The Common Agricultural Policy
Agriculture is one of the key common policies of the European Union. The Common Agricultural Policy (CAP) was founded in 1962 with the aim of securing Europe’s food supplies, increasing agricultural productivity and ensuring cheap food for consumers (based on a system of price supports) – and in this it has been wildly successful.
So successful that by the 1980s it attracted justified criticism for stimulating overproduction (creating the infamous “butter mountains” and “wine lakes”) and distorting global trade through dumping of surplus produce on developing markets.
As a result, the CAP has been comprehensively reformed, with protecting the environment becoming a central objective, largely through Rural Development payments (about 20% of CAP funding). Furthermore 30% of direct support payments to farmers are now conditional on them carrying out environmental practices.
The CAP is the largest item in the EU budget, making up almost 40% of the EU’s €140 billion budget in 2015[1]. This funds farmers across the EU, thereby producing the food we eat, stewarding our land and environment, as well as maintaining economic activity in our rural and peripheral areas.
At €55 billion a year, the CAP represents about €2 per week for every EU citizen which, given that the budget covers securing food supplies, supporting farm cooperatives and producer organisations, environmental land management, subsidies for remote and vulnerable areas, agricultural research, forestry measures, rural business development and more, represents not such a bad deal for us.
Scottish farmers received around €580 million a year in direct subsidies from the CAP before we left the EU. Scotland received almost €500 million in 2014-2020 in Rural Development funds from the CAP.[2] Scottish farmers needed these subsidies due to the challenges of farming in Scotland: 59% of Scottish agricultural land is classified as “rough grazing”, meaning it is only suitable for extensive livestock such as beef and sheep, and nothing else, compared to just 9% in England.[3] Our hill farmers have few opportunities to diversify or earn rewards from the markets and, in some cases, these subsidies represent over double their farm business income.[4]
Governments in recent years and of all political colours have declared their indifference or outright opposition to CAP payments and their desire to reduce or scrap them.[5] This may work for profitable arable farms in rich soil in East Anglia, but it won’t work for Scotland.
We have already seen a practical example of this indifference: the UK Government refused to pass on to Scotland a €230 million payment from the EU earned due to Scotland’s low level of CAP payments.[6] Cuts to farm subsidies from the UK Government would have a knock-on effect not just on farmers but on ancillary rural economic activities dependent on farming, such as slaughterhouses and machinery supply.
Not only is EU funding critical but EU citizens also play an essential role. As the British Veterinary Association has emphasised, figures from the Veterinary Public Health Association (VPHA) estimate that over 90 per cent of vets in meat hygiene services are non-UK EU citizens.[7] Put simply, EU membership is absolutely critical for Scottish farming’s financial wellbeing.
The “Norway solution” is no panacea for reducing regulation: in order to gain access to the single market, considered vital for their farmers, Norway must implement, without a democratic voice in its construction, the vast majority of single market rules, such as on pesticides, sheep identification, and the Nitrates Directive.[10]
The SNP was active in promoting reform: in our view the Commission has been too reluctant to act to regulate the major supermarkets, unfair trading practices and abuses of bargaining power in the supply chain. We also campaigned against CAP subsidies which indirectly support bullfighting, against the electronic identification of sheep, and we could be doing better in enforcing common animal welfare laws. But the only way to fix what’s wrong with EU agricultural policy is to have a seat at the table and negotiate change with our partners: so many of these issues cross borders and require common solutions.
[1] EU Annual Budget life cycle figures, EU Commission.
[2] ‘CAP Budget Facts’, The Scottish Government, 2014.
[3] ‘Economic Report on Scottish Agriculture’, The Scottish Government, 2015.
[4] ‘Agriculture Facts and Figures’, The Scottish Government and Office of National Statistics, 2015.
[5] Examples: ‘Environment Secretary Caroline Spelman’s speech at the Oxford Farming Conference’ The UK Government, 2011; ‘HM Treasury European Union Finances’, The UK Government, 2012.
[8] Further details from ‘CAP Budget Facts’, The Scottish Government, 2014.