CAP Report In Right Direction For Scotland

25 February 2011
Alyn Smith MEP, Scottish full member of the European Parliament's lead committee on CAP reform, the Agriculture and Rural Development Committee, has cautiously welcomed the draft report on CAP reform by Bavarian Christian Democrat Albert Dess as "a useful start" in the process of reforming the CAP, which will be completed by the end of 2013.

Crucially, the report meets Scottish demands by calling for the retention of direct payments, which are vital for our hill farmers in a vulnerable economic climate. The report also recognises the conclusions of the Pack Report by demanding a more even and fair distribution of CAP funds across Member States; acknowledging that in certain fragile regions coupled payments are necessary and will have to continue; calling for a simplification of CAP administration and cross compliance; and allowing for flexibility in the future basis of CAP payments, while making it clear that the historic base will have to go.  

More controversially, the Dess Report introduces a new proposal for the "greening" of direct payments.  While the Commission's Communication envisaged a new "environmental payment" as a top-up to the direct payment in Pillar I, Dess calls for a new list of "priority environmental programmes" (such as crop rotation, biodiversity measures and reducing soil erosion) in Pillar II. Farmers would have to participate in at least two of these programmes; otherwise their Single Farm Payment would be docked. Unlike the other programmes in Pillar II, these schemes would be 100% EU financed, although some money would have to be redistributed from Pillar I to pay for it.

Smith said:

"All in all, not a bad start to what will be the Parliament's official position ahead of the Commission's legislative proposals in late summer 2011. Dess has certainly put the cat among the pigeons with his new idea for "greening" the CAP, and we will have to go into the rival proposals in more detail to see which will be better at reducing bureaucracy and providing simplification for farmers.

"Having said this, food production and food security is at the heart of the CAP, and I'm delighted that Dess has recognised this through the retention and, indeed, improvement of direct payments, which will give farmers the security they need to produce. I'm also pleased that he has dropped some of the more silly ideas that were floating about, such as the notion of "capping" individual payments, which would not help the provision of food security and public goods, and indeed would just lead to the division of efficient farm units.  

"Much of what Dess is saying goes very much along the lines that we have already laid out in Scotland. He recognises the need to simplify the administrative rigmarole and to make it easier for new entrants to get hold of payment entitlements; that we need a new objective basis for direct payments, but that an area-based premium will not work in all regions, requiring special measures (the Pack Report suggested that, in LFA regions, Standard Labour Requirement could be used instead); that although decoupling is a positive process and should continue, there are certain fragile farming areas where payment by production is still necessary to prevent land abandonment; and that the distribution of CAP funds is currently unfair and needs to be reformed.  

"I look forward to working with Mr Dess to clarify these ideas and to improve the report, so that Parliament has the strongest possible position ahead of the legislative negotiations."

A briefing on the report is available below:

  • The EU agricultural budget for the next Multiannual Financial Framework (MFF) should be maintained at least on the same level as the 2013 CAP budget.
  • The CAP should retain a two pillar structure.
  • The CAP budget should be more fairly distributed across and within Member States; each Member State should receive at least two thirds of the EU average for direct payments.  The concept of an EU-wide flat rate per hectare is rejected.
  • Direct payments to farmers should be maintained; these payments should no longer be based on historical references but on "a uniform area-based regional or national premium", allowing for the disparate situations in the different Member States and the need for special measures in vulnerable regions.
  • Direct payments should continue to be decoupled, such as the suckler cow and sheep premiums; however, coupled payments should still be allowed in particularly vulnerable regions where there is a risk of land abandonment.
  • The Commission called for an additional "greening" payment in Pillar I to allow for the provision of environmental public goods. Dess proposes that the "greening" element should come in Pillar II. A new list of "priority area-based measures", such as on climate change, crop rotation and biodiversity, will be created in Pillar II, and will be 100% EU financed. Farmers will have to participate in at least 2 of these programmes, or their Pillar I payment will be fined. Dess believes that his proposal will lead to less bureaucracy and be easier to implement than a "greening payment" in Pillar I. Member States would have to transfer funds from Pillar I to Pillar II to fund this: a figure is not specified. This is the most controversial element of the Dess Report.
  • The Commission proposal for a "cap" on individual payments is rejected.
  • Member States should have flexibility to ring-fence Pillar I money for a special scheme for small farmers, the details of which would be worked out locally.
  • Direct payments must only be paid to "active farmers": the Commission is asked to come up with a workable definition.
  • Article 68 (which allows Member States to use up to 10% of their direct payments for special measures to boost vulnerable sectors and regions, and for environmental measures), should continue. 
  • The administration of direct payments needs to be simplified: measures suggested include simplified transfer rules for payment entitlements, reforming the national reserve to gear it more towards young farmers, and "an effective and unbureaucratic monitoring system for both pillars and uniform penalties."
  • Cross Compliance should be "substantially reduced" in its scope, and rules should be simplified and harmonised. It should be "restricted to monitoring for compliance with fundamental and recognised standards, and standards closely related to farming".
  • The Less Favoured Area Scheme should remain entirely in Pillar II (the Commission proposed a split between the two pillars) and should retain the existing criteria for demarcation of these areas.
  • There is a very broad discussion about possible market instruments, but the retention of the current general architecture is supported. Dess suggests that Member States should be able to use up to 2% of their direct payments for risk management measures, but that there should not be an EU-wide insurance scheme. Export refunds should only be abolished if our trading partners do so.
  • Rural development measures, and decision making, should be flexible depending on the needs of the Member States. MS should decide on "priority measures" to achieve EU 2020 targets, which would be subject to a reduced national co-financing rate of 25%. National co-financing should be able to come from private as well as public sources.