Biggest stories of 2013: CAP reform
NewsTuesday 17 December 2013
Right, 2013 is coming to an end, so let’s take a look back at the biggest news stories in the farming industry this year. It really has been a busy 12 months and a number of stories have shaken the industry and the nation as a whole.
The horsemeat scandal was huge and made the front pages of all the papers, the badger cull was also big news, and today we are focussing on the disappointment that surrounded the European Union’s decision to reduce the long term budget for 2014-20, and also reduce the Common Agricultural Policy (CAP).
For other farming news, click here now.
CAP reform: At the beginning of the year
At the beginning of the year, the NFU highlighted the importance of the CAP to the UK’s farming industry. The union stated that its importance had been underlined by the government’s forecast at the start of 2013, which predicted a decline in the profitability of farming across the majority of its sectors.
Increased input costs combined with the impacts of the poor weather hit agricultural industries hard in 2012 and the income forecasted an even worse financial year for farmers in 2013. Speaking about the predictions, the NFU stated in January that the forecasts were a timely reminder that the Single Farm Payments Act was a lifeline for many farming businesses.
Plenty of figures were released in Defra’s report, which showed how difficult a year it would be for the farming industry across the UK.
NFU chief economist Phil Bicknell said: “The figures make sobering reading but will be no surprise for many in the industry. Wheat yield and quality were hit by the weather, while it’s been well documented that rising costs outstripped farmgate price changes for dairy and pork producers at times over the last year. More recently, we can add the plummeting lamb price to the list of challenges the industry faces.
“The weather caused chaos across the board and has laid bare the importance of CAP payments. With profits squeezed, a larger number of farmers will again be forced to rely on CAP’s direct payments to underpin their business in the year ahead.”
CAP was due to be discussed by the European Union
Come February, with the EU’s meeting to discuss the EU long-term budget going ahead, it was clear that the Common Agricultural Policy was going to be on the agenda. The meeting was scheduled to take place in Brussels, and in the lead up to the event the NFU and other farming bodies called for fairness ahead of the final decision.
The EU was set to discuss a number of policy concerns relating to the future of the CAP. In the build up to the discussion a meeting was arranged in Brussels, which was organised by European farmers’ organisation COPA-COGECA. Speaking at the meeting, Martin Haworth, the director of policy at the NFU, said: “We have said all along that it would be unrealistic for us to expect the CAP to be exempt from the austerity measures that are being applied throughout the European Union.
“What is key to us is that whatever settlement is finally reached, the terms and conditions applied to our farmers must not put us at a disadvantage with our major competitors.
“Specifically we expect our government to treat English and Welsh farmers equitably and to ensure that they can operate on a level playing field with our main competitors in the rest of Europe.
“We are deeply concerned that the UK government continues to negotiate to have the powers to move up to 20 per cent of the money at national level from the UK’s direct payments envelope into its rural development envelope. This would hit our farmers far harder than any cuts that are applied fairly and equally across all European farmers.”
The EU’s long term budget was cut and the CAP was reduced
At the meeting previously mentioned, EU members met up to decide on the EU’s long term budget and CAP, and for the first time in history, the budget was cut. This then led to the CAP being reduced going forward from 2014.
Again, the NFU responded to this decision. The union’s president, Peter Kendall, spoke out, saying: “The NFU has consistently stated that it would be unrealistic to expect the CAP could be exempt from cuts, when all public expenditure across Europe is under pressure. The important thing for us is to ensure that the UK is treated fairly and equitably.
“The Heads of Government have introduced some improvements in the Commission’s proposals as they affect agricultural spending. For example, they have agreed that ‘greening’ of the CAP will not require land to be taken out of production and that ‘capping’ of the payments to larger farmers will be voluntary at Member State level.”
The NFU also went on to say that it was important that neither the overall budget figures, nor the detailed points of the agreement, were unpicked by the European Parliament.
Mr Kendall continued: “A regrettable part of the budgetary deal is the confirmation that Member States or regions can move up to 15 per cent of their Pillar 1 (single farm payment) budget to Pillar 2 (rural development) without any obligation for national treasuries to matchfund; and all Member States can move 15 per cent and some up to 25 per cent in the other direction.
“For the NFU, there is no justification for Defra to move money from Pillar 1 to Pillar 2. The ‘greening’ of the first Pillar reduces the need for spending in Pillar 2. Furthermore, to reduce our farmers’ payments, which are already well below the EU average, and at a time when others may increase theirs, would be to compound an already unfair situation.
“In terms of greening, English farmers must be given a choice of measures and must not face higher conditions than others in Europe. Some will qualify for the greening payment through membership of environmental stewardship schemes; others must have the choice of complying with common European measures.”
What this means for farmers going forward
The CAP reform means that there will be limited flexibility to deviate from the EU-wide greening requirements that were laid down by the European Commission, under Defra’s plans.
Defra claimed that it intended to stick to the approach to greening that was outlined in the CAP direct payments regulation.
EU farmers will, under the new regime, have to comply with greening measures in order to be able to qualify for 30% of their new basic payment from 2015. There will be three basic measures which are crop diversification, the maintenance of permanent grassland and the need to establish Ecological Focus Areas (EFA) on 5% of arable land.
In response to this, the NFU then called for more flexibility within a National Certification Scheme, which it claimed could enable farmers to choose alternative measures to the crop diversification requirement, which the union stated would be an issue for many farmers.
Defra rejected this proposal, however, stating that the additional potential benefits were likely to be outweighed by the additional delivery risks and complexity for both farmers and enforcement agencies. There was no flexibility to move away from any one of the three greening elements, according to Defra, even within a Certification Scheme. It also feared a certification scheme could bring an increased risk of disallowance and stressed the need to implement greening in a way that is ‘achievable and manageable’.
For the full list of specifications that farmers will have to achieve, and for more information on the CAP reform’s impact on the UK farming industry, click here.