Common Agricultural Policy

Earl Cathcart Excerpts

Thursday 18th November 2010 Lords Chamber

[Earl Cathcart]

My Lords, I declare that I farm a few hundred acres in Norfolk and therefore receive the single farm direct payment and environment grants.

My first point is that this is a common agricultural policy, but it is not common in the sense that all 27 states are not treated financially equally, as has already been said by the noble Lord, Lord Greaves. The EU 12—that is, the last 12 countries to join the EU—received only around 25 per cent of the subsidy on joining, with the amount increasing until they are fully phased in by 2013. Even then, the EU 12 states will still average out considerably below the EU 15 states. This has led to demands from the EU 12 for an EU-wide flat-rate payment from 2013 onwards. However, those original EU 15 states, which have been getting a larger slice of the cake, believe they should continue to do so. It will be interesting to see who wins.

The Common Market was set up originally to have a level playing field for trade. Here we have the largest single expenditure item of the EU so I cannot see how anything other than equal treatment for all member states can be the answer. However, the French farmers are excellent negotiators and they, no doubt, will argue that some states are more equal than others. We will have to see.

Secondly, this is primarily an agricultural policy. The most important thing that a farmer does is to grow food. As such, food production must be the top priority in any CAP reform. Having said that, alongside food production can come the environmental role, including development and climate change schemes. Britain and Europe must improve their self-sufficiency in food production and food security. With the explosion in the world population in our lifetime, there is an ever increasing need to produce more food. The top priority for CAP reform must be improved efficiency in food production.

My next point, or rather question, is: will Pillar 1 payments—the direct payments or the single farm payment, call it what you will—continue post-2013? I believe that they will as they are seen as a very important safety net for farmers by the vast majority of member states and their MEPs, who now, for the first time since the Lisbon treaty, have to vote to approve the CAP reform package post-2013. But not all member states take this view. It is interesting that President Sarkozy of France wants a return to support payments according to the volume of food produced rather than direct payments. If that happens, we may return to food mountains and wine lakes. The journal Agra Europe wrote:

“The President’s argument has little to do with maintaining the incomes of small, poverty-stricken peasants and all to do with maintaining the incomes of France’s large agribusiness industry… In income terms French agriculture is dominated, not by small peasant farmers of popular myth, but by large scale cereal, dairy and beef farmers”.

Perhaps Sarkozy has started the awkward phase of France’s negotiations already.

Last month the Commission’s draft document The CAP Towards 2020 was leaked, as has been mentioned by my noble friend Lord Greaves. There are two things in it that I find curious. In fact, there are lots of things but I will mention only two today. First, the document considered limiting support to active farmers. What is an active farmer? We need the Government to keep an eye on what the definition of “active” is. Am I an active farmer if I engage in contract or share farming arrangements with my neighbour? Although I supply the land and pay for the input costs, I do not actually sit on a tractor on a day-to-day basis. If this is the definition, it will catch out a great many British farmers. Or is “active” meant to exclude the owner of land that could be used for farming but who chooses another non-farming use?

The second thing that I found curious was the reference to payment ceilings. This presumably means that no one farmer can receive more than, say, €100,000. I know that my noble friend Lord Dykes and the noble Lord, Lord Wills, argued the other way, but the contra argument is that this is illogical as the larger the farm, the larger the successful food production, which is what we need, but also the larger the capital outlay, the larger the overheads, the larger the cost of production, and, all in all, the larger the risk, and, therefore, it would follow, the larger the payment. Farmers are not fools, and they will reconstruct their businesses to avoid this ceiling. For example, if a farmer now receives €300,000 from the single farm payment, rather than be capped at €100,000, he might divide his farm into three separate legal entities and businesses—one part he farms as a sole trader, the second in partnership with his wife, and the third in partnership with his children, thus ensuring that he continues to receive the ful1 €300,000 as before.

There are two things that have not received nearly enough prominence and which the Government should ensure are given a much higher profile post-2013. The first is forestry, which seems to be almost forgotten in the commissioners’ thinking altogether. Britain imports 90 per cent of our timber needs and there are vast forestry interests in mainland Europe. The CAP should support the planting of woodland and responsible forest management so that people are encouraged to enhance the environmental value of forests. Secondly, as has already been mentioned, not nearly enough attention is being paid to science, research and development, not just for food production but for horticulture. My noble friend Lady Trumpington asked a very good question, which was ably answered by my noble friend Lord Plumb: if Britain and Europe are to produce more and more food because we need to feed an ever increasing population, then we forget science, research and development at our peril. There should be a level playing field for member states financially; food production should be the priority for the CAP, post-2013; direct payments will remain, because most member states want them to; and let us not forget forestry and science.