Select Committee on European Communities Eighth Report


Table 1 - Commission Proposals and Berlin European Council Agreement on reform of the Common Agricultural Policy
Commission Proposals, July 1997

(As outlined in the Government's explanatory memorandum on Agenda 2000 (document 9984/97) dated 9 September 1997)

Agreement at European Council, March 1999

(As outlined in the Government's CAP Reform Agreement - An information document)

Arable crops
  Reduction of cereals intervention price by 20% in one step in 2000.   Reduction of 15% in two steps, starting in 2000, with the Agriculture Council to consider the need for a further step later.
  Non crop specific area payment at 66 ecu/tonne (multiplied by cereals reference yields of the 1992 reforms) (to cover cereals, oilseeds, linseeds and proteins. 6.5 ecu supplement on proteins). Silage cereals excluded. Durum wheat supplementary aids unaffected.   Area payment increased to ?63/tonne. Supplement on protein crops increased to ?9.5/tonne.
  Default rate of compulsory set-aside at zero (voluntary set-aside would continue and receive the non crop specific payment).   Default rate of compulsory set-aside 10%.
  Intervention price reduced by 30% over the period 2000-02 with adaptation of import/export management measures. Introduce a private storage scheme.   Intervention price reduced by 20% over 3 years, starting 2000. Safety-net intervention price from 2002 onwards set at ?1560/tonne (25% below current level).
  Premium increases:
Suckler cow premium: 215 ecu/head each year. Reduced to ?200.
Beef special premium: young bulls one payment of 368 ecu/head. Reduced to ?210.
Steers: 2 payments of 232 ecu/head.Reduced to ?150.
Introduction of dairy cow premium at 70 ecu/head. Discretion for member states.
Extensification Premium - reflect on how to strengthen in relation to environmental objectives. Optional bases:- a two tier scheme payments of ?33 and ?66/head for stocking rates <2 and < 1.6LU/HA 2000-02 rising to ?40 and ?80/head 2003 with reduction of 0.2LU/HA.

or:- single tier payment ?100/head where < LU/ha 1.4.

Calf slaughter premium at ?50/head.

Adult cattle (more than 8 months old) slaughter premium ?80/head.

  Milk quota regime retained until 2006.   Unchanged.

Specific quota increases allocated to Greece, Italy, Ireland, Northern Ireland and Spain.

General 1.5% quota increase for all other Member States.

  10% support price cut over 6 years. 15% support price cut, starting in 2005, to be phased in over 3 years.
  Dairy cow premium supplemented by an extra 145 ecu/head, adjusted according to milk yield.   Compensation for reductions in support prices expressed in ?/tonne of milk quota held by the producer on 31 March each year, to be phased in.
  Provision for additional national envelopes to top up the basic payments.
  Mid-term review of quota regime (timing unclear).
·  Possibility of differentiated CAP payments and limits on payment either as a ceiling on direct aid per holding, or as a national maximum envelope of direct aid, allowing Member States to decide on its distribution.   Member States have the discretion to reduce direct payments by up to 20% according to labour force criteria, overall prosperity criteria, and/or the total amount of aids received by farmers.
·  Enable Member States to make direct payments conditional on the respect of environmental conditions.

·  Targeted agri-environmental schemes should be reinforced and encouraged.

  Member States are required from 2000 to take appropriate environmental measures, and have the discretion to attach appropriate environmental conditions to direct payments ("cross-compliance").
Rural Development
  Existing measures, including agri-environmental schemes, to be brought together in a single rural policy. Outside Objective 1 & 2 areas measures to accompany and complement market policies will be co-financed under the EAGGF Guarantee section. They will embrace all measures supporting structural adjustment and rural development as presently co-financed by the EAGGF Guidance Section.   All rural development and agri-environment measures brought together in a single Rural Development Regulation. Member States required to draw up 7-year Rural Development Plans: agri-environment schemes compulsory, all others optional (e.g. establishment aid for young farmers, early retirement scheme, support for processing and marketing of agricultural products, afforestation).

Table 2 - Estimated costs of the Commission Proposal and the Berlin European Council Agreement

(in million euro at current prices)
20002001 20022003 200420052006 Total
Commission Proposal40010 431104475546080 462204614046160 312475
Berlin agreement40010 426984466145338 450634496745495 308222

Source: Commission working paper dated 13 April 1999, reproduced in Agra Europe, 16 April 1999.

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