2 Objectives of the Common Agricultural
27. The original objectives of the Common Agricultural
Policy were set out in the Treaty establishing the European Economic
Community (also known as the Treaty of Rome) in 1957. They were
retained in the Treaty on the Functioning of the European Union
(TFEU) (Box 1).
|Box 1: Article 39 of the Treaty on the Functioning of the European Union (TFEU)
The objectives of the common agricultural policy
1. The objectives of the common agricultural policy shall be:
(a) to increase agricultural productivity by promoting technical progress and by ensuring the rational development of agricultural production and the optimum utilisation of the factors of production, in particular labour;
(b) thus to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture;
(c) to stabilise markets;
(d) to assure the availability of supplies;
(e) to ensure that supplies reach consumers at reasonable prices.
The need for a common policy on agriculture
28. When the Treaty of Rome established the Common Market,
there was strong state intervention in agriculture in the six
founding Member States. If agricultural produce was to be included
in the free movement of goods while maintaining state intervention,
national intervention mechanisms had to be made compatible across
the Community. This is the basic purpose on which the common agricultural
policy was founded and remains valid today.
Dr Moss, Principal Agricultural Economist at the Agri-Food and
Biosciences Institute (AFBI) and Senior Lecturer at Queen's University,
Belfast, stated "measures which impact on the functioning
of the markets for agricultural commodities should remain common".
The Commission's Communication states that the "overwhelming
majority of views expressed [in response to their public consultation]
concurred that the future CAP should remain a strong common policy.
A Eurobarometer survey conducted in early 2010 concluded there
was "an overall preference for the European level to manage
29. It is asserted, through the subsidiarity
principle, that EU-level action is justified on issues that cross
Agricultural policy influences several supra-national issues,
such as food security (as agricultural products move freely within
the EU), the preservation of natural resources and biodiversity
(although specific habitats might be deemed a local issue), and
tackling climate change. For the same reason, a common EU agricultural
policy is desirable for the purpose of international trade negotiations,
giving Member States greater influence than they would have as
30. Member States are likely to differ in the
priority that they place on agriculture and rural development.
The potential for distortion of competition because some producers
are supported more than others increases the more CAP expenditure
or policy is determined nationally or is co-financed. The Andersons
Centre claimed that UK farmers would be placed at a disadvantage
if more funding was decided nationally as "the UK Treasury
would strongly resist providing funds".
Several other witnesses agreed that a 'renationalisation' of the
budget could harm UK farmers' competitiveness.
31. Given the strategic importance
of food and the openness of markets within the EU, it is essential
that the EU retains a common policy on agriculture. First, this
helps to maintain fair competition for agricultural products within
the EU. Second, agricultural policy affects cross-border issues
such as food security and climate change where action at a supra-national
level is appropriate. Third, through acting collectively, the
EU is able to be a major player in global agricultural trade.
Objectives and priorities for
the post-2013 CAP
32. The Commission's Communication gives three
overall objectives for the future CAP, and several sub-objectives
within each main objective (Box 2).
Box 2: The Commission's objectives for the future CAP
Objective 1: Viable food production
- to contribute to farm incomes and limit farm income variability
- to improve the competitiveness of the agricultural sector and to enhance its value share in the food chain
- to compensate for production difficulties in areas with specific natural constraints because such regions are at increased risk of land abandonment
- Objective 2: Sustainable management of natural resources and climate action
- to guarantee sustainable production practices and secure the enhanced provision of environmental public goods
- to foster green growth through innovation
- to pursue climate change mitigation and adaptation actions
Objective 3: Balanced territorial development
- to support rural employment and maintaining the social fabric of rural areas
- to improve the rural economy and promote diversification
- to allow for structural diversity in the farming systems, improve the conditions for small farmers and develop local markets
33. Although witnesses agreed the need for a
common policy, we received mixed views about the objectives of
the policy in future, ranging from maintaining farmers' incomes
through providing food security to protection of the environment
and rural landscapes. In the following section, we present the
views of UK interested parties on the purpose of the CAP and recommend
a set of objectives and priorities for our agricultural policy.
34. Our predecessor Committee in their inquiry
Securing food supplies to 2050: the challenge for the UK noted
the difficulty with defining 'food security'.
For some, food security is simply about access to enough food,
for others it is synonymous with self-sufficiency or even food
sovereignty. In this
report, we concur with our predecessors that food security is
'to have access at all times to sufficient, safe, sustainable
and nutritious food, at fair prices, so as to help ensure an active
and healthy life'.
