Reform of Europe’s flagship policy raises familiar questions
Long the totemic policy of the European Commission, the Common Agricultural Policy (CAP) is set to be reformed. At stake is the policy’s structure for 2014 to 2020.
For its many critics, change cannot come soon enough; while for the large swathes of Europe, including Scotland, that see CAP funds as the foundation of their agricultural sectors, the negotiations appear fraught with risk.
The EC fired the starting gun on the lengthy process in November 2010, and in October last year presented a set of measures designed to balance the CAP’s stated aims of securing healthy and quality food production, whilst preserving the environment.
Among the proposed reforms are moves to simplify direct payments to farmers, encourage new entrants, directly link support with levels of activity and increase “greening” through the support of improved use of natural resources.
Edinburgh has consistently argued that CAP funds are essential if Scotland is to continue sustainable and productive farming, as well as ensure security of food supply. Support for new entrants and greening have been welcomed by the Scottish Government, which has also identified the speed of introduction of direct payments and the need to ensure no gap in funding for the Scottish Rural Development Programme and as key issues to be resolved in the changes.
Richard Lochhead, Cabinet Secretary for Rural Affairs, has welcomed the emphasis on attracting new farmers to the sector and determining payments based on current rather than historic levels of activity. “We need a CAP that delivers support to all active farmers irrespective of whether they’ve been farming for one year or 30 years,” he told Holyrood.
“We have the ludicrous position now where a farmer can be receiving support based on his level of activity ten years ago, whereas a new entrant who is much more active is receiving no support – that has to be fixed.” Some of the measures on greening are not suited to Scottish circumstances, Lochhead adds.
For example, in some areas of Scotland meeting the stipulation that three different types of crop used in rotation will simply prove impossible.
But, he explains, the principle of supporting farmers that the market fails to reward for protecting the environment is a sound one.
The CAP, he says, will continue to recognise Scottish farmers compete with non-EU countries that are not obligated to meet the high standards required in Europe, while many isolated or marginal farmers require subsidy to remain viable.
Others are less convinced. “What you might want from the CAP, and what’s on the table, are two very different propositions,” says Alan Renwick of the Scottish Agricultural College.
The reforms, he adds, have not done enough to end the dependence of certain sectors on CAP largesse. Rhetoric on innovation and increased efficiency has been “long on words and short on detail”.
“The CAP has been a barrier to innovation in agriculture in Scotland,” Renwick continues.
“The CAP fossilises things. It also puts a lot of regulations on people. A lot of people are spending all of their time just trying to make sure they comply.” The Liberal Democrat MEP George Lyon agrees that the bureaucracy associated with the CAP is at times overbearing, and there are ample opportunities to simplify the process.
But he adds that public money must be audited effectively, and one of the reasons the CAP imposes strict standards is that some member states have been guilty of mismanagement in the past. All financial scrutiny and inspections, he adds, must be “proportionate and appropriate”.
But while policy-makers hunker down to the minutiae of renegotiating the CAP’s direction and structure, the process has been likened by some to rearranging the deckchairs on the Titanic by those who believe the entire European project sits on shifting sands.
The CAP budget for 2014 to 2020 has already seen a 9 per cent cut, and dismal economic conditions suggest there could be worse in store. With the eurozone slumped into a second recession in four years and the markets continuing to hold a gun to the head of several of the continent’s weaker economies, there is a real fear that the CAP, which currently absorbs over 40 per cent of EU budget expenditure, may be shredded. Speaking to Holyrood in November, the SNP MEP Alyn Smith said Scottish politicians and the agricultural sector as a whole should be asking the question: “If there is to be no EU agriculture budget at all, what is our plan B?” One of the many fault lines that divides the UK Government and the SNP administration in Edinburgh, the issue of CAP funding provokes divergent reactions in Scotland, where 85 per cent of farmed areas are classified as Less Favoured Areas, and England, where the ratio is reversed.
These differing priorities have hardened attitudes both north and south of the border. Successive UK governments have pushed hard for deep cuts to CAP, deeming its generous subsidies unnecessary to England’s highly productive acres.
For the devolved administrations, CAP payments represent a vital lifeline that keeps local agriculture on an even keel.
Lochhead has consistently argued for the budget to be maintained. The policy, he explained during a parliamentary debate in January, allows Scotland’s food and drink sector to flourish and provides “a buffer against volatile conditions, be it the weather or the market”.
Addressing the National Farmers’ Union of Scotland AGM earlier this month, Lochhead said that any major cut to Pillar 1 of the CAP – the direct payments made to farmers that account for three-quarters of its budget – would “decimate” the Scottish industry.
“Many other countries also recognise the importance of the CAP budget,” he says.
Farmers across Europe “don’t have as many choices as those farming in the golden acres of Oxfordshire”.
But as Renwick notes, the Coalition Government has struck a more conciliatory tone than the previous Labour administration.
While Labour favoured scrapping Pillar 1 funding immediately, Defra ministers have talked about phasing out the scheme by the end of the decade. Whatever the outcome, Renwick says that anybody in the agricultural sector who does not plan ahead for significant budget cuts will only have themselves to blame. “Whether it’s now, or whether it’s 2020, I think there is still a direction of travel to reduce support,” he says. “Farmers should be preparing themselves for that, and thinking how they could not necessarily do without subsidy but how they could reduce their reliance on it.” While Lochhead says that any farmer would rather that 100 per cent of their income came from the marketplace, “we’re a long way from that happening”. In the meantime, he adds, “so many farms are reliant on single farm payments – that’s why it’s so important that CAP continues to deliver for Scotland.” Renwick goes further, saying that for too many, funding derived from the CAP has become something of a crutch. “Particular sectors are clearly very dependent on it,” he continues.
Without access to the subsidy, he says, farmers would be forced to think, “What does the market want? What can I supply?”, rather than relying on the tried and tested methods.
Whatever the future budget, Lochhead says Scotland has received a raw deal from the CAP in the past. Scotland is ranked fourth-lowest in Europe in terms of the level of single farm payments received. As an independent country no longer tied to subsidy-averse England, Lochhead says Scotland would be in line for a “huge dividend” running into hundreds of millions of pounds.
More evidence, says Lochhead, of “why it’s so important that Scotland’s voice is heard” as an independent nation, and, until that day, as an equal partner in the UK delegation.
“Every survey of Scottish farmers shows that they don’t trust Defra to negotiate on their behalf,” he says. “The Treasury are driving UK farming policy whereas in Scotland the national interest which is food security and safeguarding the environment are what drives our agricultural policy.” According to Lyon, the idea that the CAP doesn’t allow for significant flexibility between regions is misleading. Indeed, he adds, “the Scottish system currently is completely different from the English system in terms of the way CAP is implemented.” As for the argument that Scotland would be better placed to negotiate its own position as an independent country, Lyon points to the ongoing eurozone debt crisis as proof that the real power in Europe lies with the major nations. “You don’t have much of a voice round the table,” he says.
Renwick says that affording local and national governments greater autonomy so that they can interpret CAP to their own unique circumstances will go some way to soothing the differences of member states. But decades-old disagreements about the nature and funding of the policy are likely to run and run.