January 2012 - 'The Green’ Common Agricultural Policy

by Rupert West FRICS and Mike Holland MRICS

The World population reached 7 billion in 2011 and is predicted to rise to 10 billion in 90 years time¹. Whilst this seems a long way off and there will be many reforms of agricultural subsidies (including perhaps complete removal), between now and then the clear message is that the need for food and energy is steadily increasing; and success or failure to supply this need can make or break Governments.

It is therefore puzzling that as the current round of CAP Reform discussions get underway, following the release of the EU Commission’s draft reform proposals on 12 October 2011, the underlying tone is for further land to be managed purely for environmental reasons. A backward step?

The key elements of the draft proposals are:

Replacement of the Single Payment Scheme with a ‘Basic Payment Scheme’ with effect from 2014;

Capping of direct payments dependant on scale of farming;

Crop diversification – 3 crop rotations on arable land;

Permanent Grassland – permanent grassland to remain permanent after 2014²;

7% of eligible land to be managed for environmental benefit³;

Young Farmer Support

The main cause for concern is the “greening” effects of the proposals which principally include a minimum 3 crop arable rotation and an additional 7% of the land area being managed for environmental purposes.

The ability to manage land sustainably so that its productive capacity is maximised whilst ensuring that the environment is well managed and cared for is not for debate; it is a given. But is it really necessary for CAP funding to be subject to further ‘greening’ in order to make it palatable to the electorate and the EU’s budget makers, when there is a clear need for greater levels of food and energy production?

Managers ofUKfarmland have to balance their role in both food and energy production. Short of embarking on a programme of land reclamation along our coasts, the land area we have is what we have; they are not creating anymore! Hardly surprising then that the UK land market continues to trade at strong levels; particularly as investors looking for alternatives see land as a considerably safer option than other investments.

The EU Commission will state that its role is to balance the needs of 27 member states, not just the needs of theUK. Whilst this is true, the principle objective of the continuing CAP discussions/negotiations must surely be the need to apply common sense to these draft proposals. ‘One size fits all’ may not be feasible and it will be for DEFRA and industry representatives from the UK, principally the NFU and CLA, to argue the case for a more balanced approach which recognises the need for greater food and energy security for an ever growing world population.

However, with a full-blown Eurozone crisis being played out as we write this article, clarity and stability will no doubt be required on the EU budget as a whole before any meaningful discussions can be had on the detail of the CAP.



Sources:

¹UN World Population Prospects, 2010 Revision

²Subject to a maximum of 5% of the declared area of permanent grassland as declared in 2014 being capable of conversion

³7% of the declared area in 2014 excluding permanent grassland