Select Committee on European Scrutiny Third Report


GREENING OF THE COMMON AGRICULTURAL POLICY (CAP)


(21855)
13491/00

Special Report No. 14/2000 of the Court of Auditors on Greening the CAP.


Legal base:
Document originated: 13 September 2000
Forwarded to the Council: 13 November 2000
Deposited in Parliament: 1 December 2000
Department: Agriculture, Fisheries and Food
Basis of consideration: EM of 12 December 2000
Previous Committee Report: None
To be discussed in Council: Early in 2001
Committee's assessment: Politically important
Committee's decision: Cleared

Background

  12.1  Over the years, there have been concerns that the intensification of agricultural production has led to environmental problems, which have been exacerbated by the high level of support provided under the Common Agricultural Policy (CAP). In particular, the Community's fifth environmental action programme ("Towards Sustainability") identified agriculture as one of the five sectors where it was considered that policies previously designed to promote economic development needed to include an environmental dimension. At the same time as this was being agreed, the Community was also implementing its 1992 reform of the CAP, which included two major changes of environmental significance — the lowering of price support under several of the regimes for arable crops and livestock, and the introduction of so-called environmentally-oriented "accompanying measures". This process was subsequently continued in the Agenda 2000 CAP reforms, which placed further emphasis on environmental protection. This Report by the Court of Auditors analyses the environmental significance of the policy changes in the 1992 reforms, as well as the problems encountered in achieving the environmental benefits which the "accompanying measures" were designed to bring about.

The current document

  • (a) The 1992 reforms

  12.2  The Court notes that, for arable crops, these reduced support prices and introduced area-based direct payments, with the aim of reducing the incentive to intensive production through using large amounts of agro-chemicals. However, it points out that the effects of these changes were undermined by an unexpected increase in the world price of cereals, and by the real increases which producers in a number of Member States (including the UK) received as a consequence of the agrimonetary system then in force. As a result, the Court suggests that the reforms did not have a "sustained and significant impact" on the use of artificial fertilisers or of pesticides.

  12.3  The Court also points out that:

  • because compensatory payments were higher for irrigated farmland, this provided an incentive to use water, particularly in areas of southern Europe where such use by agriculture is already unsustainably high, and was often accompanied by intensification;

  • the provision of higher compensatory payments for maize production, and of higher aid rates for sunflower and durum wheat, was often environmentally negative;

  • although it was intended that aid would be paid only for land previously used for arable crops, much grassland had also been classified as eligible, with the consequent conversion from pasture to arable involving greater use of pesticides;

  • the allocation of support favours regions with higher yields, where intensive farming practices are more common; and

  • the high environmental potential of the set-aside requirement had not been realised in many Member States.

  12.4  As regards livestock production, the Court notes that the reform in the beef sector sought to encourage extensive production through increased premia, but with the introduction of strict limits on the number of animals per hectare for which the basic aid was paid. However, it says that in practice the rules allow a farmer to keep as many animals as he wishes, provided his claim is limited to the eligible number, and that the effect of the stocking limit was also undermined by an exemption for small producers. It therefore concludes that the practical impact of the stocking density restrictions has been "generally limited". Similarly, it says that, although measures were taken in 1991 to stabilise the Community sheep and goat flocks, this was done at levels which are unsustainable in certain localities, leading to overgrazing. Other factors identified by the Court include (i) the failure of most Member States to impose additional environmental protection restrictions on farmers, and to withhold aid from those who do not conform to such measures, (ii) the extent to which the lower feed prices brought about by the encouragement of forage maize production have provided an advantage for the intensive raising of livestock, and (iii) the extent to which the major nitrate pollution problem generated by intensive pig and poultry production persists in many regions of the Community.

  12.5  In addition to these criticisms of the regimes covered by the 1992 reforms, the Court notes the importance in environmental terms of a number of other regimes. These include tobacco, milk, sugar, intensive horticulture and wine, where it suggests that even recent developments have failed to take adequate account of environmental concerns. It also highlights the adverse implications of two of the regimes. First, unlike other arable aid, that for flax has been paid even if the land was not previously used to grow it: this has therefore provided an inducement to crop previously uncultivated land. Secondly, the aid arrangements for dried fodder favour production dried by machine rather than naturally by the sun, and are thus inconsistent with Community energy policy.

