Memorandum by The Scottish Rural Property
and Business Association
INTRODUCTION
The Scottish Rural Property and Business Association
(SRPBA) represents the interests of approximately 2,700 land based
businesses in Scotland including farming, forestry and game management
businesses. Our goal is a prosperous and sustainable rural sector
driven by thriving land-based businesses.
Given the diversity of its membership, the Association
has a broad perspective on the rural policy. Our members are land
managers in the wider sense so our policy perspective is not solely
focussed on farming. However, we believe that agriculture is and
should remain a core rural activity upon which a thriving rural
economy is built.
Our members take a proactive approach to land
management. They have, through many years of continued management
of land, provided a range of services and products to society—food,
fuel and protection of natural resources. In the process they
have created a landscape from which the public at large have benefited.
The Common Agricultural Policy has been instrumental
in shaping and driving the land management activities of our members
and will continue to do so. We therefore welcome the House of
Lords" Inquiry into the future of the CAP and are grateful
for the opportunity to contribute.
OVERVIEW
1. 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?
The long term objectives should be a competitive
market orientated agricultural sector allied to a more profitable
and sustainable countryside. However agricultural (food production)
policy can no longer be considered separately from energy policy.
We need to secure strategic supplies of both food and energy,
and land management (including the agricultural sector) is inextricably
linked with both. To this end the Common Agricultural Policy may
no longer provide an accurate description of the policy. This
is a policy for delivery of profitable and sustainable rural economy
which is founded on viable and thriving land management businesses.
Pressures on the CAP stem from the fact that
the CAP is expected to deliver on a whole range of social, environmental
and economic objectives in an enlarging EU with a limited budget.
It is no longer deemed acceptable for public funding to deliver
only agriculture/food production and there are wider social and
environmental pressures on funding which had historically been
directed at the agricultural sector.
Land managers are stewards of the countryside
who must balance the economic realities of food and energy production
with the responsibility to do so in an environmentally sustainable
way. A range of non-market services have historically been provided
by land managers in a range of environmental and cultural landscape
services. These were previously simply viewed as by-products of
farming, forestry and game management activities but are now expected
to be end goals in themselves. At the same time land managers
are expected to be more business like in their approach which
inevitably focuses their attention on outputs for which they are
paid.
This sets a challenge for land managers and
brings pressure on the support system. Land managers are asked
to continue to innovate and produce the high quality food (and
increasingly, energy) needs of Europe, and in addition to reduce
pollution and increase delivery of the environmental services
of biodiversity and landscape as well as free at point of use
public access for health and recreation.[1]
THE REFORMED
CAP
2. What has been your experience so far with
the reformed CAP? What has worked well and less well? And
where can lessons be learned?
The 2003 reforms have been partly successful
in that they have begun to focus farmers on the market place and
remove some of the distortions. The SRPBA was supportive of de-coupling
production from support, although it is probably still too early
to see real evidence of the restructuring of the industry that
must occur as a result.
Many Scottish farmers have reacted to the reforms
by using the current period of CAP to make longer term decisions
and restructure their businesses. However many have not yet done
so, and it remains to be seen whether reforms will need to go
further in order to bring about the necessary changes in decision
making.
THE SINGLE
PAYMENT SCHEME
3. 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?
A first pillar of the CAP providing direct support
payments remains vital to underpin most farming enterprises, at
least in the medium term. The majority of businesses would simply
not be profitable enough to deliver on any of the other objectives
expected from farming without the single payment. This is particularly
the case for upland areas where arguably employment, social fabric,
social history, rural skills, landscape features, biodiversity,
tourism etc become proportionately more important than simply
production. Direct support is needed to keep people in these areas.
Longer term, Pillar I funding remains a good
mechanism for providing a broad based payment in return for good
agricultural and environmental stewardship across Europe. However,
it cannot continue to be relied upon for survival.
The Single Farm Payment scheme could be simplified
by ensuring adequate cross compliance obligations for the receipt
of pillar one monies leaving pillar two to focus on business and
agricultural development. The SFP should recompense farmers for
the non market benefits that they provide through their activities.
This should not necessarily rewarded on a competitive basis if
a consistent level of environmental stewardship is to be achieved
across the EU.
The historic basis for payment of SFP in Scotland
has given time for farmers to adjust but may become problematic
in the longer term. There is a particular concern about payments
being allocated to "naked acres" with recipients not
required to undertake any economic activity, which does not gain
sympathy from either the public or the industry.
MARKET MECHANISMS
4. 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.
Market interventions should be removed so that
direct payments to farmers are made where there are social or
other specific community, non market benefits delivered to society.
This is more justifiable in the longer term. However, the facility
for some emergency intervention could be required until there
is a clearer strategic approach to income stabilisation. We accept
that set-aside and quotas are no longer justified although consideration
should be given to preserving the environmental benefits achieved
through set-aside for example in water body protection. This can
be done through agri-environment measures.
