21 May 2008

7 minute read

The so-called CAP Health Check will further break the link between direct payments and production and thus allow farmers to follow market signals to the greatest possible extent. Among a range of measures, the proposals call for the abolition of arable set-aside and a gradual increase in milk quotas before they are abolished in 2015, and a reduction in market intervention.

These changes will free farmers from unnecessary restrictions and let them maximise their production potential. The Commission also proposes an increase in modulation, whereby direct payments to farmers are reduced and the money is transferred to the Rural Development Fund. This will allow a better response to the new challenges and opportunities faced by European agriculture, including climate change, the need for better water management, and the protection of biodiversity.

"The Health Check is all about freeing our farmers to meet growing demand and respond quickly to what the market is telling them, "said Mariann Fischer Boel, Commissioner for Agriculture and Rural Development. "It also aims to simplify, streamline and modernise the CAP and give our farmers the tools to handle the new challenges they face, such as climate change."

The English National Farmers Union(NFU) have said that the EU CAP Health Check take the Common Agricultural Policy (CAP) in the right direction, but do not go far enough in eliminating the potential for different treatment for farmers across Europe.

NFU President Peter Kendall said: "The Health Check is intended to be an adjustment to the CAP, not another radical reform. The problem with the last reform in 2005 is that it made the CAP more complicated and less common. The Health Check is an opportunity to correct those mistakes and we welcome the move towards a more level-playing field, but this does not go far enough."

"Some of the measures are welcome, most notably the abolition of set-aside. We support the elimination of dairy quotas by 2015. The introduction of a new minimum claim threshold of €250 or 1 hectare will reduce the administrative burden and hopefully, result in a more efficient delivery; while the review of the cross-compliance requirements can provide the opportunity to exclude provisions that are not directly relevant to farming."

He also welcome the elimination of partially coupled payments in the arable sector but remain disappointed at the lack of ambition of the proposals for the livestock sector. The proposed continuation of coupled payments for suckler cows and ewes in some other EU countries betrays the spirit of the 2005 reform and distorts our domestic markets."

The NFU went on to warn that despite the Commission proposals on partially coupled payments and modulation will make the CAP more common, the possibility for member states (under a reformed article 69) to use up to 10 per cent of their CAP budget for specific measures was viewed with real concern.

NFU Scotland had a similar message. They broadly welcomed the European Commission’s CAP ‘Health Check’ proposals, and sees them very much as the start of a process during which time it will consult its membership as widely as possible as it formulates its response.

NFU Scotland’s President Jim McLaren, said: "Today’s proposals are a starting point and we shall consult our membership widely over the next six months before final decisions are made by European Ministers in November this year.

"Progressive modulation would likely have the same negative effect as capping and Commissioner Mariann Fischer Boel was very clear when we met her earlier this year that she did not want businesses to split artificially as a result of capping. Any decision must take into account the significant contribution Scotland’s large farm units make to the rural economy as well as the large numbers of people they employ."

Meanwhile the Scottish Cabinet Secretary for Rural Affairs and the Environment Richard Lochhead said:

"Our farmers and crofters have been keenly anticipating Europe's proposals for this year's Health Check of the CAP. While this is not a wholesale review the Health Check does flag up the general direction of travel for the future.

"It is absolutely vital therefore that Scotland's voice is heard and that the final decisions reflect our national interests so as to safeguard the thousands of livelihoods which the farming industry supports.

Dai Davies, President of NFU Cymru reacted favourabley. Following a briefing by EC officials she said, “NFU Cymru has always viewed the ‘Healthcheck’ as the opportunity to make minor adjustments and to refine the reform package agreed in 2003 and not as the opportunity to make fundamental or radical changes in direction.

“The farming industry in Wales desperately needs a period of stability and I am therefore pleased that the broad thrust of today’s announcement, if ultimately accepted by the EC’s Council of farm Ministers will permit us to continue to operate the Single Payment Scheme in Wales on the basis of historic payments. This is the number one item on our wish list and avoids the redistributional issues we have been so keen to avert in terms of support and that would accompany a switch to flat-rate area based payments.”

However, IFA President Padraig Walshe said the Health Check announced in Brussels by Commissioner Mariann Fischer Boel was secondary in significance to the Mandelson WTO cuts being offered in Geneva.

He said “the WTO proposals would have a devastating impact on family farming in Europe. The Irish economy would suffer job losses of 50,000 in processing, 50,000 farmers would be put out of business and the overall hit would be €4bn.”

In light of this he said that any initiatives announced by Mariann Fischer Boel were "meaningless".

Examples of CAP Initiatives

Abolition of set-aside: The Commission proposes abolishing the requirement for arable farmers to leave 10 percent of their land fallow. This will allow them to maximise their production potential.

Phasing out milk quotas: Milk quotas will be phased out by April 2015. To ensure a 'soft landing', the Commission proposes five annual quota increases of one percent between 2009/10 and 2013/14.

Decoupling of support: The CAP reform "decoupled" direct aid to farmers i.e. payments were no longer linked to the production of a specific product. However, some Member States chose to maintain some "coupled" – i.e. production-linked - payments. The Commission now proposes to remove the remaining coupled payments and shift them to the Single Payment Scheme, with the exception of suckler cow, goat and sheep premia, where Member States may maintain current levels of coupled support.

Moving away from historical payments: Farmers in some Member States receive aid based on what they received in a reference period. In others, payments are on a regional, per hectare basis. As time moves on, the historical model becomes harder to justify, so the Commission is proposing to allow Member States to move to a flatter rate system.

Extending SAPS: Ten of the 12 newest EU members apply the simplified Single Area Payment Scheme. This is supposed to expire in 2010, but the Commission proposes extending it to 2013.

Cross Compliance: Aid to farmers is linked to the respect of environmental, animal welfare and food quality standards. Farmers who do not respect the rules face cuts in their support. This so-called Cross Compliance will be simplified, by withdrawing standards that are not relevant or linked to farmer responsibility. New requirements will be added to retain the environmental benefits of set-aside and improve water management.

Assistance to sectors with special problems: Currently, Member States may retain by sector 10 percent of their national budget ceilings for direct payments for environmental measures or improving quality and marketing of products in that sector. The Commission wants to make this tool more flexible. The money would no longer have to be used in the same sector; it could be used to help farmers producing milk, beef, goat and sheep meat in disadvantaged regions; it could be used to support risk management measures such as insurance schemes for natural disasters and mutual funds for animal diseases; and countries operating the SAPS system would become eligible for the scheme.

Shifting money from direct aid to Rural Development: Currently, all farmers receiving more than €5,000 in direct aid have their payments reduced by 5 percent and the money is transferred into the Rural Development budget. The Commission proposes to increase this rate to 13 percent by 2012. Additional cuts would be made for bigger farms (an extra 3 percent for farms receiving more than €100,000 a year, 6 percent for those receiving more than €200,000 and 9 percent for those receiving more than €300,000). The funding obtained this way could be used by Member States to reinforce programmes in the fields of climate change, renewable energy, water management and biodiversity.

Intervention mechanisms: Market supply measures should not slow farmers' ability to respond to market signals. The Commission proposes to abolish intervention for durum wheat, rice and pig meat. For feed grains, intervention will be set at zero. For bread wheat, butter and skimmed milk powder, tendering will be introduced.

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