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The Scottish Government consultation on the "Future Implementation of the Common Agricultural Policy in Scotland" was published in June 2008. This consultation aimed to gather views on proposed reforms to, and the future of, the Common Agricultural Policy in Scotland. George Street Research was commissioned to analyse and report on views submitted by the 55 respondents to this consultation. This document outlines the main findings which emerged.
Main Findings
- Respondents were keen to see support targeted at hill and upland areas; this should be used to guard against the risk of land abandonment and the consequent environmental, economic and social impacts that can result.
- Respondents emphasised the need to ensure provision of public goods such as soil, water and habitat management. Measures to address climate change and halt the loss of biodiversity need to be maintained.
- Livestock numbers have been decreasing; respondents wanted any changes to include measures to guard against any further decline.
- Respondents felt that available funds should be targeted where most needed. Payments should be simple to understand and to access and reasons for payments should be justifiable.
- Respondents voiced concern that some businesses may not be viable without continued financial support.
- Respondents were keen that any changes made to the way the CAP is funded should ensure continued agricultural production and food security.
- Respondents felt that adequate notice of any changes needs to be given. Where appropriate, assistance in planning should be given to businesses in advance of proposed changes.
- Respondents identified the need for clear evidence to be used as a basis for any changes and for funding objectives to be clear and transparent.
Introduction
The Common Agriculture Policy ( CAP) is a system of agricultural programmes and subsidies which results in a single market across the European Union ( EU), with common rules and standards and without competition. At present there are 27 Member States in the EU and they decide on the support given to farmers. CAP payments cost over €50 billion per year which equates to around 40% of the total EU budget. Since its introduction it has been amended to take account of changing conditions and the entry of additional Member States. In May 2008 the EU published their proposals for the next round of reforms; the CAP Health Check. This Health Check will review the 2003 reforms as well as looking ahead to the future of the CAP.
As some of the proposals will have a significant impact on agriculture in Scotland, the Scottish Government launched a consultation on the "Future Implementation of the Common Agricultural Policy in Scotland" to gather the views of anyone involved or interested in this area. The consultation asked for views on the current proposals as well as further changes proposed from 2014 onwards.
A total of 55 responses were received and these were mainly from organisations. While there were few differences in opinions across sectors, answers were presented from different viewpoints and sometimes for different reasons.
Pillar 1 and Pillar 2
The view of the UK Government is that CAP reforms should aim to eliminate Pillar 1 payments such as Single Farm Payments ( SFP), along with other measures which will bring substantial cuts in the CAP budget. Funds would be moved to Pillar 2 measures, for example the Scotland Rural Development Programme ( SRDP).
The majority of respondents commenting on the future of Pillars 1 and 2 wanted to retain some form of direct payments, either through the current SFP system or by way of a revised version. The main concern expressed was over the viability of businesses if Pillar 1 support is withdrawn; with the consequent risk of land abandonment. Some respondents wanted to see a base level payment retained for the provision of public goods such as animal health, soil, water and habitat management, climate change and food security.
Respondents wanted to see businesses given adequate notice of any changes and for changes to be phased in gradually; changes should be based on evidence with funding based on clear objectives.
Pillar 2 measures, such as the Scotland Rural Development Programme, were seen as complex and overly competitive with hard to access payments, especially for small businesses.
Flat-rate Payments
The European Commission ( EC) has said that regional flat-rate payments provide more equitable support to farmers than the SFP. The variation in the quality of agricultural land in Scotland means that a simple flat-rate would be hard to justify. Differentiating payments according to land quality could help overcome this problem and the Macaulay Land Use Research Institute ( MLURI) land capability classifications for agriculture could be used as a starting point.
The majority of respondents agreed that there should be a move away from the historic model used to calculate Pillar 1 SFPs but did not think a simple, flat-rate system would be suitable. Respondents felt that payments should be linked to agricultural activity or potential, or subject to cross-compliance measures.
Respondents agreed that the MLURI land capability classifications could be used as a base or starting point for a model of payments differentiated according to land quality. They felt, however, that the suggested 3 regions would be insufficient due to the variation in land types across Scotland.
CAP Health Check Proposals
Respondents were asked a series of questions relating to specific proposals in the CAP Health Check. Responses show support for most of these proposals, although respondents had differing ideas on some of the detail.
Cross-compliance
The EC has proposed changes aimed at simplifying cross-compliance which include the withdrawal of some elements of Statutory Management Requirements ( SMRs). In addition, changes to Good Agricultural and Environmental Condition ( GAEC) are also proposed in order to retain the environmental benefits from set-aside and to address water management issues.
Respondents welcomed the proposals aimed at simplifying cross-compliance and the proposed changes to GAEC. There was some concern that the proposals might result in an added economic burden for land managers.
Set-aside
Proposals allow for set-aside entitlements to become, in effect, standard entitlements on hectares which meet eligibility requirements.
Over half of the respondents who commented agreed that set-aside is no longer necessary and should be removed. However, the environmental benefits of set-aside need to be retained and some respondents suggested that a small percentage of agricultural land should be managed for environmental purposes. Respondents mentioned the importance of ensuring that there is no negative effect on habitat and wildlife.
