two-step process. If the 'health checks' prove to be a missed opportunity for revising the fundamental workings of the CAP, then presumably the Commissioner will see the realisation of her fears, with budgetary cuts determining the scope and ambition of the future CAP post-2013.

114. When speculating on the extent to which substantial reforms could figure in the 'health checks', Defra noted that the previous Commissioner, Franz Fischler, had hid major reforms behind the title of a "mid-term review" in 2003.[188] However, Defra's ambitions for the future of the CAP seemed to have been constrained by a dose of realism when the Secretary of State outlined his "wish-list" for the 'health checks', at the NFU Annual Conference in February 2007. Echoing much of the Commissioner's own view, David Miliband said:

189

While none of this is incompatible with the proposals outlined in the Vision document, it does rather suggest that the UK Government has perhaps become more realistic in looking towards the 2008/09 budget review, rather than the earlier 'health checks', to press for the fundamental revisions to the CAP which it advocates.

OUR CONCLUSIONS

115. We believe that the CAP 'health checks' are a vital opportunity for the UK Government to pursue its agenda on the future of the CAP. If the policy is to be developed in advance of the financial negotiations that will set its budget, the debate on its future direction cannot wait until the later step of the mid-term review of the Financial Perspectives. Advance warning of the future EU agricultural policy for the period post-2013 would help farmers prepare for their new policy environment and help facilitate a resolution in the ongoing multilateral trade negotiations. There seems to us no reason why decisions could not be made in 2008, during the process of the 'health checks', and then implemented in 2014, on the basis of a financial agreement reached in the budget review. The logic of this approach seems compelling, and we urge the UK Government to grasp the opportunity of the forthcoming negotiations to push hard for a new policy that better reflects the modern-day objectives of Europe—a 'Rural Policy for the EU'.

162 Ev 73 Back

163 Department of Environment, Food and Rural Affairs, Autumn Performance Report 2006, p 41 Back

164 Ev 103 Back

165 Ev 104 Back

166 "Paris fury at threat to farm cash", Financial Times, 9 January 2007, p 7 Back

167 Ev 1 Back

168 Q 70 Back

169 Prime Ministers press conference on EU Budget negotiations, 9 December 2005, www.number-10.gov.uk/output/Page8743.asp Back

170 "Miliband receives support of Italy for greater CAP reform", Farmers Weekly Interactive, 21 March 2007, www.fwi.co.uk (See also: "Communiqué on Italian and British shared positions on the future of European agricultural policy", www.defra.gov.uk/farm/capreform/pdf/uk-italy-070419.pdf) Back

171 HC Deb, 19 April 2007, col 432 Back

172 HM Treasury and Defra, A Vision for the Common Agricultural Policy, December 2005, para 2.15 Back

173 Council of the European Union, Memorandum on the implementation and the future of the reformed CAP, 7265/1/06, 17 March 2006 Back