The EU’s Common Agricultural Policy (CAP) is the framework under which European farmers operate. It sets out a range of farming, environmental and rural development activities as well as controlling EU agricultural markets. It is the single largest common policy across the EU.

The European Commission published its CAP Regulatory proposals on 12 October 2011. The UK government believes that the Commission had identified the right challenges facing farming in the future, particularly the need to increase food production to feed a growing world population and at the same time reduce environmental impact, but their proposals fall short of meeting them.

Defra has published an informal consultation in the form of a discussion paper to seek stakeholder views and comments on how these proposals might affect them. As the proposals are being negotiated through the Agriculture Council, and simultaneously by the European Parliament, the findings of this exercise will help to inform the UK negotiating position. The Consultation will be open until 5 March 2012.  Should you wish to share your views, you can do so on the consultation web page.

Latest news

• 12 December 2011 - Discussion Paper on CAP Reform post 2013 – We are seeking views on how the proposals may impact those directly affected by the CAP. A news release has been published.
• 14 November 2011 – CAP plans don’t get to heart of challenges (Defra Press Release)
• 13 October 2011 – EU CAP reform proposals should go further (Defra Press Release)
• 12 October 2011 – the European Commission presented its proposals for reform of the CAP after 2013. The Commission said that they are designed to make the CAP a more effective policy for a more competitive and sustainable agriculture and vibrant rural areas. The proposals are accompanied by an impact assessment. Full details (Commission website)

CAP Reform – what happens next

Following the publication of the Commission’s legislative proposals on the future CAP, negotiations are underway in Agriculture Council and the European Parliament. Reforming the CAP to prepare farmers for future challenges and opportunities is an important UK priority. A future CAP must enable a thriving and sustainable agricultural sector that improves farm business and environmental performance and delivers good value for taxpayers and consumers.

Farmers need to make a genuine contribution to the objectives of the EU2020 Strategy. However, much of the current CAP hampers the achievement of these objectives and is not affordable. The UK therefore needs genuine and ambitious reform of the CAP. Competitiveness must be at the very heart of agricultural policy to ensure farmers can meet their full potential and prepare for a future without income support.

A future CAP must be affordable and significantly better at delivering important public benefits, including for the environment. Underpinning all of this is a need to simplify the future CAP and reduce the burden of regulation on farmers and authorities.

The EU budget is organised under seven year frameworks (‘Financial Perspectives’), the current one runs from 2007-2013. Reform of the CAP now means preparing a CAP for the Financial Perspective 2014-2020 (‘post 2013’). The CAP represents over 40% of EU budget expenditure and is the most expensive of EU policies, much of this expenditure represents poor value for money. We want to see agriculture becoming competitive without reliance on subsidies.

The Commission’s proposal is far above a genuine real freeze to the budget. Overall, it would result in an additional 100 billion euros (2011 prices) of spend across the MFF, costing the UK an extra 10 billion pounds / £1.4 bn per year compared to a real freeze from the 2011 actual budget. The Commission also proposes to shift additional 15 billion euros off budget – which demonstrates a lack of transparency.

Discussions in the EU have begun and Defra is working constructively with key UK stakeholders, the Devolved Administrations, other Member States, the European Commission and European Parliament to press for ambitious reform of the CAP.

The Commission is aiming for an ambitious timetable which would see implementation in 2014. Along with other Member States, we are continuing to engage with the Commission to ensure appropriate time is available for implementation.  In reality, any agreement on CAP has to follow the agreement on the Multi-annual Financial Framework, which is likely to delay implementation beyond 1 January 2014 and require transitional measures.

Further Information

• 29 June 2011 - The European Commission announced its proposals for the overall EU budget from 2014 – 2020 – including information on the shape and size of the future CAP budget – where they suggested a nominal freeze to the level of CAP spending. The negotiations on the overall budget will run alongside the CAP negotiations. Full details of the EU budget proposals (Commission website)
• 23 June 2011 - European Parliament adopted an own-initiative report in response to the Commission’s initial proposals on future CAP – drafted by German Christian Democrat MEP, Albert Dess.
• 28 January 2011 - UK Government responded to a European Commission consultation on the future of the Common Agricultural Policy (PDF 75 KB).

If you want to get in touch with the team about reforming the CAP, please contact cap.reform@defra.gsi.gov.uk

Background to the CAP

The CAP dates back to the early days of the European Community. It was designed to boost European food production in the face of post-war shortages and increase farm incomes. These short-term aims were achieved through market price support, but an enlarged EU and changing agricultural objectives mean the CAP has had to evolve.

CAP has undergone a number of major and minor reforms since its origins, the last one being the CAP Health Check, which concluded in 2008. Over the years, CAP has moved away from traditional subsidies of the past, like coupled payments and market price support, and moved towards the provision of public goods, particularly environmental ones, with the rural environment playing an increasing role. However, CAP still accounts for over 40% of the entire EU Budget, with over one third spent on Direct Payments alone.

Broadly speaking the CAP can be divided into 3 areas:

Direct payments to farmers (CAP Pillar 1)

Direct payments to farmers account for around three-quarters of the CAP Budget. They are a direct subsidy to farmers, currently allocated to EU Member States based on historic criteria. They replaced previous coupled payments and market measures that were phased out when levels of production became too high, although some coupled payments still remain.

More information on direct payments to farmers is available.

Market management measures (CAP Pillar 1)

The EU uses processes that control the market of agricultural goods in and out of the EU, such as export subsidies.

Rural Development (CAP Pillar 2)

Just under one-quarter of the CAP is spent on rural development measures under three broad categories:

• improving competitiveness
• improving the environment and countryside e.g. through agri-environment schemes
• improving quality of life and economic diversification for rural communities.

As farmers manage over 70% of EU land and are intricately linked to the environment, there is real public benefit in ensuring farmers manage EU land sustainably.

In England, there are already over 58,000 agri-environment scheme agreements in place, covering more than 62% of available farmland. These schemes ensure farmers deliver specific environmental benefits, such as?

More information on rural development under the CAP is available.