Oral - EU Common Agriculture Policy: 2008 Health Check

On 20 November, the European Commission published proposals on change to the CAP Single Payment regime as part of the commitment to review the impact of the CAP reform package agreed in 2003 and subsequent reforms. These proposals are more commonly referred to as the CAP 2008 health check.

At the outset, I should make clear that the Commission’s proposals are part of its consultative process on potential options for change in the current operation of the CAP. The health check is not expected to amount to major reform.   I would advise Members also that the health check is not concerned with the budgetary aspects of the CAP.

The Commission presented the CAP health check proposals to the Agriculture and Fisheries Council on 26 November. I attended Council as part of the UK Ministerial team, a process that also involved agreeing to the negotiating line that the UK provided in the ensuing political and initial responses provided by the Member States.  The UK position was to offer a broad welcome to the direction of change indicated by the Commission.

In terms of the timetable, the Commission is entering into a consultative stage to inform the preparation of draft EU legislation that is expected to be published in May 2008. The legislative proposals will then undergo detailed scrutiny at an EU level with the intention of political agreement reached by the end of 2008.

At the Wales level, it is my intention to issue a consultation paper next month to seek views from the farming and broader countryside interests on the Commission’s proposals. I will also be interested to hear the views of Assembly Members. The consultation responses will offer a contribution to informing Welsh Assembly Government`s position in influencing the stance that the UK should adopt as we move forward next year to the end-game negotiations on the health check package.

I can make the commitment that as Minister I will remain fully engaged at the London and EU levels to ensure that the needs of Wales and Welsh farming are not disadvantaged when the final outcome to the CAP health check is reached.

Turning to the Commission’s proposals, there is a clear message that payments to farmers should be fully decoupled from production, a position we achieved in Wales through introduction of the Single Payment Scheme in 2005. That is not the case across all of EU 27. Thus, I have no difficulty in principle in supporting the direction that the Commission would want to take.  

On the other hand,  the Commission is offering the possibility that those Member States , or in the case of the UK regions within them such as Wales, that currently operate the Single Payment Scheme on the historic model, to move to an area based or “flatter rate” model from 2009. Members will recall that under the 2003 CAP reform package, the basis for the Single payment model introduced from 2005 in Wales was intended to remain in place until 2013.

As to the option now presented by the Commission, I am not entirely persuaded that this is a move we should make for Wales at the current time but I would not want to take a final position until I have considered views form within Wales received in response to the consultation to which I have referred.  

A further key element identified by the Commission is to increase the rate of compulsory modulation by 2 per cent per year from 2010 that would result in a rate of 13 per cent by 2013, compared to a current rate of 5per cent. The receipts generated would be used to strengthen spending under the Rural Development Plan.

On compulsory modulation, the Commission is silent on the read acr5oss to national modulation that only applies to the UK and Portugal. Clearly this is an area that all administrations in the UK will be pursuing as I believe it will be important for Wales to retain the flexibility provided by the existing modulation regime.

As to other issues, the Commission is proposing further reductions in market intervention measures including export subsidies, easing the administrative burden on farmers through simplification of the CAP cross compliance regime and the abolition of milk quotas in 2015.  The Commission has yet to provide the detail on the extent of change in these areas.

The Commission also presents the possibility of imposing limits on individual CAP payments to farmers. The Commission proposes that any savings would stay within the Member State or region concerned. There has been considerable press and media interest in this proposal. The UK position is to oppose such a cap on payments. I will be interested to hear views in Wales although on a Wales only basis it will generate possibly a relatively small amount of recycled finding available for other schemes.

It will be my intention to keep Members informed on developments as the Commission moves forward from consultation to publishing draft legislation, and on the key steps at the EU level as the detailed negotiation proceeds to reach a final position at the end of 2008.