ANNEX A
OUTCOME OF AGRICULTURE COUNCIL ON 24-25 JUNE
Direct Payment
The UK worked to limit the complexity of the direct
payments regulation and in many cases succeeded. While some of
the complexity remains, it could have been much worse.
Greater flexibility was secured for Member States
to deliver the greening requirements, including through
national certification schemes if they wish to. This will allow
all the regions of the UK more choice in deciding the most appropriate
means for implementing greening for their farmers and paying agencies
than the Commission's original strict and blunt 'one size fits
all' approach that failed to recognise the diverse range of farming
practices and environmental challenges across the EU, or indeed
within the UK. Discussions will now need to begin with the interested
groups in England on how to take forward implementation.
While there is more flexibility in the final greening
package, it has been further weakened in terms of environmental
benefits during the course of negotiations, under pressure from
other Member States. It would have been better for the money made
available as greening payments to have been allocated to Pillar
2 funding; the pot of money that supports agri-environment schemes
and which delivers more cost effective environmental outcomes
and with clear requirements on Member States to focus expenditure
on environmental objectives.
On coupled support, the prospect of increasing
the range of products available for additional subsidies (e.g.
tobacco) was successfully resisted. It is disappointing that
there is not a common set of rules for Member States and there
is the option to moderately increase coupled support (up to 8%
for countries which have already decoupled and 13% for those which
have not). However, without UK intervention this backward step
could have been far worse. The Government will be working with
the European Commission to ensure that coupled support in other
Member States does not cause disruption to markets across the
EU.
The UK argued successfully for a significant reduction
in the complexity as to what constitutes an active farmer.
The original proposals were complicated for farmers and paying
agencies, and would have required detailed information on each
farm's income to prove that agriculture was the main source of
profit. The short list of business types (e.g. airports) that
will now be submitted to this test is far more proportionate.
It has been made it easier to move from the old system
of single farm payments to the new one, with the option having
been secured of letting farmers keep their old entitlements
rather than apply for new ones. This could help reduce burdens
on them and the Rural Payments Agency (RPA), and there will also
be freedom to choose whether or not to have a simplified scheme
for small farmers.
In response to pressure from the European Parliament
and European Commission, Member States had to concede a mandatory
scheme to assist young farmers under 40 years old with
less than five years' experience running their own farm. While
it is vitally important to get new blood into farming, the UK
is not convinced that paying extra direct payments is the right
way. The structure of the industry and pattern of 'succession'
of farmers varies hugely across (and in some cases within) Member
States, so that a one size fits all approach is unlikely to deliver
real change in the UK (or EU) and may encourage young farmers
new to the business to become reliant on public subsidy right
from the outset. It will be necessary to consider carefully how
to implement this provision in England.
The UK fought off the Commission's proposal to cap
payments to those with the largest claims, which could have led
to the splitting up of some of its larger farms, whereas it is
better for competitiveness to let farmers decide what size their
farm should be. Capping will remain voluntary, in line
with the Multiannual Financial Framework conclusions; but Member
States are likely to be required to reduce the largest payments
by a small amount, which they will be able to spend on rural development.
This is one of the areas which the European Parliament will need
to agree to formally as one of the MFF related issues before signing
off on the CAP deal.
On internal convergence, there will be a move
away from historic to area-based flat rate payments, but, whilst
there will not be the full convergence by 2020 which the UK would
have liked, the position has improved since the March Council
with a clear target of 60% minimum convergence. The UK also succeeded
in making the options available to the Devolved Administrations
simpler and more gradual, with minimal convergence in the first
year at 10% rather than 40%.
Several amendments were secured to help Scotland,
Wales and Northern Ireland implement the direct payments regulation
in ways which help their farm sectors to thrive. Most importantly,
it been acknowledged that all four regulations can be implemented
regionally, in line with the UK's devolution arrangements, and
the text includes a provision giving flexibility to utilise regional
reserves for top-up payments to new entrants to farming. This
is an issue which Scotland deem critical to its farming future.
Rural Development
The new rural development agreement will enable all
regions of the UK to deliver environmental benefits and rural
economic growth, and the UK fought hard to ensure acceptance in
principle that there would be no double funding for carrying
out the same environmental measures under each CAP Pillar.
