Documents considered by the Committee on 12 September 2018 Contents

8Future of the Common Agricultural Policy

Committee’s assessment

Politically important

Committee’s decision

Documents (a)–(c): Not cleared from scrutiny; further information requested; drawn to the attention of the Environment Food and Rural Affairs Committee; Documents (d)–(e): Cleared from scrutiny

Document details

(a) Proposal for a European Parliament and Council Regulation on Common Agricultural Policy Strategic Plans; (b) Proposal for a European Parliament and Council Regulation on the financing, management and monitoring of the Common Agricultural Policy; (c) Proposal for a European Parliament and Council Regulation amending Regulations (EU) No 1308/2013 establishing a common organisation of the markets in agricultural products, (EU) No 1151/2012 on quality schemes for agricultural products and foodstuffs, (EU) No 251/2014 on the definition, description, presentation, labelling and the protection of geographical indications of aromatised wine products, (EU) No 228/2013 laying down specific measures for agriculture in the outermost regions of the Union and (EU) No 229/2013 laying down specific measures for agriculture in favour of the smaller Aegean islands; (d) Impact assessment; (e) Commission Communication—the future of food and farming

Legal base

(a) Articles 42 and 43(2) TFEU, ordinary legislative procedure; QMV (b) Article 43 (2) TFEU, ordinary legislative procedure; QMV (c) Articles 43(2), 114, 118 and 349 TFEU, ordinary legislative procedure; QMV (d)—; (e)—

Department

Environment, Food and Rural Affairs

Document Numbers

(a) (39830), 9645/18 + ADD 1; COM(18) 392; (b) (39831), 9634/18 + ADD 1, COM(18) 393; (c) (39832), 9556/18, COM(18) 394; (d) (39833), 9646/18 + ADDs 1–2, SWD(18) 301; (e) (39294), 14977/17, COM(17) 713

Summary and Committee’s conclusions

8.1In early June, the European Commission presented draft legislation on the Common Agricultural Policy (CAP) beyond 2020. These proposals aim to make the CAP more responsive to current and future challenges such as climate change or generational renewal, while continuing to support a sustainable and competitive agricultural sector. They follow an earlier Communication signalling the Commission’s intentions (document (e)).

8.2The proposals are set in the context of the EU’s long-term budget for the 2021–27 period. In the light of the UK’s withdrawal from the EU—and, consequently, reduced financial contributions—the Commission proposes a reduction (in current prices) of around 5%66 in the CAP’s budget to €365 billion (£328 billion)67 over seven years. This corresponds to an average share of 28.5% of the overall EU budget for the period 2021–2027. Out of this amount for the CAP, €265.2 billion (£238 billion) is for direct payments, €20 billion (£17.95 billion) for market support measures and €78.8 billion (£70.73 billion) is for rural development. An additional €10 billion (£9 billion) will be available through the EU’s Horizon Europe research programme to support specific research and innovation in food, agriculture, rural development and the bio-economy.

8.3The package of legislation comprises three draft Regulations (documents (a)–(c)). These are accompanied by an overarching impact assessment (document (d)).

8.4The Commission is proposing a more flexible CAP, under which broad objectives are agreed at an EU-wide level and then Member States will be able to define for themselves eligibility conditions at a local level which are appropriate to their situations. These are to be delivered within the context of an agreed CAP Strategic Plan which sets out their requirements at a national level. The Plans will cover both direct payments and market measures under Pillar 1 (European Agricultural Guarantee Fund) of the CAP as well as rural development under Pillar 2 (European Agricultural Fund for Rural Development). There will be an ongoing process of reporting and reviewing to assess progress against the Plans.

8.5The Commission is also proposing:

8.6The package consists of three separate proposals: CAP Strategic Plan Regulation (document (a)); the Horizontal Regulation (document (b)), which covers the financing, management and monitoring of the CAP; and the Amending Regulation (document (c)), which amends elements of the legislation governing the common market organisation in order to bring it into line with the overall package. Further details of the proposals are set out in the EM from the Minister for Agriculture, Fisheries and Food (George Eustice) and summarised by the European Commission.68

8.7In his EM, the Minister sets out a limited UK Government position on the proposals, noting that there are no “direct policy implications” for the UK as it does not anticipate being a participant in the CAP post-2020, and the Commission has budgeted the CAP post-2020 proposals on the basis that the UK will not participate. He observes that the CAP is not open to association with third countries.

8.8The Minister also notes that the UK and the EU start from a “unique position” when considering future development of regulation, with rules and regulations originating from the same current framework, although he adds that “of course following our departure from the EU we will set our own agricultural policy”.

8.9The Minister does, however, acknowledge that much of the discussion and negotiation of the next CAP will take place while the UK continues to be a member of the EU even though decisions are likely to be taken after the UK’s withdrawal.

