UK divided on CAP systems

Published on Wednesday 7 January 2004 00:00

IT SEEMS increasingly likely that Scotland and England will each implement Europe’s new-look Common Agricultural Policy in different ways from January next year.

Scotland is still odds-on to use a historic average to fix future single annual payments for farmers, but Lord Whitty, Minister for Food and Farming, gave a clear hint yesterday that England will adopt a more complicated system.

The crucial part of the biggest shake-up in the CAP’s much-criticised 50-year history is not in doubt: all member states agreed last June to decouple farm subsidies from production by introducing a single annual payment giving "freedom to farm" as long a farmers stuck to environmental and husbandry rules.

The question is how this single farm payment is decided. Decoupling is the real prize, Lord Whitty told the first day of the Oxford Farming Conference. But the UK government has still to decide its approach.

Originally it seemed likely that the historic basis would be used, the average of a farmer’s total subsidies for 2000-02. That is still what NFU Scotland wants, as it said in its response to the executive’s CAP reform consultation which ended yesterday.

It is also understood that is what the Executive will probably opt for after studying the more than 200 responses it has received, because CAP implementation is a devolved issue.

But Lord Whitty said that, as government tries to reach a decision for England - the Department of Environment Food and Rural Affairs will put a proposal to a Cabinet committee and hope for a decision before April - the historic average has disadvantages.

It would, he said, create "huge anomalies" over time, particularly as entitlements to single annual payments were traded between farmers.

"The historic average is not sustainable over the long term. It could also be said that it will not be politically justifiable to keep paying a farmer for what he did ten years ago," he said.

He suggested that a single annual payment based on a historic average would also create problems for future governments, while a flat rate system, based on total payments for the region and simply divided by the number of hectares in that region, was a non-starter.

He indicated that a number of hybrid solutions are now being considered by Defra. They might last and avoid major anomalies in payments to farmers, but they will be complicated and unlikely to reduce the red tape - seen as one of the main reasons for change.

There will be some anomalies no matter what system is finally agreed, said Lord Whitty. But there will be fewer using the hybrid system and the total amount of support going into UK farming will be the same,

The new CAP, he says, does not have maximum production as its driving force. It will be more about delivering regional and social policy and more environmentally sensitive. The public paying for it has a right to expect that, he said.

A spokesman for NFU Scotland said that after the problems experienced with "winner and losers" under changes to the less favoured area support scheme in Scotland in the past few years, most farmers were in favour of simpler, historic average payments.

Professor Stefan Tangerman, director for food and agriculture with the OECD, told the conference that decoupling was an essential move for the European Union because direct subsidies for production do not work.

They are, he said, unnecessary; unfair - because the bulk of payments goes to the largest, usually the richest, farmers - and inefficient, because when 1 is transferred to a producer as price support, their income only increases by 25 cents.

That did not mean there was no need for agricultural policies in the EU - soon to be enlarged to 25 member states - or throughout the world, because agriculture had other roles as well as producing food. But support should be more specifically targeted to areas such as the environment and conservation.