Crunch time on future of CAP in European Parliament

MEPs are set to agree their final position on the future of the Common Agricultural Policy in Strasbourg after months of preparation.

The amount of money assigned to CAP, which is a direct form of payment to farmers in the EU, is set to be voted on in a planned shake-up for 2014 to 2020. A further raft of 330 amendments have been tabled to the position adopted by the agriculture committee in January.

As a result, a meeting was scheduled for Monday evening to further clarify the procedures and ensure a manageable workload for the days ahead. The vote is planned for Wednesday after a debate on Tuesday.

"The issue of fairness will be one of the key subjects for discussion in this final phase" said European Commissioner for Agriculture and Rural Development Dacian Ciolos in a speech.

NFU director of policy Martin Haworth in Brussels said: "We have said all along that it would be unrealistic for us to expect the CAP to be exempt from the austerity measures that are being applied throughout the European Union."

"What is key to us is that whatever settlement is finally reached, the terms and conditions applied to our farmers must not put us at a disadvantage with our major competitors."

José Bové, French MEP for the Greens, used a news conference in Parliament to urge a reduction in the 'very high' cap on annual subsidies to farmers which is currently at €300,000. Bové said it would affect only 0.12% of farmers and amount to savings of €1.45bn.

Bové said the EU should limit subsidies to €100,000 per farm. Farm groups have said they would prefer capping was struck out from the future CAP.

MEPs endorsed Commission proposals to cap direct payments to any one farm at €300,000, and reduce payments to those receiving between €250,000 and €300,000 by 70%, and payments to those receiving between €200,000 and €250,000 by 40%.

"The starting gun was fired on this CAP reform when the European Commission published a set of entirely unsatisfactory proposals in October 2011" Raymond said.

"Earlier this year, the European Parliament's agriculture committee made great strides in removing some of the worst elements of the Commission’s proposals, but we are asking for an even greater commitment during next week's vote."

The centerpiece of CAP reform remains the greening of direct payments.

MEPs have said new environmental rules - which will make 30% of national budgets for direct payments conditional upon compliance with greening measures - must be made more flexible" said Ciolos.

"This is an instrument for adding value to the production of public goods."

"It reflects the economic dimension of soil fertility and of biodiversity. It is also a means to combat climate change. This change in the CAP is necessary both of the good management of natural resources and for farmers."

"For taxpayers' money to be used efficiently I think it is important that the greening measures be the baseline for the 2nd pillar agri-environment measures and that the 7% of ecological focus areas play their role in stabilising farming ecosystems, which is synonymous with productivity and long-term competitiveness."

There were three key measures: crop diversification, maintaining permanent pasture and creating ecologically focused areas will remain but with exceptions.

MEPs made clear that farms with under 10 ha of arable land should be exempt and the rules should be relaxed for holdings of 10 - 30 ha.

"We have managed to bring greening into the first pillar of the CAP, making it possible for every farmer in the EU, not just those in countries that can afford to fund it under rural development programmes. This greening is clearly subject to EU rules, and now needs to be paid for by real EU money for a public good", Luis Manuel Capoulas Santos said.

Raymond continued: "We want the MEPs to vote in favour of much of the good work of the agriculture committee, but in addition we need to make bigger strides to reduce unnecessary red tape in the future CAP."

"We are also urging MEPs to reject the excessive use of trade distorting coupled support payments that unfortunately the majority of agriculture committee MEPs supported and to minimise the powers that would see the gap in payment levels potentially widen further, leaving UK farmers at a competitive disadvantage were Defra to make use of the powers that it is fighting so hard to gain."

Payment flexibility call

With payments under Scotland's Less Favoured Area Support Scheme (LFASS) scheduled to start mid-March, slightly later than normal, NFU Scotland has repeated calls for payment flexibility to be built into new CAP schemes.

The LFASS payment run, which delivers more than £60 million of crucial support to livestock farmers in Scotland's hills and uplands, is eagerly awaited given the pressures that the 2012 weather has placed on many farm business cash flows.

LFASS awards back up the main tranche of support delivered to Scottish farms through Single Farm Payments (SFP).

SFP delivery traditionally begins in early December and more than 99 percent of Scottish SFP funding for 2012 has already been paid.

Scottish farmers welcome prompt delivery of funds under current support schemes. However, the complex nature of any new support system to emerge from current CAP Reform negotiations has the potential to delay payment runs in the future.

NFU Scotland continues to support the development of a system that would allow producers to receive an advance payment.

NFU Scotland President Nigel Miller said: "For many Scottish farmers and crofters, lifeline LFASS support cannot come quickly enough as the 2012 weather has seen greater expenditure on feeding and bedding, poorer returns for lambs and seriously stretched cash flows.

