Home What's New Speeches & Articles Newsletter - Nov 2008 Biography Diary Contact Information Photo Album Parliamentary Highlights Publications Links MEPs' Transparency   Conservative Party Latest News from Conservatives.com Conservative Party Website
		CAP mid-term review - Briefing with Lord Whitty of DEFRA Wednesday 30th April 2003 The vagaries of the CAP still encourage farmers to produce what pays the biggest subsidy, rather than what the consumer wants. This has led to farmers becoming increasingly removed from their customers and the market place, whilst still failing adequately to support our rural communities. Ways must be found to reduce the payments to Britain and the other 14 existing member states to allow enlgargement to take place. The key area of dispute is how much direct farm aid should be paid to farmers in these new member states. Two thirds of the citizens of the countries set to join the EU in 2004 believe in CAP reform. The European Commission claims that "according to the results of a new Eurobarameter poll, 67% of Accession State citizens support the EU shift in financial support away from subsidising farm products and towards the development and protection of the rural economy and direct support to farmers." Defra says "the Government is committed to reform of the Common Agricultural Polcy as a key element towards its goal of a more competitive and sustainable agriculture." The ecomonic analysis of the European Commission's latest proposal for the CAP reform estimates overall economic benefits of £400-600million a year in the UK, though farm incomes in the UK are expected to be largely unchanged. However, they claim that there are opportunities for increased incomes generated by greater productivity and efficiency. It will make European agriculture more competitive and market orientated, promote substantial simplification in the CAP, facilitate the enlargement process and help to better defend the CAP in the WTO. However, Lord Whitty of DEFRA said that the outcome is not going to be that which the UK wants to see. Instead, we must ensure that as little damage is done to UK farmers as possible, and there are things we can do in terms of ammendments. In order to fund the 'enlargement package' as well as a transfer of 6% of support for Agriculutre to rural development schemes, we are going to see a reduction of support paid to most farmers in the UK. The CAP is regarded as negative by Australia plus many developing nations. The USA also has an excessive agriculture subsidy regime. However, the USA has already put their case forward to the WTO and thus, have left the EU on their back foot. If no agreement can be rendered before the deadline, it could jeopardise the WTO process. The key element of the proposals is the decoupling of subsidies from the current complex set of elibigility criteria and commodity regime mechanism and the creation of a 'single income payment'. De-coupling will lead to closer market orientation meaning that farmers are influenced more by consumer demand than by which crops get the best subsidies. It is believed that de-coupling would immediately remove a number of perverse incentives to intensive production. De-coupling of subsidies from production will reduce problems with the WTO. A move towards de-coupling is also beneficial to the environment. Still the French and Spanish governments are talking about partial de-coupling. There is cross-party support in the UK for de-coupling, however there is a question of how it will be implemented. The reform of CAP will include modulation. This process, by which there is a diversion of a proportion of farmers' support payments to fund environmental and rural development schemes, would discriminate against the structure of farming in the UK. Degressivity is also on the agenda of the CAP reform. This results in a progressive reduction of the de-coupled payments, particularly for larger farmers, so as to fund further reform of the dairy and sugar regimes. It is important to note that most of Britain's farms are classed as large. Thus, there will be a transfer of funds to smaller, less efficient continental farms and who are considered competitors to UK farmers. A flat rate formula would result in a better deal for the UK, and the Germans too would support a flat rate formula. The current system has become a beauracratic nightmare. Under the new plans, the time-consuming bureaucratic system of applying for production subsidies would be done away with, ending the need for cumbersome registration and form filling. Roger expressed his concern about the anomalies of the base period, where landowners who had bought or sold land, or farmers who had grown unsubsidised crops, in the base period, who lose out, in effect, for ever. He also suggested that the EU is creating a mechanism which could, in effect, abstract value from a landlord's property and give it to another party (the tenant) and Roger fears this might represent a breach of the right to hold property under the ECHR (a view with which the NFU at Uppingham were recently inclined to agree). On the issue of de-coupling, Roger brought up the concern that the EU are not only decoupling subsidies from production, (which he believes is a good thing) and the land-owner ( which Roger considers is a bad thing), but also decoupling them from the land entirely, so as to create a new junk bond or financial derivative. He said that most tax payers would be relaxed about their taxes helping to maintain the land, but not about them being used to create "a financial product for spivs to speculate in". Lord Whitty accepted many of these structures, however he said that they were not quite creating a junk bond because the new owner of subsidy rights would still have to farm, but that's not much consolation to the land-owner. The European Commissions proposals are broadly in line with the UK thinking on the CAP, although according to DEFRA, the reforms do not go far enough. Lord Whitty said that we ought to be ready to accept a pretty terrible deal, with all its anomalies, because atleast it was better than the truly awful system that went before. Roger says this shows of poverty ambition. The briefing also reflected Lord Whitty's accurate perception of the difficulty of achieving sensible outcomes in the EU's gridlocked institutional decision-making system. Perhaps the time has come to repatriate agricultural budgets and policy. Katie Harries Assistant to Roger Helmer MEP