Brussels sprouts too many rules

Published on Monday 3 September 2007 00:04

IT NOW appears all but certain that Gordon Brown is not going to permit the British electorate a referendum on the revised EU constitution, despite that pledge being prominent in his party's election manifesto.

I have mixed views on this topic, tending to believe that politicians are elected to govern and should then get on with it. If the electorate don't like a particular administration, then they can get rid it at the next general election. However, of one thing I am absolutely sure- the folly of the Common Agricultural Policy (CAP) cannot be allowed to continue indefinitely.

There have been various attempts to initiate reforms over the last 20 years, first by Ray MacSharry and then more recently by Franz Fischler. The intentions may have been genuine, but the end result was less than satisfactory with the CAP now costing in the region of 30 billion each year. The CAP is rather akin to Hydra, the mythical Greek monster with nine heads. Cut one off, and it is replaced with two. That is how successive reforms of the CAP have turned out in practice.

When the latest reforms were agreed in 2003, the industry was promised a much simpler regime with a greatly reduced level of paperwork and bureaucracy. Quite the reverse has happened and the new single farm payment, which replaced around a dozen of the previous support measures, is far from simple. Worse still, it has become an asset which can be traded in much the same fashion as dairy farmers buy and sell milk quota.

One of the declared aims of CAP reform was to cut excess production, especially of dairy products, and put an end to intervention. Well, there is no excess production in the EU, indeed quite the reverse. I wonder if the general public who ultimately foot the bill have any idea that farmers can still receive their single farm payment for producing virtually nothing. That, to my mind, is nothing short of scandalous.

Then there is the cost of administrating the CAP. Brussels is teeming with highly paid civil, and sometimes decidedly uncivil, servants whose sole task in life appears to be creating more jobs for their class and making life as difficult as possible for farmers and tillers of the land. The latest nonsense, certainly from the Scottish perspective, is the individual identification of every sheep in the land. Until the beginning of July, the UK had a derogation which allowed identification to be conducted on a batch basis. It worked perfectly well, but Brussels is having no more of it. I suspect that many farmers and crofters with relatively small flocks will decide to get rid of their sheep rather than endure the hassle that comes with a new system.

The nitrates directive is another vexed issue, with vast tracks of farmland now classified as nitrate vulnerable zones. Farmers will be restricted both in terms of the quantity and timing regarding the spreading of slurry and fertilisers. Building extra storage for slurry will cost millions of pounds. And yet the science on which all of this based is dubious, to say the very least, with nitrate levels lower now in most rivers. Proportionate legislation and regulation is all that is required, and most farmers will accept that.

But what do we do with the CAP? Clearly, it cannot be discarded overnight and there is no political will to proceed down such a drastic route. I suspect that agriculture in the EU will continue to be supported because the bottom line is that European farmers can never hope to compete with low-cost systems operated in countries where labour is obscenely cheap and standards of production lag way behind what consumers here demand.

My own view is that the EU must get back to a regime where support is directly linked to production, but with limits. Before the UK signed up to the European Economic Community, the industry was supported by what were known as deficiency payments. Early each year the leaders of the various farming organisations would meet in London with the minister of agriculture and fix a basic guaranteed price for the various commodities. In the course of the year, if prices fell below this level, the difference was made up by a deficiency payment within a budget. It was simple and it worked. It also provided the nation with relatively cheap food, but Brussels would have none of it.

Sure, the UK farming industry prospered for a few years following accession to the EEC, but the downside was that mountains of butter, beef and grain appeared. Most of that produce was eventually sold off at knock-down prices, or simply given away. But the world is now a different place and food is becoming increasingly scarce. The near doubling of grain prices in less than 12 months is testament to that. Livestock farmers are seriously feeling the pinch and a sizeable number may well be inclined to cut back on production. Food prices will have to rise if farmers are to remain in business and it is totally unacceptable for the British Retail Consortium to state, as it did last week, that the solution is for producers to become more efficient. The vast majority have no further leeway on this front.

The situation with milk is the classic example of how supply and demand can drive the market. Suddenly the realisation dawned that the ex-farm price would have to increase to maintain supplies. Robert Wiseman Dairies is now paying its suppliers an astonishing 37 per cent more than in February.

Precisely the same pattern will follow with other commodities, unless producers are rewarded. Farmers do not go on strike, but they can stop producing. The CAP must be reformed to align it with the changing circumstances of Europe. There will be no need for a referendum on that point.