35. The urgent need to address the food security
question has been impressed on the Committee by the recent Foresight
report, the Future of Food and Farming.
This report confirmed the UN Food and Agriculture Organisation
(FAO)'s predictions that food supplies will need to double to
meet the predicted demands of 8-10 billion people by 2050, without
bringing more land into production. Moreover, this "growing
demand for food must be met against a backdrop of rising global
temperatures and changing patterns of precipitation".
We also note the conclusions of the Securing food supplies
to 2050 inquiry that: "Doing nothing to contribute to
the world's food supplies would be morally unacceptable: at a
time when a fundamental shift in thinking is required, the UK
should set an example, not bury its head in the sand".
36. This does not mean that we should use the
CAP as a tool to increase EU production now beyond the level suggested
by market conditions, which would be a return to post-war logic.
The National Farmers' Union (NFU) claim that UK self-sufficiency
in all food-groups (including for example tropical fruits that
cannot be grown here) will fall from 59% to under 50% by 2030
if current trends continue.
However, we should not strive for total self-sufficiency as this
would be impossible with our current diets. The UK is currently
72% self-sufficient in domestically-produced foods, which are
more relevant to our basic food security in terms of calorific
intake than self-sufficiency over all food groups.
The Future of Food and Farming report rejected food self-sufficiency
but emphasised that food system governance needed to be improved
as well, for example to avoid the introduction of export bans
at times of food stress.
37. There was a broad consensus among witnesses
that the strategic importance of food justified Government intervention
through agricultural policy to ensure food security; for many
this includes retaining a significant degree of self-sufficiency,
at least until global governance of the food system has been improved.
For example, Dr Moss said:
I think it is important that Europe retains a significant
degree of self-sufficiency in food for strategic reasons. Very
simply [...] we can opt not to buy a motor car, we can opt not
to have fancy clothes or live in fancy houses, but food is of
absolute importance; imperative importance.
38. Food security involves a balance between
production and sustainability. Our future food security depends
on sustainable management of the land and preservation of agricultural
social capital. The
Minister of State for Agriculture and Rural Development told us
that it was in the EU's strategic interest to increase food production
capacity, pointing out that climate change projections suggest
that "northern Europe will be increasingly the bread basket
of the world".
39. We believe that the EU will
need to play a greater role in meeting food supply challenges
in the future, particularly as future climate change may result
in currently productive areas becoming less so. Until failures
in the global governance system of food supply are addressed,
there remains a strategic interest for the EU to retain a significant
degree of food self-sufficiency. The first objective of the Common
Agricultural Policy should be to maintain or enhance the EU's
capacity to produce safe and high-quality food.
40. The European Commission believes that improving
the viability of EU agriculture in a global market is central
to the first objective of maintaining production capacity:
On the one hand, agriculture can potentially contribute
substantially to many of the challenges faced by Europeans with
right incentives and in the right setting [...] On the other hand,
its structure is diverse and economic situation fragile [...]
In effect, short-term survival dominates the perception of many
farmers over the long-term, broader perspective. If agricultural
policy does not address the former, it will have little success
in promoting the latter.
41. In the UK, agriculture accounts for a relatively
small proportion of the workforce and GDP (about 0.5% of Gross
Value Added.) However,
it contributes significantly to other parts of the economy: for
example food and drink processing is the UK's largest manufacturing
sector and buys two-thirds of the production of British farmers.
The Government wants to rebalance the economy away from services
and the financial sector towards manufacturing. UK agriculture
could be important in achieving this through its role in supporting
the UK agri-food industry.
42. The UK Government and devolved administrations
consider improving the overall competitiveness and viability of
UK agriculture to be key aims of the CAP. The Welsh Assembly Government
wanted a CAP that "strengthens the competiveness of our land
and the Scottish Executive also aims to "optimise the productive
use of natural resources".
Defra called for "transformational reforms which we believe
are necessary to deliver a thriving, sustainable and internationally
competitive EU farming sector" in order to reduce reliance
on public subsidies.
Farming representatives and environmental NGOS also agreed with
the need to tackle the issue of farm business competitiveness.
43. Enhancing the competitiveness
and viability of the EU agricultural sector should be the second
objective of the CAP. A competitive and viable EU agricultural
sector is the key to producing more while having less impact on
the environment and to reducing farmers' reliance on income support
from the tax-payer in the long-term.
44. Farmers are responsible for managing over
half of the EU's land area.