There will also now be a 30% minimum spend on
environmental measures, which is a sensible way of ensuring
that Pillar 2 funds are directed to the measures which deliver
the best value for money for taxpayers and for the environment.
Short term agri-environment agreements are not allowed,
other than as extensions to existing agreements and funding is
now allowed to cover income foregone for afforestation for
up to 12 years. The obligation to apply the active farmer
definition to all recipients of Pillar 2 support will now
be a voluntary measure.
The reform relating to Areas facing Natural Constraint
(ANC) is going ahead in line with the European Court of Auditors
report, tightening up the current Less Favoured Areas designation,
and thereby helping to ensure that taxpayers' money is spent in
a targeted way. A longer transition period was given for Member
States and regions to enable them to carry out the new ANC designation
until 2018.
CAP Finance and Controls — the 'Horizontal'
Regulation
A number of UK-inspired simplifications were agreed
on how the CAP is managed and controlled, which should save farmers
and paying agencies time and money compared with the Commission's
original proposals.
A major success was securing a Commission Minute
Statement which states Member States can implement all four CAP
Regulations regionally in line with their devolution arrangements,
providing further reassurance on the legal text secured at the
March Council which enabled regionalisation to take place.
On cross-compliance, the Commission's proposal
was largely maintained, meaning the status quo on cross-compliance
and carrying forward the existing penalties regime. Burdensome
additional requirements such as a GAEC on carbon rich soils, which
were deleted during the negotiations, were not reintroduced in
the later stages of negotiations. Additional cross compliance
requirements such as the introduction of the Water Framework Directive
and the Sustainable Use of Pesticides will come into force when
all Member States have complied with the Directives in their own
right. The ban on hedge cutting during the bird breeding season
was successfully retained.
The Government is disappointed that there is no provision
enabling farmers to refrain from applying for a greening payment
without an additional penalty being imposed. However, the proposed
penalty has been reduced to zero for the first two years
(after which it will increase to a maximum of 37.5% of the total
Direct Payment). This transition period will allow farmers to
take on greening without fear of an additional penalty on top
of losing their greening payment while they get up to speed with
compliance.
Useful amendments were agreed to the Commission's
proposal which should make the new audit requirements less
burdensome than the Commission's original proposal. This is a
large step towards keeping at bay additional on-the-spot checks
on holdings, preventing an unnecessary burden being placed on
farmers and administrations. Furthermore these new audit requirements
will not come into play until October 2014 — one year later
than originally proposed.
The Government welcomes the 2018 transition period
for the mapping of landscape features included as part
of Greening controls, and, although it was unable to maintain
the original Council position of a 2019 transition, it was able
to secure the inclusion of National Certification Schemes in this
transition period.
On disallowance, the Commission's original
and unfair flat-rate corrections process was resoundly rejected
by Member States and MEPs in favour of more proportionate UK tabled
amendments on the application of disallowance. There will be
a fairer system for Member States, which should mean less disallowance.
It now limits the Commission's discretion in applying flat-rate
corrections as anything other than a last resort; gives more weight
to the Conciliation Body's report; and provides for detailed rules
on the application of flat rates to be included in the implementing
legislation.
On transparency, the UK has been an advocate
of full disclosure of beneficiary details, and is thus pleased
to see the proposed threshold now linked to the Small Farmer Scheme.
This link signifies a lower threshold than the original €5000
threshold proposed in the March Council and is the best outcome
which could have been hoped for within the legal parameters set
by the Council Legal Service on the publishing of beneficiary
data.
UK tabled amendments on exchange rates were
also successful, with the ability to use the monthly average exchange
rate as an alternative to a fixed day exchange rate having been
inserted as new text. The ability to use a monthly average euro
to sterling exchange rate may also help give more certainty to
farmers and paying agencies who decide to use this option for
their hedging arrangements and systems development respectively.
The Government is disappointed it was unable to stave
off the requirement for paying agencies to potentially need to
make an additional payment to beneficiaries to reimburse any unspent
funds from the crisis reserve in the previous year. However,
the Commission is verbally committed to working with Member States
to find a viable solution.
It is also disappointed to have to accept three additional
mandatory requirements for the Farmers Advisory Service,
since it feels strongly that this will make a system intended
to help farmers have easy access to information they need unnecessarily
burdensome.