Decoupling
While Scotland fully decoupled support payments from production in 2003, other Member States retained a degree of coupling in some sectors. The Health Check proposals aim to continue the principle of decoupling.
While over half respondents replying to the question on decoupling were in favour of proposals for further decoupling of support; some wanted to see coupled support retained, at least in some areas. Support was seen as especially important to secure the future of the grazing sector, and the additional environmental benefits it provides. Some respondents also wanted to see direct support for hill and upland farmers.
National Reserve
The Health Check proposals aim to ensure access to SFPs (or any replacement) for new entrants to farming; this will be done under the National Reserve. Proposals also aim to simplify and increase the National Reserve's flexibility which can be used to increase unit value and/ or the number of entitlements which farmers are allocated.
Around half of those responding wanted to see new entrants having access to SFPs. Some respondents questioned the need to use the National Reserve if area-based payments are to be introduced; around a third mentioned the need to move away from SFPs or towards area-based payments.
Respondents wanted to ensure that support is given only to those actively involved in farming. In addition, a number of respondents wanted to see a clear definition of 'active farmer'. Some respondents felt that the definition of an eligible hectare should include some link to active production.
Many respondents commented on the proposal for increased flexibility in the National Reserve and half of those commenting included support for the proposals. The same number agreed with the proposal to make payments twice a year.
National Envelope
The 'National Envelope' concept originated as a means by which to effect full decoupling and, in Scotland, this has been used to fund the Scottish Beef Calf Scheme ( SBCS). The National Envelope concept is being developed further under Article 68 with measures that are designed to increase its flexibility in light of CAP reforms.
Proposals for increased flexibility in the National Envelope were supported by around a third of those respondents who commented.
There were a variety of concerns over the SBCS, which was seen as ineffective and inflexible. Respondents felt these limitations had contributed to a decline in livestock numbers, especially in hill and upland areas and commented on the need for support targeted at these areas.
Modulation
Modulation involves reducing spending on Pillar 1 measures and transferring the funds to Pillar 2 measures. Proposals in relation to modulation included increasing compulsory modulation and progressively higher rates for businesses benefiting from higher levels of SFP.
Over half of those commenting agreed with the proposal to increase compulsory modulation. Respondents acknowledged that proposals would act to harmonise rates across the EU.
However, over half also made negative comments regarding the proposals for progressive modulation. This measure was seen as discriminating against larger businesses and respondents felt it could result in larger businesses restructuring.
Environmental respondents in particular were concerned that progressive modulation might lead to a reduction in SRDP funding and felt it vital that the SRDP was not compromised by any changes to funding arrangements.
Minimum Thresholds
The EC has proposed simplification and a reduction of the cost of future payments with new minimum payment thresholds. Members States are to apply either the minimum payment amount of €250 or a minimum size of eligible area per holding (at least one hectare).
Two-thirds of respondents commenting on proposals for minimum thresholds supported the idea of some form of minimum threshold. Small numbers voiced support for specific proposals; similar numbers supported a minimum payment level of €250 and supported the proposed 1 hectare minimum size.
Comments from environment respondents did not specifically support or reject the proposals on a minimum threshold but focussed on the need to ensure that there is no negative impact on small producers; a third of those responding had similar concerns.
Mechanisms for Intervention
The EC proposes to introduce a variety of changes to the intervention systems used as market supply controls.
Around two-thirds of those choosing to comment on mechanisms for intervention in commodity markets agreed with the proposals; around a third wanted to see intervention options retained, at least in some areas.
Milk Quotas
The EC propose to introduce a 'soft landing' for the dairy sector via a gradual annual increase of milk quota leading to its eventual phasing-out.
Just over half of those who replied to the question on the future of milk quotas agreed with the proposals; the others commented on a variety of possible impacts from the proposal.
Small Support Schemes
The EC is proposing changes to some small support schemes which still receive payments related to production including the Protein Crop Premium ( PCP) and the Energy Crop Scheme ( ECS).
Proposed changes to the PCP and the ECS were supported by around a third of those responding to the question on small support schemes. A small number of respondents had concerns over the proposals for the PCP.
Conclusions
Main themes emerging across responses included the need for support for hill and upland areas, the need to halt the decline in livestock numbers and the need to guard against the risk of land abandonment. In addition respondents wanted to see environmental benefits safeguarded.
Any changes should aim to ensure both existing funds and any payments are directed to those areas where they are most needed; this should include continued support for those businesses which would not be viable without support. Changes should also aim to ensure production and food security.
This document, along with "Future Implementation of the Common Agricultural Policy in Scotland Analysis of Consultation Responses" the full research report of the project, and further information about social and policy research commissioned and published on behalf of the Scottish Government, can be viewed on the Internet at: http://www.scotland.gov.uk/socialresearch. If you have any further queries about social research, or would like further copies of this research findings summary document or the full research report, please contact us at socialresearch@scotland.gsi.gov.ukor on 0131-244 7560.
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