Several witnesses, particularly Defra and environmental NGOs,
emphasised the central role the CAP could play in sustainable
land management. Defra argued that the future CAP should reward
farmers for "delivering environmental benefits by managing
the land effectively to promote long term resilience".
Similarly, the Country Land and Business Association (CLA) told
We genuinely believe that farmers are primarily in
business to produce food, but because they manage the bulk of
the territory, they're the only businesses out there who can supply
biodiversity, landscape management, water protection, climate
protection over a wide scale, and in principle they're willing
to do this, but they want to see it as a business.
45. Markets tend not to reward farmers properly
for their activities that deliver environmental or societal benefits,
such as protecting farmland birds or ensuring a high standard
of animal welfarethis is a form of market failure (Box
3). The Royal Society for the Protection of Birds (RSPB) said
there is a "clear case for policy intervention, through the
CAP, to secure environmental delivery due to the market failure
to reward many environmental public goods";
similarly the Society for Biology said that "public subsidy
should be for public goods".
|Box 3: Public Goods and Market Failures|
The strict economic definition of a public good is a good whose consumption is non-excludable and non-rival. This means that the consumption of such a good by one individual does not reduce the amount of that good which can be consumed by any other individual (non-rival) and no-one can be excluded from the consumption of the good (non-excludable). Examples of public goods are law enforcement, defence and street lighting. Because of the nature of such goods, there is no market incentive to produce them as consumers cannot be charged (via the market) for their consumption, resulting in market failure. Consequently, public goods have traditionally been provided by public authorities/government.
Farmers often create public goods, including environmental protection, conservation of biodiversity, soil fertility and water quality, landscape preservation, food safety, animal and plant health, and rural development. Agricultural production also creates negative externalities, for example water pollution, which are not properly accounted for in the cost of the product and are therefore paid for by society. Although some witnesses referred to food production as a public good, this is not strictly true as there are efficient markets for food and if one person consumes the food, there is less available for others. 
46. The third objective of the
CAP should be to ensure the sustainable management of the EU's
natural resources, biodiversity and landscapes, recognising that
farmers are the managers of over half of the EU's land area.
47. The European Commission gives "a fair
standard of living for the agricultural community" as one
of the ways to achieve its mission, which is to promote the sustainable
development of Europe's agriculture and to ensure the well-being
of its rural areas.
Commissioner Ciolo? told us that "one of the most important
objectives of the Common Agricultural Policy is to ensure a good
standard of living for farmers", adding that direct payments
should ensure a minimum level of income for farmers.
48. This emphasis on income support was not supported
by all witnesses. Professor Swinbank, Emeritus Professor of Agricultural
Economics, University of Reading, felt there was "no need
for income support across the generality of European agriculture".
Dr Moss and the NFU argued that it would not be possible to deliver
every single farmer in Europe an acceptable standard of living
via the CAP. Many
agricultural economists question the use of the CAP as an income
support policy as it is not means-tested and the available farm
income data is not sufficient to enable this. In addition, Member
States have their own mechanisms to deal with economic hardshipthe
Welfare State for examplewhich arguably are more efficient
and targeted than EU-level measures.
The Minister described income for farmers as being at the top
of his list of objectives for the reformed CAP, but emphasised
that he did not mean this to be achieved through subsidies.
49. Nonetheless there may be a convincing case
for maintaining farmers' incomes in some areas of low productivity,
where this is necessary to ensure the delivery of important public
goods (Box 3). In our report into Farming in the Uplands,
we concluded that farming activity was central to the future of
the cherished landscapes and traditions of upland areas and should
be supported through CAP instruments.
On the other hand, economists have argued that socioeconomic objectives,
such as avoiding depopulation, could be achieved more efficiently
through EU cohesion funding or national projects than through
50. The Minister told us he supported the use
of the CAP in economically vulnerable areas, saying "we agree
that there should be measures within in it [the proposals from
the Commission], preferably in Pillar 2, to support those farmers
in the uplands and in the hills".
However, Defra's written evidence suggests this could be achieved
through instruments other than the CAP.
Given the importance of maintaining a common system of support
for agriculture in the EU, we would argue that any support for
farmers in less productive areas should be delivered through the
CAP rather than through national instrumentsto do otherwise
risks creating competitive distortions that could negatively affect
51. The impacts of climate change on European
agriculture are unpredictable, but it is possible that some currently
productive regions will become unsuitable for agricultural activity
with consequences for the delivery of public goods. For this reason,
future approaches to maintaining agriculture across the EU must
be flexible to reflect changing circumstances.
