Common Agricultural Policy

Lord German Excerpts

Thursday 18th November 2010 Lords Chamber

[Lord German]

My Lords, I congratulate my noble friend Lord Greaves on the timeliness of this debate. There cannot be many people who can co-ordinate a major announcement by the European Commission and a debate in Parliament on the same day and almost to the same hour.

My understanding of the agricultural community in Wales leads me to counterbalance some of the comments made by the noble Lord, Lord Wills, about the current nature of agricultural payments. I refer also to the comments of the noble Lord, Lord Gardiner, about the need for payments to be a central part of the future CAP for farmers because of our interest in food security. By way of illustration, in 2008-09 almost 90 per cent of average farm income in Wales was provided through the single farm payment—the reason being, of course, that we have a large number of hill farms and less-favoured areas, and the average age of farmers is increasing, with their sons and daughters saying that it is not worth farming and the consequent danger of land abandonment. In addition, there is the burgeoning of other industries in a rural economy to match the changes that are occurring in our rural environment. Looking across the European Union, it is interesting to note that the share of subsidies in total agricultural income, in both old and new member states, is between 30 and 40 per cent, whereas in regions and countries with an extensive livestock sector, it is close to 100 per cent. Therefore, we must be capable of having a policy that distinguishes between need and future food security.

As we have heard today, the central arguments on the future of the common agricultural policy are coming nearer to a conclusion. We have heard from the Government of a future decision on the overall European budget, and the Commission is currently putting forward proposals on the overall architecture of the future programme. However, what will remain unclear for some time yet is the size of the slice of the cake that the common agricultural policy will have within the overall budget. Although it might be tempting to dwell on that, it is likely that it will not become clear until the ink is finally dry on the overall budget. It is worth noting, as other noble Lords have mentioned, that the gradual reduction in the size of the CAP’s slice of the budget is expected to continue. That is certainly the view of officials in the Commission.

It would be interesting to dwell on those issues, but I should like to spend a few moments developing the arguments about the architecture of a future common agricultural policy. We know that this will be a much more complicated exercise than in past spending rounds because the final decisions will be made by co-decision between the Council of Ministers and the European Parliament. That will be a complicated political process—perhaps one of the most testing and demanding of the co-decision-making processes that we have seen in the current round. Different national and regional policy interests will need reconciliation. Of course, it is only by being at the heart of the debate that the UK Government can exert their influence. I should be interested to hear from the Minister what level of discussion is currently taking place between the UK Government and the European Parliament on trying to find common ground.

The current debate centres around the policy’s core aims and objectives but there are reformers in this debate who would like to see further objectives in addition to the original ones, such as the provision of environmental security, so ably discussed earlier by my noble friend Lady Miller, with a move to a land management policy focused on the delivery of social and environmental goods.

It seems that there is no inherent conflict between the original and the proposed objectives. Food security and environmental security go hand in hand—they are dependent on each other in many ways. By contributing towards both, farmers can both increase and diversify their income, particularly in areas considered to be less favoured. The common agricultural policy is one of the main mechanisms for providing strong incentives for good environmental behaviour. Therefore, the current debate provides an important opportunity to deliver on many of the social and environmental goals that the United Kingdom and Europe share.

Placing those two goals into separate funding pillars, therefore, seems to be an artificial division. Surely it is possible for agri-environmental and less-favoured schemes to sit alongside the single payment scheme, perhaps with a new enlarged Pillar 1. I understand the complications and difficulties involved in that, especially in relation to matched funding, but those are technical arguments. We should concentrate our arguments mainly on the objectives and policies that we want to see, and the architecture should be led by the policies which seem to work and which would make those objectives much more favourable.

The issue of modulation tends to become the argument by moving between Pillar 1 and Pillar 2, rather than the overarching use of the resources available. Concentrating too much on the structure results in an artificial and unhelpful distinction between agricultural support and rural and environmental development. In fact, it can lead to polarised opinion and an unfortunate skewing of the debate. Perhaps an extended Pillar 1 would lead to a clearer Pillar 2.

In conclusion, the Government and the European Commission need to do far more to promote the purpose and benefits of the CAP. It undoubtedly has a bad name, typified by the commonly heard statement that it is simply about subsidies for farmers. However, there are powerful arguments in its favour, not least of which is food security in a world where shortages are anticipated. However, it is also a system that has given us strong local and regional diversity, developing small producers and primarily ensuring high-quality produce. I would welcome such support from the Minister for promoting the CAP in his reply to the debate. After all, the CAP is not just for farmers; it is for our citizens as a whole.