The Agriculture and Rural Development Committee (AGRI)

November 2007

Caps within the CAP

Agricultural Commissioner Mariann Fischer Boel has released her CAP health-check – it is not a new reform, and not just a fine-tuning, but something in between which can build upon the alleged "good foundation" that is the EU's £35bn policy. It must be stressed that this was just an initial communication between the agricultural commissioner and the AGRI committee in parliament, and some of her suggestions may not see the light of day. Nevertheless, what she did say gives a fairly good idea of what the future holds for British farmers.

Out of all her proposed ideas, a few stand out, such as the proposed cap on direct payments to farmers. Farms receiving above 100,000 euros (£71,781) would have payments cut by 10 %, above 200,000 euros (£143,544) by 25% and over 300,000 euros (£215,316) by 45 %. It is estimated that around 6,000 British farms will be affected by the capping, collectively receiving around £56 million less, and this money will be redistributed to Britain's Rural Development fund.

The Commissioner was, however, quick to point out that the complexity of the Single Farm Payment "mechanism" was likely to stall the progress of this idea. I believe that it is an unnecessary proposal which will only encourage big landowners to split up their farms in order to evade restrictions. Fischer Boel did make a sensible, albeit long overdue, suggestion to raise the amount of land a farmer has to own before he qualifies for EU support (currently 0.3 hectares). DEFRA's incapability to deliver Single Farm Payments on time was, after all, largely due to ridiculously small claims (some under £1) clogging up the system.

Just like set-aside, milk quotas face extinction, though not until 2015. Up until this point, there could be a gradual rise in milk quotas in order to give the dairy sector "a soft landing", if there is such a thing when faced with the realities of European policy. At three years old, the annual energy aid payment of 45 euros per hectare is also in line for the chop, as the Commissioner is convinced that the biofuel market is already stimulated by the fixing of the compulsory 10% target. In light of food shortages this year, Fischer Boel is looking to push harder on second-generation biofuels such as biomass, so that crops are feeding mouths, rather than engines.

Initial reaction from the Conservative delegation is that the Commissioner did not go far enough with her proposals. In particular, I would like to see firmer proposals on compulsory rather than voluntary modulation which would ensure that British farmers are on an equal footing with their European counterparts. The suggestion of capping threatens to overshadow these important issues and, as is the case with most health-checks, certain problems may arise which had never been an issue before the visit to the doctor.