8 Voluntary reduction ("modulation")
of direct farm support payments
| (28452)
—
—
| Draft Council Regulation laying down the rules for voluntary modulation of direct payments provided for in Regulation (EC) No 1782/2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers, and amending Regulation (EC) No 1290/2005
|
| Legal base | Article 37EC; consultation; QMV
|
| Department | Environment, Food and Rural Affairs
|
| Basis of consideration | Minister's letter of 8 March 2007
|
| Previous Committee Report | None, but see footnote
|
| To be discussed in Council | 19 March 2007
|
| Committee's assessment | Politically important
|
| Committee's decision | Cleared
|
Background
8.1 The current approach to agricultural and rural support within
the Community was essentially determined by the Agenda 2000 reforms.
These involved reductions in internal market prices which were
compensated for by increased direct payments to farmers under
what became known as the first pillar of the Common Agricultural
Policy (CAP), whilst the various elements of support for rural
development, comprising the so-called second pillar, were consolidated
into a single Council Regulation.
8.2 These reforms also introduced the concept of
voluntary modulation, under which Member States were free, if
they so wished, to make reductions of up to 20% in the direct
support payments to their farmers in order to fund rural development
measures. However, the further changes introduced following the
mid-term review of those reforms in 2003 included a provision
enabling compulsory modulation to be applied as from 2005 to direct
payments in order to provide additional Community support for
rural development, whilst at the same time repealing as from 31
December 2004 the provisions for voluntary modulation.
8.3 In December 2005, the agreement reached by the
European Council on the financial framework for 2007-13 paved
the way for those Member States wishing to do so to re-introduce
voluntary modulation of up to 20%, and to use the amounts generated
for their rural development programmes under the second pillar
of the CAP. The Commission accordingly proposed in May 2006 detailed
rules for the application of voluntary modulation,[24]
which included provisions whereby:
- as with compulsory modulation,
the deduction would not apply to the first €5,000
of aid;
- there would in future have to be one national
rate of modulation (unlike the earlier voluntary arrangements,
where Member States had been able to operate different regional
rates);
- the proceeds of voluntary modulation would be
subject to the minimum spend requirements laid down in Regulation
1698/2005 for the three policy axes (10% for competitiveness and
enhancing the quality of life, and 25% for enhancing the environment).
8.4 In our Report of 5 July 2006, we noted that securing
agreement to voluntary modulation was of key importance to the
UK. However, we were told that the exemption of the first €5,000
meant either that a higher rate of modulation would be needed
to secure a given amount of receipts, or that the level of receipts
generated by a given rate of modulation would be reduced; that
the different rural development programmes currently in place
within the UK reflected the strategic objectives set by each of
the four administrations; and that the requirement for a minimum
spend for each of the policy axes contradicted the agreement reached
by the European Council in December 2005 —
and welcomed by the UK —
that such a minimum would not be set. In view of these various
issues, we recommended the document for debate in European Standing
Committee, and that debate took place on 23 October 2006.
The current document
8.5 We have now received from the Minister for Sustainable
Farming and Food at the Department of Environment, Food and Rural
Affairs (Lord Rooker) a letter of 8 March 2007, enclosing a revised
text prepared by the German Presidency, following the rejection
of the original proposal by the European Parliament. He says that
this text differs significantly from the version which was debated
in European Standing Committee, and in particular recognises that
special considerations are required for Member States, such as
the UK, which have operated voluntary modulation in the past.
It would therefore allow voluntary modulation on a regional basis,
with different rates allowable in England, Scotland, Wales and
Northern Ireland, and would also ensure that it is not subject
to the €5,000
franchise governing compulsory modulation (thus enabling the rate
of voluntary modulation to be kept at a lower level than would
otherwise have been the case). However, there has been no change
to provisions governing the minimum expenditure for each policy
axis.
8.6 In addition, the Minister says that, if there
were to be any future increases in compulsory modulation applying
across all Member States, the Presidency text would reduce voluntary
modulation, and that it would also require Member States applying
it to demonstrate that they had made an assessment of the impact.
He indicates that the UK supports the first of these steps, and
is content with the second.
Conclusion
8.7 This latest document addresses directly two
of the UK's main concerns on the original Commission proposal.
Consequently, although we are content to clear it, we are drawing
it to the attention of the House.
24 (27550) 10014/06: see HC 34-xxxiv (2005-06), para
1 (5 July 2006). Stg Co Deb, European Standing Committee,
23 October 2006. Back
|
