Memorandum by the Country Land and Business
Association
1. The Country Land & Business Association
(CLA) is the premier organisation safeguarding the interests of
those responsible for land, property and business throughout rural
England and Wales. CLA members own and manage more than half the
rural land in England and Wales and we are committed to the positive
development of the rural economy.
2. We welcome this inquiry into the future of
the CAP, which comes as we are developing our own thoughts on
the issues. In the interests of brevity, we have kept our answers
to the questions short but would be very happy to provide oral
evidence to elaborate the points made. To provide a fuller explanation
of how our thinking on this important topic is developing, we
have also included a copy of a paper given by Professor Allan
Buckwell. CLA Chief Economist, at the Centenary conference of
the CLA, on 10 May.
What should be the long term objectives
of the CAP? Does the title "Common Agricultural Policy"
aptly fit your perceived objectives of the policy? What do you
consider to be the main pressures on the CAP as it currently is?
3. The long term objectives of the CAP should
be to enable and to incentivise land managers to produce the socially
optimal quantities of high quality food and fibre, renewable energy,
biodiversity, landscape, heritage, and soil, water and air management.
In our view, the name "Common Agricultural Policy" is
increasingly outdated; it should be understood as a land management
policy, not simply an agricultural policy.
4. Currently the main pressures on the policy
are the twin demands of cheap food and environmental stewardship,
and ongoing efforts to address outdated problems of the 1980s—over
production. In our view, the CAP should be reoriented to focus
on the high priority concerns of the 21st century; global food
security and environmental security. Climate change and the growing
role of 1st generation bio-fuels in meeting global energy needs
will aggravate these concerns.
What has been your experience so far with the
reformed CAP? What has worked well and less well? And where can
lessons be learned?
5. The CLA have long advocated the decoupling
of payments from production and moving to an area-based payments
system. We have supported the introduction of the Single Payment
Scheme (SPS), but see it as a transitional scheme leading to a
more permanent scheme that pays land managers for the delivery
of environmental and food security public goods. Unfortunately
the experience of English farmers with the introduction of the
SPS has been very poor indeed. This has been well-documented and
analysed elsewhere, such as the Efra Committee, and the National
Audit Office.
Do you consider the Single Payment Scheme to be
a good basis for the future of EU agricultural policy? What changes
might be made at the EU level to the Single Payment Scheme, including
to the rules governing entitlements, in the short and/or the longer-term?
6. The SPS is a good basis for the future of
European agricultural policy as it increasingly relates public
payments with the provision of public goods and sustainable production.
In the short term the SPS could be improved by implementing many
of the proposals to be considered in the "health check"
in 2008. These include abolition of the supply management mechanisms
such as set-aside and announcing the end of milk quota by around
2014; a reduction in the number of types of entitlement; more
supportive inspections whereby the inspectors spend more time
talking through issues with farmers, and a more proportionate
system of penalties.
What short and longer-term changes are required
to the CAP's market mechanisms? Suggestions made by the Commission
have included re-examination of certain quotas, intervention,
set-aside, export refunds and private storage payments.
7. As already suggested, the market management
mechanisms of the CAP, those aimed at production control—such
as quotas and set-aside—have no further purpose with decoupled
payments. Others, such as export refunds should no longer be needed,
while intervention should be available only for extreme situations.
We also believe that is important to have a balanced approach
to trade policy liberalisation. At the same time as barriers to
imports are being reduced, which can be expected to lower internal
market prices, we should also eliminate the possible use of export
restrictions that may be used when commodity prices are high.
Another key element that should be on the trade liberalisation
agenda is the need to ensure that sanitary and phytosanitary standards
are fully maintained to ensure appropriate defences against pests
and diseases.
8. More generally, we would like to see more
emphasis being placed on the correction of market failures through
the provision of training, R&D, and financial risk management.
What is your view on the introduction of the European
Agricultural Fund for Rural Development (EAFRD)? Do you consider
that it is meeting its objectives thus far? Is it suitably "strategic"
in nature, meeting the needs of rural society as a whole rather
than being restricted to aiding the agricultural industry? How
well is it being co-ordinated with other EU and national policies
on regional and rural development?
9. The RDR is a very good idea, but it needs
to be developed and supported by a very much more substantial
budget. In this latter regard, it is deeply regrettable that it
was British tactics that led to the wholly unsatisfactory Council
decision on the rural development budget for the period 2007-13,
as agreed in December 2005. In England the majority of the emphasis
of the RDR is on the agri-environment schemes, which is too narrow.
The environmental agenda for land management is larger than that
of the agri-environment schemes, which is focussed mainly on landscape
and biodiversity. Resource protection and maintenance, and climate
change issues, for example, need to be given a higher priority.
In addition, greater emphasis should also be given to the options
under axis 1 and axis 3 that provide support and assistance to
improving competitiveness and profitability of rural land-based
businesses.
