The defects of the Common Agricultural Policy are wearily familiar to us. It has kept consumer prices high and cost the taxpayer dear. It has damaged the environment by encouraging over-production of particular crops, the destruction of hedges, and inappropriate agricultural intensification. It has distorted world trade and harmed developing countries by undermining their ability to export. By supporting unfairly some sectors of agriculture and ignoring others, the CAP has distorted farming patterns and has ossified agriculture, making the recipients of subsidies across Europe reluctant to move into other sectors which would otherwise provide more attractive and viable commercial opportunities.
However, almost by stealth a number of changes to the policy – as well as a number of outside pressures on it – have combined in recent years to constitute a significant alteration to the way the policy operates and it is now possible to envisage a very different CAP for the long-term future. This progress has also vindicated the government’s policy of purposeful and constructive engagement in Europe and has shown how the difficult and painstaking task of building alliances in Europe for policy changes can bring real benefit.
Reformers have been able to take heart from the increasing pressure on the CAP arising from world trade negotiations; from the difficulty of simply extending the existing CAP to all the new countries who have just become EU members through EU enlargement; and from the emergence of a more pro-reform line from an increasing number of EU governments.
The agreement concluded in Luxembourg last June – where our own government played a key role – took the reform process further than many had dared hope. Much still needs to be done, however, and the European commission has now proposed reforms of the cotton, olive oil, tobacco and hops sectors. The future of the notorious EU sugar regime is also a priority.
What should a reformed CAP ideally look like? In my view a new and forward-looking agricultural policy for Europe should take as its starting point existing rural development regulation, referred to – in typical Euro-speak – as the ‘second pillar’ of the CAP. In essence, this is a way of providing financial assistance to agricultural and rural modernisation by, for example, encouraging and supporting environmentally friendly and commercially attractive options for farmers.
In Britain it has already been used to support a variety of measures: promoting the growing of energy crops, supporting on-farm diversification schemes, helping organic farming to get established, and assisting farmers to benefit from the marketing and commercialisation of their products.
The policy would need to operate under European-wide agreed rules. It could be financed in similar ways to existing structural and regional policies, which recognise the particular social and economic problems in particular areas. But by ending ongoing and automatic price and production subsidies, much of European agriculture would operate in normal market conditions.
Ironically, some of the countries that have always supported the traditional CAP such as France would, I believe, benefit from this alternative policy. France, with its many large and successful agricultural sectors, should thrive in such a changed atmosphere. Where there were problems of transition the rural development funds could support farmers to develop alternatives or even (since early retirement schemes are eligible for funding under the existing rural development regulations) to retire.
Seeing farming within the context of rural development would also highlight the contribution agriculture can make to wider rural and regional development strategies. Farmers would have a better chance of linking up with other businesses, in order to get closer to – and derive more benefit from – the market.
Changing the CAP into a forward-looking rural development policy makes sense not only for Britain and its nations and regions, but also for the EU as a whole. The government should be congratulated for managing to go further down this route than any of its predecessors and its efforts in building the necessary support with our EU partners should be backed by all of us.