Cap Reform Measures

I announced in February that Wales would adopt the historic model for the Single Farm Payment. There are now a number of other major issues relating to reform of the Common Agricultural Policy on which I can announce the Welsh Assembly Government’s preferred way forward.

I believe that this package of decisions makes clear the Government’s commitment to environmental enhancement and the principle of matching payments to the public benefits being delivered by farmers.

Firstly, public consultation in 2003 showed strong support for an entry-level agri-environment scheme that would provide wider opportunities for farmers in Wales to undertake positive agri-environment action on their farm. After careful consideration I have decided to introduce an entry-level scheme. The scheme, which will be known as Tir Cynnal, will require participants to follow a set of environmental conditions on their land designed to protect wildlife habitats, traditional landscapes, ancient monuments and historic features as well as reducing pollution and maintaining public rights of way.

My intention is to launch the scheme across Wales in spring 2005. In preparation for this, my officials will work with farmers in two areas of Wales to test the fine details of the scheme.  

The target is to bring 60% of the agricultural land in Wales that is not already in an agri-environment scheme into Tir Cynnal within the first two-to-three years of scheme operation. This amounts to around 10,000 – 12,000 farms. Whilst the environmental conditions relate to the whole farm, the payment mechanism proposed for the scheme limits funding to 100 hectares. This approach would focus the money on small to medium sized farms i.e. the traditional family farm that is the cornerstone of Welsh agriculture.

Tir Cynnal is expected to cost £20m a year once it is fully up and running and it will be funded 50% from additional resources provided by the Treasury and 50% through modulation (or top-slicing) of CAP payments to farmers.

I am extremely pleased to have been able to secure this support from the Treasury which is in addition to the Assembly’s core budget. The Welsh Assembly Government strongly endorses the underlying principle of CAP reform which is the movement of support from traditional production subsidies to rural development measures including protection of the environment. I believe this is also a very good deal for farming families. By joining Tir Cynnal they will be able to expand the work they are already doing to conserve the environment and receive payment for doing so.

The EU will introduce compulsory modulation of CAP payments to farmers in 2005. Transitional regulations will also allow additional modulation above these rates to fund support for the environment. It is estimated that if take-up of Tir Cynnal reaches predicted targets, Wales will need to modulate at around 10% by 2006.

The regulations, which are currently being finalised by the Commission, will allow different rates of modulation to be applied by the four administrations within the UK. The final decision on modulation rates in Wales will be dependent on these regulations being introduced as expected as well as the rate of take-up of the scheme.

As part of the CAP reform package, there is discretion to establish a national envelope to address potential environmental aspects of the new Single Farm Payment regime or to help marketing or enterprise initiatives. The envelope would be funded by deducting up to 10% from the SFP made to farmers.

I have decided not to proceed with the National Envelope for Wales in the light of the additional modulation which will be needed to support the entry level scheme. Following consultation, there is little support within the farming community for the concept of the envelope.  Tir Cynnal will provide the opportunity for a broader base of farmers in Wales to participate in delivering public environmental benefits. The use of an envelope would have a narrower access base and would pose additional administrative burdens at farm level inconsistent with the simplification of farm payments that is at the heart of the CAP reform process. I have taken into account also the views that were submitted to the consultative proposals issued on how an envelope might operate in Wales.

Consultation by the Welsh Assembly Government on proposals for the new CAP cross compliance regime and the use of a national reserve also ended on 2 June. I expect to be able to announce details on the operational aspects of cross compliance and the national reserve in late summer.