10. Integration with other policies and the
administration of the provisions are widely seen as seriously
deficient.
Is there a case for a higher level of EU financing
of rural development? Do you have a view on the extension of compulsory
modulation from Pillar I (Direct Payments) to Pillar II (Rural
Development)?
11. Yes, as just briefly explained, the scope
of the RDR is very much wider and potentially influential than
that that has been implemented in the England. Consequentially,
we believe that there is a very good case for higher levels of
funding for the RDR. With regard to the compulsory modulation
mechanism, we have serious concerns about the distribution key,
which provides the UK with only 80% of what is deducted from the
SFP. As well, some countries have problems with the requirement
to co-finance, whether because they cannot afford it or they are
not inclined to do so.
What benefits can the EU's World Trade Organisation
obligations create for EU agriculture and, consequently, for the
EU economy as a whole?
12. The main benefit of the WTO is the provision
of an international legal framework ensuring fair competition
amongst nations, as well as security and legitimacy for internal
programmes.
13. The liberalisation agenda of the WTO being
pursued in the current Doha Development round of negotiations,
will serve to accelerate the restructuring process that is happening
to European agriculture and could have far-reaching—and
in some cases, devastating—consequences for land usage and
management. A comprehensive analysis of these effects should be
undertaken but, broadly, we can expect that some farming, such
as that in areas that are less productive yet of high environmental
value may be abandoned as the farms become uneconomic, while food
production will be increasingly centred on fewer, larger farms.
Because European farming is expected to meet simultaneously both
the food needs and the environmental/animal welfare demands of
the public, the implications of the WTO are uncertain.
To what extent has the system of cross-compliance
contributed to an improved level of environmental protection?
How is it linking with other EU policy requirements such as the
Water Framework Directive?
14. There is a large and growing body of EU
environmental regulation, most of which was included under cross
compliance as the Statutory Management Requirements (SMRs) when
the current SPS was agreed. Cross compliance has raised awareness
of the increasing linkages being made between sustainable production
practices and payment of public funds, and contributed to an improvement
in some land management practices. Arguably it also suggests that
achieving environmental changes, where those who must deliver
are uncoordinated and geographically disperse, may be more efficiently
done within the context of a public payments mechanism rather
than by simply regulating.
How can the CAP contribute to mitigation of, and
adaptation to, climate change? What do you consider the role of
biofuels to be in this regard?
15. The main contributions of land managers
to addressing climate change are flood control, carbon sequestration,
energy substitution, particularly the supply of second generation
bio-fuels, materials substitution (timber for concrete, steel
and brick) and food security. None of these important activities
are currently properly supported by the CAP.
The Commissioner has expressed her dissatisfaction
at the financing agreement reached by the Member States at the
December 2005 Council. Do you consider the current budget to be
sufficient? Do you consider co-financing to be a possible way
forward in financing the Common Agricultural Policy?
16. It is not possible to say with certainty,
and it may be misguided to attempt to do so, whether the budgetary
resources currently available will be sufficient into the future.
A necessary prerequisite is greater certainty as to the future
objectives of the CAP. As already stated, in our view, the future
global challenges to food and environmental security are likely
to demand more than is now provided in the current budget.from
Budget Heading 2 "Preservation and Management of Natural
Resources" that funds the CAP and environmental policy. These
additional funds will mainy be required for the kinds of actions
under pillar II that society demands. How we get these funds and
the degree of co-financing are open questions. There is much merit
in the suggestion that an EU policy—and there should be
no doubt that it should be an EU policy—should be financed
by an EU budget.
What has been the impact on the CAP of the 2004
and 2007 enlargements and what is the likely impact of future
enlargements of the EU on the post-2013 CAP?
17. There have been few short-term consequences
of the enlargement, as the current budget and policy reforms were
agreed before the expansions. It is, of course, regrettable that
the accession of Bulgaria and Romania was not properly provided
for in the agreement on the financial perspective for the period
2007-13. This may yet lead to cuts in single farm payments under
the Financial Discipline provisions of the budgetary agreement.
Undoubtedly there have also been benefits from the increased labour
mobility and market integration between the new members and the
EU15 but the statistical evidence is not yet available to demonstrate
this. Longer term, we expect that the different needs and priorities
of the new members will influence the evolution of policy—with
a greater emphasis on rural development and environmental stewardship—and
the distribution of the budgets—with more money moving "from
west to east".
How could the CAP be further simplified and in
what other ways would you like to see the Common Agricultural
Policy changed in the short and/or the long term?
18. Our view is that the key challenges facing
land managers in the 21st century arise from the pressures of
environmental deterioration, population growth, increasing production
of 1st generation bio-fuels, and climate change. These pressures
give rise to the twin challenges of food security and environmental
security. The CAP should be refocused to address these challenges.
June 2007
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