52. The fourth objective of
the CAP should be to help to maintain agricultural activity in
areas where it delivers significant public benefits, such as the
maintenance of biodiversity and cultural landscapes. However,
the CAP should not aim to deliver an acceptable standard of living
to every farmer in the EU through income support alonefarmers
should be encouraged to look to the market for returns.
DIVERSITY OF FARMING SYSTEMS
53. The Commission's Communication gives 'structural
diversity' in farming systems as one of the objectives of the
CAP. The EU exhibits a wide range of different farming systems,
ranging from semi-subsistence farming to large agri-businesses
such as the Co-operative Group. Currently, EU agriculture has
been unwilling to adopt some more intensive methods of farming,
found for example in South America, such as the use of GM crops,
cloning of livestock, or very large-scale dairy units ('super-dairies').
There was a general view among our witnesses that the public valued
the current model of EU agriculture. For example, the CLA said:
This is the genuine question that we all have to
ask ourselves: does the European public want and expect that its
agricultural land is farmed South American-style, in estates of
tens of thousands of hectares with 50 combines in a field? [...]
We each have our own personal view on that. Some will say, "If
it's cheap and efficient and high quality"which it
can be, and I'm not saying that those things are bad quality"then
bring it on." But others will say, "No, that's not the
European way of doing it," and we're trying to find a balance
in there. We will have some large farms, I hope, but I think Europe
wants smaller farms, so that's part of it.
54. The Campaign to Protect Rural England (CPRE)
felt that the preservation of the cultural landscapes generated
by farming should be one of the key objectives of the CAP. They
expressed concern that a focus on improving competitiveness would
lead to intensification and consolidation of production, with
negative consequences for European agricultural landscapes and
our inquiry into the English Uplands, we heard how the valued
cultural heritage of the uplands, which had been preserved by
its history of low-intensity land use, could be threatened by
55. Structural diversity in farming allows for
the continuation of 'high nature value' (HNV) farming systems.
These tend to be low intensity, low income and small-scale but
maintain environmentally-friendly practices such as extensive
grazing and leaving land fallow. Conservation groups have stressed
the importance of protecting these farming systems as major reservoirs
of European biodiversity.
56. Small-scale farming, can also be important
in maintaining connections between local communities and their
food supply. George Lyon MEP, Rapporteur to the European Parliament's
own-initiative report on the future of the Common Agricultural
Policy after 2013, said "Local communities want to see local
food production and therefore that is a priority we must still
address in the future".
Commissioner Ciolo? noted that his public consultation on the
future of the CAP highlighted a desire for small farmers to have
more opportunities to play a role in the "the delivery of
diversity of food and quality of food".
57. We note that there are concerns that the
untrammelled pursuit of agricultural competitiveness might have
unwelcome consequences for the diversity of EU farming and the
social and environmental benefits that flow from this, including
cultural landscapes and local food sources. Equally, the Common
Agricultural Policy should not seek to discourage restructuring
and consolidation where this enables farmers to achieve greater
competitiveness and profitability. The
fifth objective of the CAP should be to foster diversity in EU
agriculture, where this is valued by EU citizens, but not enforce
31 Official Journal of the European Union, C115,
9 May 2008, p 62. The Treaty of Lisbon, which entered into force
on 1 December 2009, amended the Treaty establishing the European
Community, which was renamed the Treaty on the Functioning of
the European Union. Back
European Parliament Fact Sheet 4.1.1 The Treaty of Europe and
Green Europe. Back
Ev 126 Back
The CAP towards 2020, p 2. Back
TNS Opinion and Social on behalf of the European Commission,
Europeans, Agriculture and the Common Agricultural Policy-Summary
Report, Special Eurobarometer 336, March 2010. It should be
noted that only 57% of those surveyed had heard of the Common
Agricultural Policy. Back
European Parliament Fact Sheet 1.2.2 Subsidiarity. Back
Ev w28 Back
For example, the Tenant Farmers Association (TFA) (Ev 110), the
