The EU Commission has flagged up several issues to be addressed in the CAP. Initial proposals are due in the summer and may result in changes for the 2009 SPS year.
The Common Agricultural Policy (CAP) seems to be in a state of perpetual revolution – no sooner has one reform been agreed then the next is being prepared. Currently, there are three separate exercises in the pipeline, planned to change the face of the CAP. At the most basic level is the ‘Simplification Exercise’. This is a relatively minor tidying up of legislation – its main on-farm effect may be simplification of the cross-compliance rules. The other two parts are the CAP Health Check and the Budget Review.
In addition to these, the individual CAP regimes for wine, and fruit and vegetables, are also being reformed. With wine, it is unlikely to affect many in the UK as it concerns its production rather than consumption. However, with the latter, we may see the end of fruit, vegetable and potato authorisations for 2008. Also affecting agriculture are EU plans for binding targets for biofuels use.
The 2005 Fischler Reforms built in a number of reviews, and these are being pulled together with wider analysis of how the Single Payment Scheme (SPS) is working. The EU Commission is eager not to call it a ‘mid-term review’, as the last time that name was used the review turned into a full-scale reform of the CAP. The idea is to tinker with policy rather than radically change it. Initial proposals are due in the summer and may result in changes for the 2009 SPS year.
The Commission has flagged up several key issues for the agenda.
- It wants to reduce the level of intervention support for cereals. As part of the deal, this may see set-aside removed.
- With the end of quotas, there may be changes to the level of support in the milk market. They are guaranteed until 31 March 2015, which could be their final day of operation.
- Once again, the issue of capping aid payments is returning to the negotiating table. A limit of €300,000 has been proposed in previous reforms but never implemented. Such a ceiling might be politically attractive but the Commission is concerned that claimants will just avoid it (and that it will affect few businesses and save little money). Minimum payments may also be introduced, making the administration more simple.
- Compulsory EU modulation may be renegotiated. The Commission was disappointed about the low level of funds available for rural development in the budget settlement. Higher modulation would be a way of boosting funds. As the UK gets the majority of EU modulation funds back, high compulsory modulation should mean lower UK levels.
- In other parts of Europe, there may be pressure to reduce (or to start phasing out at least) the enterprise specific direct payments that have been retained.
- There may be discussion about moving other countries to the regional (flat-rate) system seen in England and Germany.
Big changes like the last point seem destined to be delayed until after 2012, as the EU Commissioner, Mariann Fischer- Boel, wants a period of "stability". These CAP discussions will feed into, and be influenced by, the Budget Review. This review would cover all EU policies, not just agriculture.
As part of the 2005 budget deal that set spending patterns for the period 2007-13, Tony Blair insisted that the entire EU spending be looked at again in 2008-09. The subtext to this is that the UK Government wants a big shift from pillar 1 CAP funding (still over a third of the total EU budget) to other areas. This would mean a drop in Single Payments. Indeed, the UK would like a commitment that by the end of the next budget period (2013-20), direct aid payments would be phased out altogether. This may be unrealistic, but there are certainly further changes ahead.
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