Written evidence submitted by Dairy UK
EXECUTIVE SUMMARY
- The CAP should meet the challenge of a globalised
market place whilst achieving greater sustainability.
- The Commission's proposals discriminate against
commercial farming, do not create a fair competitive environment
and do not enhance the UK's ability to meet food supply challenges.
- The re-distribution of single farm payments (SFP)
between EU members must not distort competition.
- Member State discretionary expenditure should
be minimised, but discretion should be given on the environmental
obligations attached to the SFP.
- The Commission's proposal will create a more
complex system.
- The CAP has to continue to evolve, but social
policy objectives should be separated from the CAP.
DAIRY UK
1. Dairy UK is the trade association that
represents the dairy industry supply chain in the UK. Members
of Dairy UK process around 85% of UK milk supply.
GENERAL
2. Dairy UK's primary concern is that the
CAP should help the UK and the EU meet the inescapable challenge
of becoming more competitive in an increasingly globalised market
place, whilst at the same time meeting the need of achieving greater
sustainability.
3. The primary support currently provided
by the CAP to assist farmers to be competitive is the single farm
payment. The single farm payment provides a degree of income stability
which also facilitates investment planning.
4. The thrust of the Commission's proposals
in respect of the SFP is to:
- Find a mechanism to redistribute SFP funds more
equitably between Member States.
- Penalise large farmers through a system of capping.
- Link agri-environmental criteria to a "green"
portion of the SFP payment (ie; incorporate pillar 2 objectives
into pillar 1).
- Allocate a portion of SFP funds separately to:
- support small farmers;
- maintain production in areas with specific natural
constraints, ie; areas not naturally suited to agricultural production;
- Consider adding the Water Framework Directive
to the Cross Compliance criteria.
5. Member States would also be given the
discretion to provide voluntary coupled support to particular
types of farms that are important for economic or social reasons,
i.e.; farm types that are not competitive.
6. Collectively these measures seek to broaden
the range of justifications behind the SFP by attaching environmental
and social criteria. They also compromise the principle of moving
the CAP away from coupled payments.
How will the Commission's proposals affect the
ability of UK agriculture to be competitive in a global market?
7. The proposals discriminate against the
type of commercial farming that has developed in the UK. There
is a strong risk that they may reduce the value of SFP payments
to UK farmers compared to the majority of our European counterparts.
This will:
- reduce the income security provided by the SFP
to UK farmers resulting in lower levels of investment,
- through the system of capping provide a disincentive
to further farm rationalisation.
Do the proposals ensure fair competition for British
agricultural products within the European Union?
8. By discriminating in favour of smaller
farms and those located in regions unsuited to agriculture, the
proposals will act to maintain production from less competitive
EU farms which would not otherwise be sustainable, resulting in
increased supply at any given level of price. This will accentuate
price volatility and place greater competitive pressure on UK
farmers. As such they do not create a fair competitive environment.
9. The Commission's proposals also hint
at a package of measures to address competition at each level
of the supply chain and contractual relations. No detail is provided
on these proposals but unless they are carefully constructed they
could result in the introduction of competitive distortions.
Will the proposals achieve the correct balance
between productivity and sustainability?
10. This is extremely difficult to assess as
the impact of greater environmental obligations on competitiveness
and environmental sustainability is very much a question of detail.
The Commission's proposal only sketches out the type of additional
agri-environment measures it wishes to attach to the "green"
component of the SFP. It is difficult to determine whether they
will be prejudicial to competitiveness. Improving environmental
sustainability does not always equate to improving competitiveness.
Do the proposals place the UK in a good position
to help meet future food supply challenges?
11. The proposals do not enhance the UK's ability
in this respect. The proposals are almost silent on measures designed
to support the development of commercial agriculture, ie; facilitating
farm restructuring and innovation.
Will the proposals redress the imbalance in support
to different sectors created by the historic basis of payments?
12. The proposals will result in the phasing
out the historic option but the restructuring of the SFP into
several components could result in the creation of a different
range of distortions.
What aspects of the proposals should be made a
common policy, and which are best left to Member States?
13. There needs to be a transparent and equitable
mechanism for distributing SFP payments between Member States
that is minimally distorting to competition. This will be difficult
to devise and the Commission has not come forward with any proposals
to address this problem.
14. The discretion given to Member States in
respect of expenditure should be minimised to reduce the creation
of distortions. Voluntary coupled payments would be in flat contradiction
to this.
15. Conversely, Member States should be given
a degree of discretion in developing the environmental obligations
that will be attached to the "green" component of the
SFP. It is unlikely the Commission will have the knowledge and
expertise to devise a system that can take account of the diversity
of environmental circumstances prevailing in each Member States.
Can the proposals be implemented simply and cost-effectively,
within a short time-scale?
16. The Commission's proposal will create a more
complex system. The difficulties encountered in introducing payments
with both an historic and regional component in England indicates
that the Commission's proposal to both phase-out historic payments
whilst also segmenting the SFP could be an immense challenge to
all Member States.
The Committee also welcomes interested parties'
views on the options outlined in the European Commission's document
and suggestions for how the European Commission should develop
these proposals
17. The status quo option and the removal of
income support are both politically untenable options. The CAP
has to continue to evolve, balancing the need for income support
to farming against a growing range of other criteria.
18. The problem with option 2 is that the Commission
has blurred the objectives that underpinned the twin pillar structure
of the CAP. Whilst this meets political concerns over the legitimacy
of the CAP, it will not lead to a clear policy framework. In particular
social policy objectives have now been spread throughout the CAP.
These should be separated entirely from the CAP so the EU can
properly evaluate whether it should be the concern of the EU and
how they should be addressed.
3 December 2010
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