1 The CAP towards 2020
| (32233)
16348/10
COM(10) 672
| Commission Communication: The CAP towards 2020 — meeting the food, natural resources and territorial challenges of the future
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| Legal base | —
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| Department | Environment, Food & Rural Affairs
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| Basis of consideration | Minister's letter of 22 March 2011
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| Previous Committee Report | HC 428-xi (2010-11), chapter 7 (15 December 2010)
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| To be discussed in Council | No date set
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| Committee's assessment | Politically important
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| Committee's decision | For debate in European Committee A
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Background
1.1 Since 1992, there have been a number of reforms of the Common
Agricultural Policy (CAP), aimed at replacing support provided
through market-related measures (such as intervention buying)
by direct income payments to producers, and at removing the previous
need under Single Payment Scheme (SPS) for a link between current
agricultural production and the receipt of such payments. In November
2007, the Commission put forward a Communication[1]
comprising a "Health Check" of the CAP, in which it
identified three main issues — the Single Payment Scheme;
improving market orientation; and responding to new challenges
(notably managing risk, climate change, bio-energy, water management
and biodiversity, and strengthening the environmental pillar)
— and it subsequently sought in May 2008 to give legislative
effect[2] to the proposals
contained in that document.
1.2 However, as the CAP still faces a set of challenges
which require the EU to make a strategic choice as regards the
long-term future of its agriculture and rural areas, the Commission
put forward this Communication in November 2010. The document
noted that discussions had shown an overwhelming majority in favour
of the CAP remaining a strong common policy, structured around
its two pillars — support for agricultural production (Pillar
1), and rural development measures (Pillar 2) — and that
it was felt that the policy should seek to preserve food production
potential on a sustainable basis; to support farming communities
which provide quality food in a way which maintains the rural
landscape and combats biodiversity loss; and to maintain viable
rural communities. In addition, it was felt that reform of the
CAP must continue to promote greater competitiveness, efficient
use of taxpayer resources, and effective public policy returns,
in line with the Commission's recent Communication[3]
on the Budget Review.
1.3 As we noted in our Report of 15 December 2010,
the Communication went on to set out the challenges facing the
CAP in areas such as food security, environmental and climate
change, and its territorial balance; and to suggest the changes
which might be made as regards direct payments, market measures,
and rural development. It concluded by identifying three broad
policy options, all based on the two pillar system, but with a
different balance between the pillars. These were:
Option 1
— This
would introduce further gradual changes to the present policy
framework, building upon those aspects which function well, and
focusing on adjustment to those areas attracting most criticism,
notably the equity of the distribution of direct payments between
Member States. The Commission said that this would ensure continuity
and stability with the current CAP, thus facilitating long-term
planning for those in the food chain.
Option 2
— This
would make major overhauls in order to ensure that policy becomes
more sustainable, and that the balance between different policy
objectives, farmers and Member States is better met, with this
being achieved through targeted measures. The Commission said
that this option would imply greater spending efficiency and greater
focus on EU value added, and would also allow economic, environmental
and social challenges to be addressed, and strengthen the contribution
of agriculture and rural areas to the objectives of Europe 2020.
Option 3
— This
would imply a more far reaching reform, with a strong focus on
environmental and climate change objectives, whilst moving away
gradually from income support and most market measures. The Commission
added that providing a clear financial focus on environmental
and climate change issues through the Regional Development policy
framework would encourage the creation of regional strategies
in order to assure the implementation of EU objectives.
1.4 We also noted that, although the Government had
provided a number of preliminary comments, endorsing the Commission's
broad analysis of the challenges and opportunities for EU agriculture,
it had pointed out that much of the Communication focussed on
Option 2, whereas it believed it was important to consider all
options for reform. The Government also felt that the Communication
lacked the necessary ideas and ambition to bring about the transitional
reform needed, but, as it intended to respond to the Commission's
consultation exercise, we decided to take that response into account
before considering the document further.
Minister's letter of 22 March 2011
1.5 We have now received from the Minister of State
for Agriculture and Food at the Department for Environment, Food
& Rural Affairs (Mr Jim Paice) a letter of 22 March 2011,
enclosing — somewhat belatedly — a copy of the response
sent to the Commission on 27 January 2011.
1.6 This says that
the UK welcomes this opportunity for further
reforms to the CAP, which it considers vital if EU agriculture
is to help deliver the ambitions set out in Europe 2020, and to
adapt to its many future challenges and opportunities. It notes
that successive reforms have involved greater market orientation
and focus on the delivery of public benefits, and says that the
UK wants to see an acceleration of this process, as well as reform
of the trade-distorting elements of the CAP, particularly those
which are damaging to Least Developed Countries and which undermine
EU objectives during trade negotiations.
