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The newly decoupled CAP and English Land Management Allan Buckwell

CAP Reform and entrepreneurial opportunities in the enlarged EU 27 th – 28 th May 2004 Hilborough, Norfolk. The newly decoupled CAP and English Land Management Allan Buckwell CLA Chief Economist and Head of Research. The newly decoupled CAP and English Land Management.

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The newly decoupled CAP and English Land Management Allan Buckwell

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  1. CAP Reform and entrepreneurial opportunities in the enlarged EU27th – 28th May 2004Hilborough, Norfolk The newly decoupled CAP and English Land Management Allan Buckwell CLA Chief Economist and Head of Research

  2. The newly decoupled CAP and English Land Management • The evolution of the CAP, UK view. • Decoupling and the English SFP • Challenges and impacts of decoupling • The Second Pillar: Rural Development • The future of the two pillars of the CAP

  3. A few basic statistics

  4. Agriculture in the UK economy 2002p

  5. The evolution of the CAP, UK view. • Traditional 19th C approach was free trade. • After 2 WWs in 20th C, 1947 Ag Act – ‘produce that part of the nation’s food in our economic interest to produce’. • Price support by producer deficiency payments • Joined EEC in 1973 on third application. • Expansion of UK agriculture, raised self supply. • Non-farmers very critical of CAP: consumer, environmental and trade (3rd world) costs. • Very strong environmental movement

  6. UK position on EU and CAP • UK political parties cannot make-up their minds on Europe; both parties have reversed their positions • Opt-outs of social chapter and Euro, red lines on Constitution. • Governments pro-reform on CAP, pro trade liberalisation • Net contributor to budget, hence British Budget rebate (political weight much greater than economic) • Small use of structural funds; small beneficiary of Pillar 2 • Favour reductions in market support, moves away from supply management. • Supports shift Pillar 1 market support to Pillar 2 Rural Dev. • But wants a fairer, more objective sharing of Pillar 2 • Favoured enlargements, supports further enlargement – wider Europe of freely trading nation states.

  7. Decoupling and the English SFP • Support for decoupling in principle: for trade, market orientation and environmental reasons • Broad acceptance that farmers deliver multi-functional benefits • Acceptance of SFP as correct further move towards paying farmers for ‘looking after the countryside’ • Strong English debate on how to allocate the SFP • Decided for a hybrid scheme which gives the payments mostly on Historic basis in 2005, and Regional average payment by 2012. • Some strong landlord tenant issues given 1/3rd land is leased and also the prevalence of short term leasing arrangements.

  8. Controversial aspects of decoupling • National Reserve: to right injustices of the Reference period (2000-2002) • Treatment of new entrants • Entitlement trading, the concern • End of tenancy problem • Siphons on entitlement trading • The 10-month ‘land at the farmers’ disposal’ rule and short term contracts • Cross compliance conditions • Statutory Management Requirements • Good Agricultural and Environmental Conditions • Retention of 2002 permanent pasture

  9. The impacts of decoupling • Many expect production to fall • and therefore incomes to rise • Elimination of unprofitable production • Rise in prices (?) • Environmental benefits • Main EU support reclassified as Green Box (from blue) and therefore safe, Is it? • Justifications for the SFP? • Income support, and income stabilisation • Preserving farming where it would otherwise disappear • Delivering public environmental services • Compensation for higher enviro costs

  10. Pillar 2: Rural Development Policy • Rural Development Regulation (1257/99) • Co-financed • regionally defined • Menu-driven, programming approach • multi-annual • The measures available • Competitiveness: training, investments, e retirement and new entrants • Environment: LFAs, Agri-enviro, N2K • Wider rural development: diversification, quality of rural life • Plus LEADER

  11. Future development of the CAP? • Funds for Pillar 2? • Compulsory modulation 5% (2007) • Leaves balance Pillar 1:Pillar 2 at 80:20 • Financial perspectives 2007-2013 • Based on 1.24% of GNI (contested) • 1 Sustainable Growth • Lisbon: competitiveness & cohesion 47% • 2 Preservation and management of natural resources • Göteborg: sustainable development 39% • Agriculture markets and SFP 29% • Rural development and other 10%

  12. Concluding remarks • The CAP is a continually evolving, complex set of arrangements for rural policy • The drivers are: • The budget: amount and structure • External – trade – forces, especially WTO • Domestic pressures: massive detachment from food production; highly precautionary approach; food safety, environment and animal welfare. • Is Europe going forward or about to stall? • The new member states can have an important influence

  13. Allan Buckwell CLA Chief Economist and Head of Research Tel 020 7460 7937 Allan.buckwell@cla.org.uk www.cla.org.uk

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