12 July 2002

Biggest shake-up of CAP

history in the pipeline…

By Philip Clarke

Europe editor

THE most radical shake-up in the way farmers receive their subsidies since the common agricultural policy came into being is on the cards, following publication of the EUs mid-term review of Agenda 2000.

Presented by farm commissioner, Franz Fischler, to the European Parliaments agriculture committee on Wednesday, (July 10), the report calls for a further market orientation of the CAP, with more money channelled into rural development.

In line with previous leaks, Dr Fischler wants future subsidies to be entirely de-coupled from production, aid cheques to be "modulated" by up to 20% a year and larger farmers to be "capped" on the amount they can receive from Brussels. (Business, page 20)

"Restoring the credibility of CAP will require a wholesale makeover," he said. "A support regime characterised by incentives for farmers to use the most intensive methods possible while smothered in red tape…risks losing the support of taxpayers.

"In future, farmers will receive direct support without having to produce cereals or beef. Of course, in return they will be expected to provide, to satisfactory standards, the public goods demanded by society."

According to the commissions report, "the imbalance between direct payments and rural development is of particular concern." "Creating alternative income and employment opportunities on and off farm remain major aims for the future as employment possibilities in agriculture itself fall away."

As such, the commission plans to redirect modulated funds and the money saved by capping back into rural development.

Initial reaction to the commissions paper has been mixed.

The NFU says it is not against the principle of de-coupled support for farmers. "It would be much simpler to organise, would free up farmers in their management decisions, would be advantageous in the WTO negotiations and would make enlargement easier," said policy director, Martin Haworth.

Basing the payment on past receipts per farm would also avoid creating winners and losers, end livestock quotas and eligible arable land would de-restrict the industry.

The NFU also accepts the ideas of cross compliance, so long as they do not go beyond what is recognised as "good farming practice".

But it has major reservations about modulation, which is planned at 3% a year, climbing to 20% by 2010. "We accept that moving more money from pillar one supports to pillar two is the way the EU is going," said Mr Haworth. "But we have real fears that much money will be lost to UK agriculture."

uld make it worse."

The NFU also opposes capping which, it estimates, could cost larger farmers over £60m in lost payments.