11 January 1999
NFU stance on farm subsidy reform

By FWi staff

THE National Farmers Union (NFU) has outlined its position on the forthcoming reform of the Common Agricultural Policy (CAP).

The European Union (EU) proposals to reform the CAP are part of the unions Agenda 2000 plan to expand the EU to include central and eastern European countries.

The reforms are also necessary for the EU to meet World Trade Organisation obligations to reduce its subsidies and liberalise trade on world markets.

European agriculture ministers have to agree on the direction CAP reform will take before a deadline set for the end of March this year.

The full text of the NFU document is as follows:

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Agenda 2000/Reform of the CAP

An NFU Information Document

Embargoed until 00.01am Monday 11 January 1999

Public Affairs Department

January 1999

THE reform of the Common Agricultural Policy under the “Agenda 2000” proposals promises to be the most significant issue which the farming industry will address in 1999.

The outcome of the negotiations over these proposals will have far-reaching ramifications for farmers in the UK and across Europe well into the new millennium.

The NFU has always had reservations about many elements of the current CAP and has been at the forefront of calls for its reform.

Enlargement of the EU, liberalisation of world trade and growing surplus production mean that such changes are now urgently needed.

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THE WAY FORWARD UNDER AGENDA 2000

Proposals for reform under Agenda 2000 were put forward by the European Commission last year and are due to be agreed by the Council of Agriculture Ministers in the Spring.

The NFU has been pushing for EU agriculture to move away from reliance on price support, to deal with environmental and rural economy issues and to leave UK farmers better placed to compete on world markets.

We believe the reformed CAP should also:

  • Be simpler and less bureaucratic;

  • Treat all producers equally whatever their size of operation and in whichever member state they farm;

  • Be based on common financing;

  • Avoid shifting problems from one sector to another;

  • Incorporate the need to develop non-food uses of land;

  • Allow a profitable, market-orientated future for as many British farmers as possible.

The NFU believes the European Commissions proposals outlined in Agenda 2000 go a considerable way to meeting these goals.

In addition, the CAP itself should not be expected to deliver all aspects of this vision. Complementary national and EU policies will be required to build on the framework.

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A SECTOR BY SECTOR ANALYSIS

The Agenda 2000 proposals have different implications for different sectors of the industry.

In general terms, the NFU believes farmers should receive adequate compensation for any price cuts and also that an effective fall-back intervention system should be kept in place.

But the NFU has also put forward its views on what it wants from the proposals for sectors of the industry which are affected.

The arable sector

The NFU believes the Council of Agriculture Ministers should:

  • Bring an end to export taxes.
  • Retain voluntary set-aside but end compulsory set-aside.
  • Release oilseed producers from specific production constraints.
  • Continue aids for crops intended for non-food uses which often have important environmental benefits.

The beef sector

The NFU believes:

  • There should be support through a common, Europe-wide system which avoids the use of national envelopes* which threaten to cause distortions.
  • If national envelopes are unavoidable, it must be mandatory for governments to pay them in full.
  • There should be an enhancement of the suckler cow premium scheme.
  • There should be a suitable extensification premium.
  • There should be a simplification of the Beef Special Premium or its replacement by a slaughter premium.
*Under this proposal, the EU would allocate each member state an envelope of aid to distribute to its appropriate farmers according to it own priorities.

The milk sector

The NFU believes:

  • Quota increases should be justified by market demand and made pro rata across member states and producers.
  • There should be a clear signal over the future of the quota system beyond 2006.
  • The proposal for national envelopes should be rejected as the structure of milk production is uniform across the EU hence little justification exists for separate national envelopes.
  • Silage maize premium should be ended.

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OTHER KEY CONSIDERATIONS

  • CAP financing

    It is vitally important that Finance Ministers agree a sufficient budget to fund the proposed CAP reform over the next seven years otherwise there is a strong risk that there will be only a partial and inadequate reform of the CAP.

    This would not be in the interests of farmers or society as a whole because it will make it more difficult for Europe to negotiate in forthcoming trade talks and for EU enlargement to take place.

    There would also be a risk that member states will in future become responsible for funding part of the CAP themselves. This is likely to lead quickly to distortions in competition.

  • Cross-compliance

    The Commission proposes giving member states powers to introduce appropriate environmental conditions to direct payments – known as cross-compliance.

    The NFU is concerned that without uniformity across the EU, substantial market and competitive distortions could result.

    In the UK, any cross-compliance measures should be clear, practical and enforceable and not impose burdens on producers which go beyond those applied in other member states.

  • Labour unit modulation

    The NFU sees no case for the UK to adopt the labour unit modulation option as this would penalise producers who use labour efficiently and would damage the competitiveness of our farm industry.

  • Capping

    The NFU is opposed to capping whether through absolute ceilings on direct payments or scaling down rates of payment above certain levels.

    All farmers will see their returns reduced by the price cuts involved in CAP reform and will therefore require compensation.

  • Rural development

    The NFU welcomes the plan to introduce a strengthened rural development regulation as it will support farmers as they provide environmental services, improve their marketing and develop and diversify their businesses.

    Agri-environment schemes should be made more widely available where farmers are providing public benefits such as wildlife and countryside management.

    The Agenda 2000 proposals will have a damaging impact on farm incomes at a time when farmers are already suffering considerable financial stress.

    This means there is a very strong case for the introduction of an early retirement scheme.

    Afforestation aids should be available for coppicing as well as traditional woodland developments and should form part of a UK integrated strategy for energy production from bio-mass.

    The option to continue supporting beef and sheep production in the Less Favoured Areas must be taken up in the UK.

    The appropriate environmental condition would be compliance with good agricultural practice and the redistributive effects of moving from headage to area payments should be minimised.

    – ENDS –