1.7 The UK therefore shares the Commission's assessment
of the many challenges ahead, and notes that there may also be
many unforeseen challenges beyond 2020. However, it reiterates
its concern at the lack of ambition in the Communication and the
failure to recognise the difficult economic situation facing the
EU. In particular, it believes that the CAP cannot be immune to
the hard choices being made elsewhere, and that there must therefore
be a very substantial cut to the CAP Budget during the next Financial
Framework, with the remaining spending being prioritised to provide
best value for taxpayers.
1.8 The UK also believes that farmers do not want
to rely on subsidies in perpetuity, and that the key aim should
be to encourage a competitive, sustainable EU agriculture sector,
reduce reliance on subsidies, and focus resources on environmental
public goods. With this in mind, it would like the Commission
to be much more ambitious, and believes that there is scope for
Pillar 2 to better reward farmers for the important public goods
they provide. It would strongly support the Commission developing
such proposals further, but adds that there is also a need to
stimulate a change in behaviour rather than entrench reliance
on subsidy, with farmers needing to find ways to boost their net
incomes, reduce costs and increase their output. The UK believes
that, whilst some proposals — such as those on producer
organisations and improvements to the supply chain — will
start to address these issues, much more needs to be done.
1.9 The Government says that developing measures
to stimulate competitiveness and innovation, significant further
simplification, ending coupled payments and removing market distorting
mechanisms would all make important contributions to these objectives,
and that there are considerable opportunities for farmers, not
least due to increased global demand, where they need to be able
to react to these changing circumstances. Whilst the UK recognises
that price volatility can be a threat, it believes that this would
be best dealt with by encouraging the development of market based
solutions. However, it is concerned that other proposals —
such as capping payments and greening Pillar 1 — would be
counter-productive to the development of a competitive agriculture
sector, and would risk entrenching continued reliance on subsidies.
The UK also considers that there needs to be a more flexible policy,
rather than rigid structures and blanket measures, and therefore
wants to see a future CAP which focuses on enhanced Pillar 2 measures,
delivering environmental public goods, adding that Pillar 1 needs
to become a transitional measure, as tools to encourage competitiveness
and reduce farmers reliance on subsidies are introduced and take
effect.
1.10 The UK therefore sees the top priorities for
CAP reform being:
- a very substantially reduced
and refocused CAP Budget improving value for money;
- enhanced Pillar 2 measures, particularly for
the delivery of agri-environment schemes;
- measures to enhance competitiveness and reduce
reliance on subsidies, without interfering with the level playing
field within the EU;
- increased market orientation, including a reduction
in trade-distorting subsidies and measures; and
- continued simplification of the CAP, ensuring
a reduction in costs and complexity for both farmers and administrations
unless benefits outweigh costs.
1.11 With this in mind, the UK would like to encourage
the Commission to bring forward further detail on all of the options
in the Communication, ensuring that there is a balanced assessment
of the merits of each. In particular, it has urged the Commission
to explore Option 3 more fully on the grounds that, of the three
options considered in the Communication, this has the greatest
potential for the development of ideas which will deliver changes
consistent with the objectives for reform and meeting the challenges
ahead — for example, by fostering a dual approach, under
which measures to increase competitiveness would be considered
in tandem with the reduction in subsidies, and by placing a greater
emphasis on the short-term challenges and accompanying measures
which would stimulate longer-term improvement in the underlying
competitiveness of EU agriculture.
1.12 The Government's response to the Commission
also identifies a number of more specific points. These include:
- the need for any support providing
a safety net to be clearly understood as a measure of last resort;
- the need to phase out the remaining coupled subsidies
during the next Financial Perspective;
- the need for any targeting of support on active
farmers to take subsidiarity concerns into account;
- the need for the position of small farms to be
met by improving their underlying competitiveness, and avoid any
minimum level of direct payment for such farms;
- the need to avoid any cap on direct payments
to large farms;
- support for the use of an objective key for allocating
funds to Member States under both pillars;
- the need for any support to areas of natural
handicap to be focussed on the delivery of pubic benefits; and
- a willingness to explore the possibility of greater
integration between the Structural and Cohesion Funds, the European
Fisheries Fund, and the European Agricultural Fund for Rural Development.
Conclusion
1.13 As we noted in our Report of 15 December
2010, this Communication provides a useful analysis of the various
issues which need to be considered in relation to the future of
the Common Agricultural Policy, but is less convincing in terms
of identifying clearly the steps which need to be taken to address
these. Having said that, it is nevertheless a document of some
importance, not least in terms of the levels of EU expenditure
at stake, and, having now received the comments which the Government
sent to the Commission, we think this would be an opportune moment
for the House to consider the document further. We are therefore
recommending it for debate in European Committee A.
1 (29193) 15351/07: see HC 16-vii (2007-08), chapter
1 (9 January 2008). Back
2
(29703) 9656/08 + ADDs 1-2: see HC 16-xxv (2007-08), chapter 1
(25 June 2008). Back
3
(32097) 15285/10: see HC 428-xi (2010-11), chapter 4 (15 December
2010). Back
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