23 January 1999

Minister calls for views…

THIS open letter (opposite) is winging its way to you from the agriculture minister, Nick Brown. It is your opportunity to comment on the way in which CAP reform should be implemented in the UK.

Be quick about it, though, if you want your views to be taken on board because pundits predict that the current proposals to reform the CAP, presented by Franz Fischler, the EC commissioner, in July 1997, are likely to be agreed, much as they stand, in March.

Announcing this initiative at the MAFF conference, Towards a new direction in Agriculture, Mr Brown said: "I believe that these reforms will offer real opportunities for the UK farming industry. We need to take advantage of those opportunities to build the foundations of a strong, competitive and sustainable industry better able to respond to future challenges.

"Some elements in the Agenda 2000 package are likely to be subject to discretionary implementation by other member states. I want everyone involved in the industry to have their chance to comment on the way in which CAP reform should be implemented in this country."

He said that the letter to over 250,000 farmers would be followed up with a series of regional meetings in the coming months to hear views from the whole industry.

But Michael Smith, correspondent with the Financial Times, predicted that in March ministers would strike a deal that was reasonably close to the current Agenda 2000 proposals. That is, price cuts near to 20% proposed by Mr Fischler.

Euro success

He said: "There is a real head of steam for an agricultural deal in spring," with ministers flushed with the success of introducing the euro, and, a change in attitude of the two major protestors of Agenda 2000 – Germany and France. A new German government appears to be willing to listen to proposals for reform, as does France. He added too that Italy now, appears to be giving the militant three – UK, Denmark, Sweden – much greater support on CAP reform.

Without CAP reforms, Mr Smith warned of even bigger food mountains than ever before by the year 2005. "The UK must have price cuts. Otherwise the EU will cut a shabby figure at the World Trade Talks."

All parties at the MAFF conference, including the NFU, are agreed that changes in the CAP are urgently needed to accommodate EU enlargement, liberalisation of world trade and growing surplus production. How long will support payments continue? Growers could expect Agenda 2000 payments to last for seven years, said Mr Smith.

However, the NFU has reservations on some of the proposals and called for a reformed CAP to:

&#8226 be simpler and less bureaucratic

&#8226 treat all producers equally whatever their size of operation and in whichever member state they farm

&#8226 be based on common financing

&#8226 avoid shifting problems from one sector to another

&#8226 incorporate the need to develop non-food uses of land

&#8226 allow a profitable, market-orientated future for as many British farmers as possible.

In the arable sector the NFU wants the commission to:

&#8226 bring an end to export taxes

&#8226 retain voluntary set-aside but end compulsory setaside

&#8226 release oilseed producers from specific production constraints

&#8226 continue aids for crops intended for non-food uses which often have important environmental benefits.

The NFU also calls for finance ministers to agree a sufficient budget to fund the proposed CAP reform over the next seven years, otherwise there is a strong risk that the reforms will be only partial.

MAFFs forecasts of the benefits and costs of Agenda 2000 reforms in 2006 compared with continuing the current policy are:

&#8226 A benefit to consumers from lower agricultural support prices of almost ecu12bn across the EU15. That is ecu1.7bn in the UK

&#8226 Increased costs to taxpayers, resulting from higher direct payments, of some ecu3bn (0.7bn in the UK)

&#8226 Losses to agricultural products of over ecu2bn (0.3 in the UK) reflecting the net effect of lower support prices and higher direct payments

&#8226 A reduction in total income from farming in the UK of 5%.

1. Cut in intervention price of 20%Might reduce market prices because intervention provides the market floor.

2. Increase in cereal compensation aid Compensation payments for half the fall in intervention prices.

3. One rate of compensation payment Cereals, oilseeds and set-aside will be set at one rate of payment about £270/ha (£109/acre). An additional payment may be added as transitional compensation for the euro.

4. Pulse aid Peas and beans are the exception to the flat rate aid payment. To encourage home-grown protein, a rate of about £298/ha (£121/acre) has been proposed.

5. Set-aside at zero Set-aside is still retained as a tool to influence the market, but set at zero for the time being

6. ModulationA ceiling on payments received to individual farm businesses which could be related to area, production or even labour unit.