  • (b) The "accompanying measures"

  12.6  Three such measures were adopted at the time of the 1992 reforms:

  • Council Regulation (EEC) No. 2078/92, which introduced aid for the adoption of environmentally-friendly farming practices;

  • Council Regulation (EEC) No. 2079/92, which encouraged the early retirement of farmers; and

  • Council Regulation 2080/92, which provided aid for the afforestation of agricultural land.

  12.7  The Court points out that, in practice, the early retirement measure has had an insignificant impact, and it has therefore concentrated its analysis on the other two measures.

  12.8  As regards Regulation 2078/92, it points out that, even though the Commission retained ultimate responsibility for the sound financial management of Community funds, the Regulation was innovative in terms of the EAGGF Guarantee Fund in that it gave Member States a significant role in Community policy development by requiring them to draft programmes tailored to suit their specific agricultural and environmental situations. Aid is provided in the form of premiums per hectare or per livestock unit, designed to compensate farmers for the extra costs incurred, and is co-financed by the Community and Member States on a 50:50 basis (75%:25% in the poorer regions).

  12.9  The Court observes that the targeting of scarce resources is essential to apply them with greatest impact, but that the main factor in practice has been the willingness of Member States to provide co-financing, resulting in a heavily skewed distribution, with five Member States accounting for 86% of expenditure. Another consequence has been a concentration on maintaining existing practices, rather than the amelioration of those damaging to the environment. In the Court's view, this represents a "fundamentally inefficient" approach to aid distribution. It also considers this situation has been made worse by widespread discrepancies in aid rates, by the Commission's failure to give detailed guidance to Member States on designing their programmes, and by the quantitative and qualitative inadequacies of the personnel deployed by the Commission (and indeed by the Member States) to oversee this area of activity (which it says has persisted even when it became apparent that the workload was higher than had been anticipated). Similar criticisms apply to the afforestation measures, where the Court also comments that in many cases support has been given to species which are commercially profitable, but whose environmental impact is negative, especially as regards biodiversity and landscape.

  12.10  A further criticism of the Court is that the implementation of some of the agri-environment measures may be incompatible with the "polluter-pays" principle, in that it apparently transfers the environmental costs of agriculture from farmers to taxpayers, unless farmers are paid to deliver a standard of environmental performance which exceeds "good agricultural practice". In practice, however, standards of normal performance across much of Europe are either non-existent or underdeveloped, and it is thus not feasible to ensure that the aid is securing real benefits in environmental performance. More generally, the Court is critical of the failure to develop environmental indicators and of the lack of follow-up by the Commission and Member States, which it regards as essential if value for money is to be achieved.

  12.11  The Court concludes that improvements are needed from Member States in the design, implementation, control, monitoring and evaluation of programmes, whilst the Commission must improve programme approval and follow-up by providing sufficient staff with the right skills. It also says that a thorough review of all environmentally relevant measures which have an impact on agriculture should be conducted so as to secure better co-ordination between the various Community initiatives, and that the targeting of Community aid to priority zones and to combat damaging activities should be improved.

The Government's view

  12.12  In her Explanatory Memorandum of 12 December 2000, the Minister of State (Commons) at the Ministry of Agriculture, Fisheries and Food (the Rt. Hon. Joyce Quin) comments that the Commission has acknowledged many of the policy shortcomings identified by the Court, but that it has pointed out that the Agenda 2000 reforms have addressed many of them. In particular, the Commission considers that the new Rural Development Regulation (Council Regulation (EEC) No. 1257/1999) provides a more coherent approach for integrating environmental concerns, as well as strengthening the verification and evaluation requirements. She adds that, from the UK viewpoint, the Court's criticisms of Commission staffing, and the allocation of the rural development budget among Member States, require further consideration by the Commission.

Conclusion

  12.13  This is an interesting report, and, as it relates to an important new area of activity introduced as part of the 1992 Common Agricultural Policy reform, we are drawing it to the attention of the House. However, unlike a recent Court report on the olive oil regime, we do not think the document raises issues on which we need to request further information or which would justify a recommendation for debate, and we are therefore clearing it.


 
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