Single Common Market Organisation (sCMO) Regulation
The UK forged strong alliances to defend against
regressive single market proposals which would have harmed UK
agriculture. However, together with Germany, it still abstained
from the vote on the sCMO regulation due to the amendments which
had to be made in order to reach a compromise with the European
Parliament, which were not in line with UK policy objectives,
and also went against the TFEU in transferring additional powers
to the Parliament.
The UK was successful in blocking most of the anti-competitive
and burdensome measures proposed by the European Parliament, which
were costly, unnecessary and would have adversely affected
the ability of UK farmers to respond to customer demand and trade
outside the EU.
The UK resisted major backward moves to the public
intervention system which was so instrumental in creating
the butter mountains of the past, and where the European Parliament's
proposals would have wound back the clock, extending intervention
beyond the point where it provides a genuine safety net for producers
and expanding the number of products eligible for support. Some
small changes which have been made go in the wrong direction,
and the speed of reform is much slower than the Government would
have liked, but it is pleased that a further slide backwards was
halted.
The UK fought off the Parliament's attempts to weaken
wholesale competition rules in the agricultural sector,
which would have changed how markets and market powers are assessed
by redefining key concepts of competition law, and altered the
way competition issues are scrutinised. Some concessions were
made which it would have preferred not to see, but the major wholesale
changes wanted by the European Parliament, and which the heads
of European Competition Authorities also opposed, were successfully
held off
On marketing standards, the UK saw off attempts
by the European Parliament to introduce a new General Marketing
Standard which would have imposed new costs on EU business and
enforcement bodies, but it was disappointed that the hops regime
was maintained, thereby missing a real opportunity to simplify
the CAP by removing burdensome certification procedures, which
do not reflect the realities of the sector today. However, the
Government will work to ensure that the provisions have as limited
an impact on the industry as possible.
The agreed position on exceptional measures
at the March Council was preserved, which is helpful as it maintains
the separation between normal market management and crisis measures,
and the Government was able to get some increased clarity on how
the crisis reserve will work in practice. In particular, it supports
the use of exceptional measures in times of genuine crisis, and
it is pleased that there is a clear separation between these and
normal market management.
The UK worked hard to see off European Parliament's
proposals for a new crisis management scheme in the milk sector,
which would penalise producers who increased production and pay
out extra subsidies to those who cut back.
Voluntary recognition for Producer Organisations
was maintained except in sectors where mandatory recognition is
already in place, and the UK fought hard through the whole negotiations
to overturn the Commission's proposal for mandatory recognition
of Producer Organisations, and worked hard to maintain this position,
believing it is important that Member States should be able to
choose whether to recognise producer organisations in new sectors,
and that a one-size-fits-all approach is not appropriate across
all agricultural sectors. It is pleased that the option to make
appropriate policy decisions based on our individual circumstances,
has been retained, with producers already work together in the
UK, and sharing knowledge..
Thanks to a determined negotiating effort from the
UK, the deal agreed includes a firm commitment to end sugar
beet quotas in 2017 rather than 2020 as many other Member States
wanted, and the Government will continue to push the Commission,
which formally recognised that more work is needed to address
the issue of cane sugar and achieve a better balance between the
cane and beet refining sectors.
It was agreed that the new system for vine planting
authorisations should commence in 2016, running until 2030,
and, whilst the UK would have preferred an end to the EU vine
planting regime before 2030, it is content with a gradual 1% annual
increase in vine planting authorisations. Crucially, the UKs burgeoning
wine industry is excluded from the new system to replace vine
planting rights.
Throughout the negotiations, the Government has been
actively engaged and pushing for decisions taken under the CAP
that reflect the legal framework set out under the Lisbon Treaty.
This includes the application of Article 43(3), with provides
for the specific rates of aid, prices or refunds applying to schemes
and other measures in the SCMO regulation to be determined by
the Council alone, as well as those elements of all four regulations
which are subject to implementing or delegated acts. The UK came
under significant pressure from the European Parliament and Commission
to have further articles of the sCMO determined by co-decision,
and Articles relating to reference prices, and the opening of
the public intervention process for the beef and veal sector)
are now subject to co-decision in the basic Act of the sCMO. All
other articles referring to the fixing of aids, quotas and refunds
will be decided by the Council alone under Article 43(3) TFEU.
The Government is disappointed with this outcome, as advice of
the Council Legal Service was that there was a clear legal basis
for these articles being determined under Article 43(3).
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