Memorandum by the Institute of Agricultural
Management and Bidwells
OVERVIEW
The long term objectives of the CAP should be
the creation of, and maintenance of, a vibrant and sustainable
rural economy built around the principles of food, fuel and environmental
security. The language CAP is probably unhelpful as it presents
a picture of market intervention and protectionism which is still
(wrongly) used around the world to deride European Agricultural
Policy, especially in World Trade talks. Language such as Integrated
Food, Energy and Environmental Security Policy might be more relevant
for the 21st century.
THE REFORMED
CAP
It is important that UK adopts a stance which
is persuasive in the Council of Ministers, and starts by recognising
that the 2003 reforms, implemented over the last two years, represent
a substantial move forward which has yet to be fully implemented
in some other member states—and that the implementation
of these reforms leaves much to be desired in the UK also.
The UK must continue to push the rest of the
EU to implement full decoupling as soon as practical. The complex
array of partially coupled systems together with various historical
and hybrid implementation measures have led to unnecessary complexity
and distortions across the EU. It also weakens our WTO negotiating
position when in reality about 10% of single payment aids remain
coupled. A move to a totally area based payment for Pillar 1 across
EU 27 would seem most logical, given that England, Germany and
the New Member States adopting SAPS will effectively have this
system in place by 2012.
Even an area based single payment in pillar
1 is probably not sustainable as we get further into the 21st
century. Having evolved out of a complex mixture of market instruments
and direct payments it is trying to be an "income support",
a "compensation payment" and a "land management"
payment all in one. It is a blunt and non-targeted policy instrument
which, in trying to achieve a lot of things at once, will probably
achieve none very well, if at all. Yet it is providing a useful
transition from the direct aids of the 1990s under MacSharry to
more targeted policy instruments likely to be developed as pillar
2.
The CAP should increasingly focus on securing
the benefits which the market alone cannot secure ie it must identify
where market failure is occurring and seek to remedy these issues.
Over the last few years, the scope of the second pillar of the
CAP has been widened to include a wide array of rural development
issues as well as "agri-environment" objectives, but
it is now crucial that it should be adapted to steer farmers and
land managers to help mitigate climate change. The Commission
has recognised this and declared its intention to publish outline
proposals shortly.
Farmers and land managers are perhaps more directly
impacted by climate change than almost any other sector, and can
do more to mitigate its effects by the way they manage the land:
— agricultural practices can be adapted
so as to reduce emissions of nitrous oxides and methane in particular;
— forestry and soil management practices
can be adapted to optimise the extent to which carbon is sequestered
or stored in growing crops, trees and particularly in the soil;
and
— farmers and land managers are ideally
placed to provide alternative and renewable sources of energy,
thus helping to substitute mineral sources.
If the CAP is to be an effective instrument
in guiding these changes, we believe this is much more likely
to happen as a result of effective incentive mechanisms under
an expanded pillar 2 than under cross compliance (pillar 1) or
other regulatory mechanisms. What is needed from land managers
is a new and positive land management practice, not grudging compliance
with rules designed to support pillar 1 payments. It is accepted,
however, that pillar 1 payments will remain in a much reduced
form, since the Commission recognises that there have been positive
benefits to cross compliance in its current form which would be
lost if there was no pillar 1.
If UK is to make a persuasive case for such
an approach, certain conditions need to be met:
— UK needs to be committed to, and
seen to be committed to a broad definition of rural development
going well beyond agri-environment schemes. A dispute with the
European Commission as to whether 20% of its rural development
expenditure is or is not expended on other aspects of the regulation
(ie. Axes 1 and 3 of the rural development regulation) will not
form a sound basis for such discussions.
— UK needs to secure a larger share
of EU rural development funds—the EAFRD—based on objective
criteria rather than historically low uptake.
— UK should push for higher rates of
compulsory modulation across the EU—and ensure that all
of these are retained by the member state—thus allowing
country specific levels of Voluntary modulation to be reduced.
Defra and its agencies need to show that they
understand how to use incentive rather than regulatory mechanisms
to secure the delivery by the private sector of the range of objectives
set out in regional as well as national strategies. Unless these
objectives and the related incentives are taken into account by
land managers in planning their future strategies, they will not
be secured from the land management sector.
The wider debate is then whether we need a common
policy, how common does the policy need to be, and how should
this be funded. Once support is fully decoupled from production
and the market there is less of a solid case for a "common
policy"—what we really want are common outcomes
(ie an entrepreneurial and thriving rural economy with
market focussed farmers) not necessarily common policy instruments.
Thus policies can be (or maybe even have to be)
increasingly uncommon, differentiated and tailored to specific
regional and national differences, to achieve this.
However, the case for at least a common framework
remains. EU directives for biodiversity, habitats and species,
nitrates, water, soil and no doubt in time greenhouse gases apply
across the Union. The transboundary nature of most of these environmental
issues—including the fact that citizens in one EU state
do not only care about biodiversity on their doorstep but on a
much wider scale—would suggest an element of baseline commonality
with any 21st century food and environmental security policy.
I hope that these few thoughts are of interest.
If you would be interested in a further submission, including
oral evidence, then we would be pleased to follow this up.
June 2007
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