Royal Society for the Protection of Birds (RSPB) (Ev 107), Dr
Moss, Principal Agricultural Economist, Agri-Food and Biosciences
Institute (AFBI) and Senior Lecturer, Queen's University, Belfast
(Ev 124), the National Assembly for Wales Rural Development Sub-Committee
(Ev w23), the Welsh Assembly Government (Ev w31), the Scottish
Agricultural College (Ev w35). Back
The CAP towards 2020, p 7. Back
EFRA Committee, Fourth Report of Session 2008-09, Securing
food supplies up to 2050: the challenges faced by the UK, HC
Food sovereignty as a term was coined by the Via Campesina in
1996. It encompasses the idea that people should have a right
to locally produced and culturally appropriate food and to define
their own food production systems (www.foodsovereignty.org) Back
EFRA Committee, Securing food supplies up to 2050: the challenges
faced by the UK, para 6. Back
Foresight and Government Office for Science, The Future
of Food and Farming: Challenges and choices for global sustainability-Final
Project Report, January 2011, p 15. Further information on
the Foresight Global Food and Farming Futures project is
available from their website, www.bis.gov.uk/foresight Back
The Future of Food and Farming, p 15. Back
Securing food supplies up to 2050: the challenges faced by
the UK, para 47. Back
"Take action now to avoid food shortage-NFU", Farmers
Guardian, 31 December 2010. Back
HC Deb, 18 October 2010, c425W Back
The Future of Food and Farming-Final Project report, p
For example, the RSPB (Q 8), TFA (Ev 111, Q 40, Q 58), the Country
Land and Business Association (CLA) (Q 78), the National Farmers'
Union (Q 124-125, Q 157), George Lyon MEP (Q 297), Brian Pack
OBE (Q 342), the Agriculture and Horticulture Board (AHDB) (Ev
161, Q 362), the Food and Drink Federation (Ev 168, Q 398), Mr
James Paice, Minister of State for Agriculture and Food (Q 480),
the Scottish Agriculture College (Ev w35), Farmers' Union of Wales
(Ev w45). See also the European Parliament resolution of 8 July
2010 on the future of the Common Agricultural Policy after 2013
(TA(2010)0286), para 6, 10-11, 67. The previous EFRA Committee
concluded in their Securing food supplies to 2050 report
that the UK should not take world food supplies "for granted"
and that "A healthy domestic agriculture is an essential
component of a secure food system in the UK" (para 47). Back
Q 218 Back
See Dr Moss (Q 232), the RSPB (Ev 108), the CLA (Ev 117-118),
the Society of Biology (Ev w 19). Back
Q 480. The AHDB similarly said that "the UK is predicted
to be less impacted on by climate change than many other countries
meaning that our contribution to total food and crop production
may potentially need to be greater in the future than at present".
(Ev 161). Back
European Commission, The reform of the CAP towards 2020: Consultation
Document for Impact Assessment, 2010. Back
Defra, Agriculture in the United Kingdom, 2008. Gross Value
Added (GVA) of farmers and primary producers was £5.8bn,
while GVA of the agri-food sector (including catering and retail)
was £85bn, which is 6.7% of national GVA. Back
Ev 167. It has been estimated that, in Scotland, one job in agriculture
supports 0.85 jobs elsewhere in the rural economy.(Croasdale S.,
Hosie D., Hanrahan K. and Young, J., Input-Output Modelling
for the Scottish Government, 2009, www.scotland.gov.uk).
"Cameron urges economy 'rebalance' to restore growth",
BBC News website, 7 March 2011. Back
Ev w33 Back
Ev w38 Back
Ev 171 Back
For example, the TFA (Ev 110), the RSPB (Ev 106), the NFU (Ev
European Commission, The reform of the CAP towards 2020: Consultation
Document for Impact Assessment, 2010. Back
Ev 172 Back
Q 95 Back
Ev 107 Back
Ev w19 Back
Ev 151 Back
Q 172 Back
Q 257 Back
Q 126, Q 201 Back
Ev 154, Q 229. For further information, see A Common Agricultural
Policy for European Public Goods: Declaration by a Group of Leading
Agricultural Economists, 2009, http://www.reformthecap.eu/declaration-2009
and Tangermann, S., Direct Payments in the CAP post 2013,Note
to DG IPOL, January 2011, PE 438.624. Back
Q 448 Back
Farming in the Uplands, para 5, 38, 60. Back
A Common Agricultural Policy for European Public Goods: Declaration
by a Group of Leading Agricultural Economists, 2009, http://www.reformthecap.eu/declaration-2009 Back
Q 460 Back
Ev 172 Back
Q 93 Back
Ev 108 Back
Farming in the Uplands Ev w 15; Commission for Rural Communities,
High ground, high potential-a future for England's upland communities,
June 2010, p 8. Back
Ev w18; European Forum for Nature Conservation and Pastoralism,
Birdlife International, Butterfly Conservation Europe and the
WWF, CAP Reform 2013: Last chance to stop the decline of Europe's
High Nature Value farming? Back
Q 279 Back