RURAL DEVELOPMENT
5. 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?
Scotland and the UK has been disadvantaged by
historic funding criteria. Without prosperous primary industries,
many other objectives will not be attained, therefore the majority
of funding will inevitably be directed towards them. However this
does not preclude other objectives. For example more serious thought
needs to be given to Natura 2000 funding. Rural development funding
must be preserved for rural areas, and not small conurbations.
6. 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)?
The SRPBA has always acknowledged that Pillar
I funding will be shifted to Pillar II. This should occur at the
appropriate pace so that farmers are given time to adjust. Ultimately
we need to retain a critical mass of profitable farming businesses
if wider objectives are to be achieved. Removing too much of the
direct payment too soon may jeopardise this.
Shifting of funds would be better achieved through
increased compulsory modulation across the EU, rather than differing
rates of voluntary modulation affecting farmers in only one or
two member states.
WORLD TRADE
7. What benefits can the EU's World Trade
Organisation obligations create for EU agriculture and, consequently,
for the EU economy as a whole?
The EU's WTO obligations could possibly be beneficial
for the EU economy as a whole. However producer margins are very
slim and unless the market responds and the major retailers"
"arm lock" is loosened then the longer term consequences
for the consumer could be deleterious.
ENVIRONMENTAL PROTECTION
AND CLIMATE
CHANGE
8. 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?
Cross compliance obligations largely reflect
good farming practice already in place in most cases, so may actually
contribute little by way of "additionality" in environmental
protection. To be a justification for direct payment, compliance
should be ensured. A whole farm/estate approach could be developed
that sees support being accurately and effectively cross-complied
with management objectives that fit into regional biodiversity
and other plans—and those objectives periodically checked
and reviewed. There is insufficient joined up thinking between
cross compliance and other EU policy requirements. Additional
national regulation could be avoided if cross compliance was used
as a tool for implementation of water framework or soils directive
objectives, for example.
9. 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?
As indicated above, it may become impossible
to separate agriculture and energy policy in the EU, with agricultural
businesses being expected to deliver both food and energy production.
This may bring it's own challenges in relation to supply. If the
CAP can deliver a more market orientated agricultural sector,
then the sector would be able to pick up on the potential economic
and market benefits of biofuels and respond accordingly.
There needs to be more thought given to the
impacts of other policy objectives such as Water Framework Directive
on agriculture and climate change. The approach at the moment
appears to be "pristine water quality at all costs".
The socio-economic impacts of achievement this objective must
have greater priority in policy making and funding measures for
rural development.
FINANCING
10. 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?
If the Rural Development Regulation is to be
the mechanism for delivering wider rural objectives, then a reduction
in the budget is not feasible. However, at a time where we are
competing with China and India, spending of the EU budget needs
to be directed at achieving an agricultural sector that is efficient
and market orientated. We need to be able to justify the budget
when compared to the benefits of spending, for example, on education.
ENLARGEMENT
11. 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?
Digressivity to fund accession countries would
be resented by other member states. In all equity the budget should
have been expanded to absorb the new member states, although enlargement
has been remarkably successful.
SIMPLIFICATION OF
THE CAP AND
OTHER ISSUES
12. 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?
SRPBA accepts that a single Commodity Market
Organisation (CMO) would be a helpful administrative simplification,
although as indicated above, the facility for some emergency intervention
could be required until there is a clearer strategic approach
to income stabilisation. Export subsidies should be reduced and
export taxes phased out.
The SRPBA also supports full decoupling of payments,
so remaining links to commodities should be phased out.
In principle the move to flat rate per hectare
payments is a further step in decoupling, and will be expected
to be accompanied by including within the single payment scheme
a larger part of the total managed land area. This in turn can
bring more land within the minimum standards of care defined by
cross compliance obligations. If cross compliance was set at the
appropriate level across the EU, then fewer competitive agri-environment
measures would be needed in pillar two, so it could have a narrower
focus on rural business and development.
However, there will be a significant redistribution
of support if payment is removed from a historic based allocation
to a regional average basis. This is likely to hurt the more intensive
dairy and cattle production farms. The SRPBA therefore has supported
historic payments, although with the acceptance that these will
be gradually reduced over time through modulation to Pillar II.
Cross compliance could be simplified and should
be consistently applied across member states to ensure fair terms
of competition. The penalty regime should also be reconsidered
to ensure proportionality and fairness.
The SRPBA is opposed to capping of either Pillar
I or Pillar II monies. There is no objective reason for it, and
it would simply penalise those farms which employ most workers.
It would reverse the needed concentration and enlargement of farm
businesses and set in train costly but unnecessary restructuring
of businesses.[2]
11 June 2007
1 See "Public Goods from Private Land-why Nature
needs Management" published by the European Landowners"
Organisation 16 May 2006. Back
2
Please see European Landowners" Organisation Submission to
the European Commission and Parliament on the CAP Health Check
May 2007. Back
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