Memorandum by the Farmers' Union of Wales
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 of the CAP should be
to provide a policy that is adaptable to what are likely to be
the rapidly changing needs of Europe and the UK. For example,
as a result of concerns over climate change, agriculture has recently
risen rapidly up the political agenda within Europe, and the term
"sustainable agriculture", having once been used to
refer to localised environmental issues, is increasingly being
used in the context of what is sustainable on a global scale in
terms of CO2 emissions. Any long term objectives must take this
need for flexibility into account.
As problems such as global warming, rising sea
levels, the growing world population, and depletions in oil reserves
begin to take effect, it is difficult to envisage an appropriate
common European policy that does not in truth have agricultural
production of one form or another at its heart, regardless of
what that policy is called.
In terms of whether the title "Common Agricultural
Policy" remains apt, members commented that the commonality
even within Member States had been significantly diminished (exemplified
by the differences between the Single Payment Regimes implemented
in the UK devolved administrations), and that differences between
Member States were significant. Thus, the commonality of the policy
has been significantly diminished over recent years.
Within the UK, the most significant pressure
on the CAP is the Governments apparent will to marginalise farming,
agriculture representing such a low proportion of the UK's GDP.
At an EU level, the most significant pressures on the CAP come
from the efforts that continue to be made to reach World Trade
Agreements. In the absence of significant increases in world market
prices, it seems unlikely that agriculture in the UK will be able
survive in its current form if further concessions are made during
WTO negotiations, particularly against a background of rising
production costs. This poses a significant risk to both Europe
and the UK, given the predictions currently being made by scientists
regarding future needs for food and bio-fuels produced from areas
of land that will have been significantly depleted by rising sea
levels.
The incorporation of additional Member States
into the European Union also represents a significant threat to
the CAP in the absence of proportionate increases in the funds
necessary to accommodate new Member States.
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 contrast between the regimes in England
and Wales highlight Wales' wisdom in choosing an historically
based Single Payment system. However, while this has certainly
served to preserve the viability of more productive systems based
on small areas, many feel that the system has also preserved pre-existing
inequalities.
The reductions in administrative burdens that
Government predicted would accompany the reformed CAP have not
materialised, and the time and financial costs of bureaucracy
continue to escalate for farmers and the authorities alike.
The Cross Compliance regime and the penalties
that accompany it has been particularly problematic, with some
farmers having lost 60 to 100% of their Single Payments due to
simple misunderstandings of what are subjective rules.
Significant numbers of farmers have fallen foul
of CAP rules designed to penalise fraud, despite having clearly
made genuine administrative errors; for example on forms. The
nature of the Single Payment Scheme has increased the probability
of simple mistakes leading to draconian penalties.
The scheme, as implemented in Wales, has not
benefited potential new entrants to the industry, and members
feel strongly that the CAP should place more emphasis on assisting
young people who wish to enter the industry.
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?
The Single Payment Scheme, as implemented in
Wales, does appear to be a good template; however, there remain
significant inequalities, and changes might be made at the EU
level to allow such inequalities to be corrected—the current
regulations do not allow such changes to be made.
Such inequalities often derive from unusual
circumstances that occurred during the reference period; for example,
where normal practices were affected by the outbreak of foot and
mouth disease in 2001, or where farmers changed their methods
of farming between 2002 and 2004 in a way that was not accommodated
for by the National Reserve.
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
For the reasons already outlined above, agriculture
is an industry of growing importance, both domestically and within
the EU. As such, both short and long-term changes to the CAP's
market mechanisms should take the importance of preserving the
industry and the expertise of those involved in it into account.
Concessions made in the absence of clear policies that provide
mechanisms that ensure sustainable incomes for the industry will
therefore have serious consequences for Europe, particularly where
similar concessions are not made by other major players on the
world market.
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?
The final Welsh Rural Development Plan has yet
to be submitted to, or ratified by, the EC.
Previous experience has shown an increasing
willingness by UK Governments to divert Pillar II monies away
from agriculture to a far greater extent than occurs in other
Member States.
Members are of the opinion that monies paid
directly to farmers quickly filter down to other rural businesses
while minimising unnecessary administrative costs; the financial
problems experienced by many rural businesses due to the English
Single Payment delays highlight this effect.
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)?
Where there is a requirement to match-fund (£
for £) modulated monies, there should inevitably be a net
return to rural areas, notwithstanding the possibility of excessive
administrative costs. However, modulation, in the absence of such
a requirement, diminishes this potential net benefit and allows
modulation to effectively become a tax that diverts money away
from agriculture and away from particular geographical areas.
The UK's pursuit of the latter policy, even to the extent that
the law in the UK is now very different to that on the continent
(notwithstanding the position in Portugal), exemplifies the pressures
put on the UK industry compared with other countries.
Even where modulated monies are targeted at
agriculture, this is increasingly being done in a way that targets
limited geographical areas in order to replace schemes that were
previously nationally funded. The FUW believes that such displacement
of national monies by Pillar II monies is detrimental to both
agriculture and the wider rural community.
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?
Members believed that concessions made by the
EU during WTO discussions would only undermine EU agriculture
and, consequently, rural communities.
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?
Much of the environmental protection that is
afforded by Cross Compliance is provided by the Statutory Management
Requirements that predate Cross Compliance but have nevertheless
been incorporated into Cross Compliance rules.
Thus, a significant proportion of Cross Compliance
has simply sustained existing levels of environmental protection.
Other aspects of the regime provide negligible
or no environmental protection, and serve only to restrict farming
practices unnecessarily. This is particularly the case on extensive
farming systems, where rules that are clearly based upon perceived
problems that occur on intensive arable farms can result in significant
and disproportionate penalties, despite there being no valid scientific
reason for such rules to be applied.
Many Cross Compliance rules are subjective,
and open to a wide range of interpretations, therefore causing
disproportionate penalties to be imposed for practices that are
not clearly recognisable as breaches.
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 has already been stated, the CAP is likely
to play an increasingly central role in the mitigation of, and
adaptation to, climate change. Scientists anticipate that the
role of biofuels will become increasingly important in this regard,
and ongoing research would suggest that the range of crops and
bi-products that are available for biofuel production is likely
to increase significantly. However, such production will significantly
reduce the area available for conventional food and feed production,
as is already occurring in some countries where biofuel production
is becoming common, and this affect should clearly be taken account
of in drawing up future changes to the CAP.
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?
Despite the continuing, albeit lessened, protectionism
afforded to European farmers, the current market appears to offer
little hope of providing farmgate prices that make up the deficit
caused by reductions in CAP payments. In the absence of farmgate
prices that reflect production costs and provide sustainable incomes,
the current budget is currently insufficient.
Given the way in which the CAP has recently
been undermined by the decision to allow the UK and Portugal alone
to modulate at 20% without match funding, voluntary co-financing
seems likely to further undermine the CAP and the agricultural
industry in the UK.
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?
The enlargement of Europe has, as expected,
diluted the CAP. In the absence of budgetary changes that mitigate
such dilution, the overall effect will be further dilution of
the CAP.
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?
The advent of the Single Payment Scheme has
resulted in less commonality across Europe, amounting to complication
rather than simplification. However, it is the view of members
that the most significant way in which the CAP could be simplified
is by reducing the burden that the bureaucracy associated with
CAP represents for the industry.
8 June 2007
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