8.10Addressing the nature of potential policy implications for the UK, the Secretary of State for Environment, Food and Rural Affairs (Michael Gove) told us on 18 July69 that there could be “all manner of implications”. He acknowledged concerns that UK farmers would be at a competitive disadvantage if the EU were to subsidise its farmers at a higher level than the UK, but considered that the proposed UK approach would ensure that the UK farming industry is “more competitive than not just the majority of EU nations, but the majority of developed countries, and that at the same time we secure environmental benefits.” This, he said, was contingent on “[getting the] approach right”. He described the UK as “principally an observer” in the discussions on the future shape of the CAP.

8.11In a separate letter, the Minister responds to queries raised by the Committee when we first scrutinised the Commission’s Communication on the Future of Food and Farming at our meeting of 31 January. Notably, he summarises the differences between the Commission’s approach and that of the UK as set out in the “Health and Harmony” Green Paper on the future of agricultural policy.70 The main difference is the Commission’s commitment to direct payments, whereas the UK intends to move away from direct payments to a model of payment of public money for the provision of public good.

8.12We are concerned at the lack of UK Government interest in future EU policy development in this area. While we note the Minister’s conclusion in his Explanatory Memorandum that no direct policy implications arise for the UK from these proposals, the Secretary of State told us on 18 July that there could be “all manner of implications”. We would welcome clarity on the Government’s position as to whether are indeed direct or indirect implications for the UK arising from these proposals and, if so, what they are.

8.13The Secretary of State informed us that the UK will principally be an observer in the early discussions on these proposals while the UK remains in the EU. We would welcome clarification as to whether the UK will remain silent if it has identified a potential implication for the UK. It would also be helpful to know whether any other third countries have identified implications for them and are adopting a similarly silent approach or whether there are signs of positive third country engagement in the development of this legislation.

8.14While the delivery models for future UK and EU agricultural policies are likely to be fundamentally different, the objectives appear similar. These include important elements such as innovation. We note that the European Innovation Partnership for Agriculture and Innovation (EIP-AGRI)—supported partly by the research funding programme—is intended to be at the core of EU agricultural innovation. Noting that the Government has shown interest in continued engagement with the EU in the area of research, we ask whether that extends to agricultural innovation and therefore whether the UK will hope to continue its participation in EIP-AGRI.

8.15Another area of potential mutual interest in which we would encourage the Government to maintain engagement is risk management. Both the Commission and UK are aware of the need to support farmers in their management of risk, but only the Commission has tabled specific proposals. These include financial support to farmers for the purchase of insurance as long as support remains within specific limits. On the other hand, the Government warned in its “Health and Harmony” paper that state support for risk management products forms “a significant indirect subsidy to farmers”, which “can distort markets, undermine the need to properly reduce and mitigate risks and [fail to] deliver value for taxpayers’ money”. We ask that the Government sets out a view on the risk management provisions proposed by the Commission.

8.16We expect a response to our queries within four weeks, and we ask that this response be set in the context of the introduction of the Agriculture Bill on 12 September. The three legislative proposals (documents (a)–(c)) remain under scrutiny. We clear the staff working document (document(d)) and the Commission Communication (document (e)) from scrutiny. This chapter is drawn to the attention of the Environment, Food and Rural Affairs Committee.

Full details of the documents

(a) Proposal for a European Parliament and Council Regulation on Common Agricultural Policy Strategic Plans: (39830), 9645/18 + ADD 1; COM(18) 392; (b) Proposal for a European Parliament and Council Regulation on the financing, management and monitoring of the Common Agricultural Policy: (39831), 9634/18 + ADD 1, COM(18) 393; (c) Proposal for a European Parliament and Council Regulation amending Regulations (EU) No 1308/2013 establishing a common organisation of the markets in agricultural products, (EU) No 1151/2012 on quality schemes for agricultural products and foodstuffs, (EU) No 251/2014 on the definition, description, presentation, labelling and the protection of geographical indications of aromatised wine products, (EU) No 228/2013 laying down specific measures for agriculture in the outermost regions of the Union and (EU) No 229/2013 laying down specific measures for agriculture in favour of the smaller Aegean islands: (39832), 9556/18, COM(18) 394; (d) Impact assessment: (39833), 9646/18 + ADDs 1–2, SWD(18) 301; (e) Commission Communication —the future of food and farming: (39294), 14977/17, COM(17) 713.

Previous Committee Reports

None.


66 The reduction amounts to around 12% based on constant 2018 prices without inflation.

67 €1 = £0.89758

68 Fact Sheet—EU Budget: the Common Agricultural Policy beyond 2020, European Commission, 1 June 2018.

69 Oral evidence from The Rt Hon Michael Gove MP to the House of Commons European Scrutiny Committee, EU Withdrawal Inquiry, 18 July 2018.

70 “Health and Harmony: the future for food, farming and the environment in a Green Brexit”, Cm 9577, Department for Environment, Food and Rural Affairs, February 2018,




Published: 18 September 2018