"However, the opening weeks of the year have been relatively free of harsh winter weather and there should have been little to delay the necessary inspections from being completed. If anything, slippage in timing of the LFASS payment run to later in March simply underlines our view that we need new arrangements for payment schemes that allow, if necessary, advance payments to be made.

"There is considerable potential for any new direct support scheme arrangements emerging from the CAP Reform process to generate delays in payment timings because of their complexity.

"An advance payment system for the new CAP that can ensure cash flow on to Scottish farms in December of each scheme year is hugely important."

Data leaks

Gail Soutar of the NFU told delegates that unofficial, leaked data doing the rounds in Brussels had allowed experts to put the possible impact on 'pillar one' direct payments into numbers.

"The team estimates that the pot of money available will be cut by 10% in real terms," she said, leaving UK farmers below the EU average and behind key rivals.

She added that the cut to 'pillar two' funds (agri-environment and rural development) could be 22% on the 2013 budget, putting the UK at the very bottom of the EU pile.

"Did the UK go looking for a fair allocation or did it focus its whole strategy on being able to move money from from pillar one to two?" she asked.

For the NFU, the leeway for member states to make such a move – to the tune of 15% of the single farm payment funding – is 'without justification,' especially in light of controversial plans for the 'greening' of pillar one.

Discussion of that element of the proposals brought brighter news in the shape of 'significant changes' to the original Commission plans from MEPs, particularly an exemption from the arable greening measures for those with 75% or more permanent pasture.

But real concerns remain, said Soutar, particularly noises from Defra that implementation might take the shape of a single delivery method 'similar to ELS' – which could deprive English farmers of options open to their rivals and impose more onerous standards.

Defra's CAP strategist Martin Nesbitt stressed the voluntary aspect of the capping of direct payments to large beneficiaries and noted the wording of proposed greening regulation.

Implementation, he said, should 'avoid administrative burden' and 'ecological focus areas' should 'not be used to take land out of production’ and should 'avoid unjustified losses to farmers'.

He was satisfied with provision to move 15% of monies from pillar one to two, but less so at a similar degree of leeway in the opposite direction.

In terms of a timetable, he said a final agreement in June will be reliant on the European Parliament endorsing the recent EU Budget deal and formally adopting its CAP reform position next month.

There was a big question mark on that timeframe, he said, but should it happen member states would have 18 months to implement plans on the ground for a 2015 start date.

The session began with a German perspective on the process from Willi Kampmann, head of international affairs at the national farmers’ association, the DBV.

He said farming and mid-sized food production had been stabilising economic influence in troubled financial times and job losses in a sector which employs 11% of the workforce had been limited.

The German government and the DBV were “broadly aligned” on CAP reform and had taken a pragmatic approach to the European Parliament proposals.

Despite likely cuts of 7% to pillar one and 9% to pillar two, Kampmann said European agricultural policy was “still more reliable than any national policy”.

The Irish Presidency appeared 'well prepared', he added, and he was fairly confident a final deal would be hammered out by June.

Moves towards greater market management would be a chief area of concern.

Kampmann said: "We are confronted by more and more opening markets. The Commission is currently pursuing 12 different deals, and while there are of course risks there are also opportunities. Market regulation which interferes with supply management will not help."

'Muted optimism'

As of 2019, payments received by all farmers in any given member state are to be based on a uniform unit value, as proposed by the Commission, but could nonetheless in some cases deviate from the average by up to 20% so as to avoid sudden sharp falls in support, says the committee.

However, where payments are reduced, their level in 2019 may not be more than 30% below that of 2014.

The distribution of the agreed total aid between the member states in terms of Single Payment Scheme and rural development funds such as Environmental Stewardship remains to be seen. Capping of aid has been included within the deal on a 'voluntary basis'.

Similarly, the greening measures have been carried forward into the agreement although it looks as though DEFRA’s preferred option of greening via the ELS will be allowed.

In terms of modulation and reduction of direct aid in favour of rural development, some flexibility has been obtained for member states to transfer up to 15% of direct support funds to rural development. This could create a far from ‘level’ playing field in terms of the direct payments going to farmers across the EU.

The deal still needs to be ratified by the EU Parliament who are unlikely to welcome the concept of cuts in the budget.

Whether this means they will actually try and block the deal remains to be seen. But this progress means there could be political agreement for Common Agricultural Policy reform by the end of the Irish presidency in June.

However, the implementing regulation to carry out the reform is unlikely to be available before the Autumn.

Andrew Bays of BCM said: "It would appear that from the perspective of farmers and land owners the agreement that has been reached is relatively welcome within the context of the overall cuts that were being proposed."

"However, we still feel there could be more devil in the detail and will monitor the situation extremely closely to see precisely how this agreement will work through to a UK level. If the timetable can move forward swiftly it would be welcomed by the agricultural industry at the uncertainty CAP reform brings is of no benefit to farmers and landowners".