The Common Agricultural Policy (CAP) is again at a crossroads: decisions made now will determine our future food prices and availability and shape Europe's countryside and rural communities. This round of CAP reform is being played out against a very different background to past reforms: food security is rising up the political agenda, placing a renewed emphasis on agricultural policy.
The Coalition Government has committed to supporting UK agriculture and encouraging increased production. Funds provided from the CAP are the centre-piece of UK agricultural spending. Defra must engage proactively in Europe to ensure that the reformed policy will deliver a more competitive, productive and sustainable UK agriculture, in line with its commitments.
The primary objective of the Common Agricultural Policy should be to deliver food security for the EU including a significant degree of self-sufficiency. At the same time, the CAP should help farming businesses become more competitive and profitable and should manage our natural resources sustainably, including maintaining agricultural activity in areas where it enhances our physical and cultural landscapes. Recognising the combined challenges of a growing world population, climate change, and environmental degradation, the future CAP must help farmers to produce more while having fewer adverse impacts on our natural environment.
The European Commission has set out a range of options for the CAP after 2013. We are not convinced that any of the options as they currently stand represent a good deal for the UK. In this report, we have set out what changes Defra should seek to achieve on behalf of the UK as a whole. We have focussed on the key issues for UK agriculture: the future of direct payments and the balance between supporting farmers and protecting the environment.
We believe that direct payments have a place within the CAP, for as long as business conditions in agriculture fail to deliver a thriving and profitable industry. While we share Defra's ambition to reduce reliance on subsidies, we are not convinced that simply reducing direct payments is the way to achieve this. If Defra is to retain credibility, it must set out exactly how UK farmers will become self-supporting, against a backdrop of rising input prices and greater competition from third countries. In this context, we encourage Defra to clarify its own food security strategy, taking into account the recommendations of the Foresight report and its own position on the CAP.
Our witnesses rejected the European Commission's proposals to 'green' Pillar 1 through compulsory additional agri-environmental measures as they risk creating additional complexity of implementation while not delivering tangible benefits. We agree that the future CAP should place greater emphasis on sustainable farming, but believe that this will be more successful if farmers are encouraged by incentives rather than stifled by regulation. Additional agri-environmental measures must be directed at 'win-wins' for competitiveness and sustainability if they are to gain traction in the long-term. In principle we agree that strengthening and expanding the agri-environment component of Pillar 2 would be more appropriate than establishing a new raft of measures in Pillar 1. However, if UK farmers are not to be disadvantaged, there must be a common approach and a common target for implementation across Europe. For this reason, we suggest Defra consider whether full EU-financing would be more appropriate for measures that are intended to be applied across Europe.
The Commission's proposals are lacking in both vision and detail as to how it intends to increase the competitiveness of EU agriculture. Elements of their proposals, such as payment ceilings and additional support for small farmers, risk making UK businesses less competitive. Defra should negotiate changes to these elements and ensure that the final legislative proposals represent a clear plan for growth in EU agriculture. In particular, the final proposals must give fuller consideration to rectifying imbalances in the food supply chain and strengthening farm extension services and knowledge transfer. Any new definition of eligible recipients of CAP payments must not disadvantage the UK's tenant farmers and commoners.
Defra's handling of the debate over the future CAP has not impressed us thus far. We are concerned that their stance on direct payments lacks clarity and may reduce their ability to negotiate constructively with other Member States, or with the devolved administrations. It is incumbent on Defra to ensure that the devolved administrations' views are fairly represented. We encourage Defra and the devolved administrations to produce a joint position statement on the CAP post-2013 swiftly.