The tortuous negotiations over the next Common Agricultural Policy reached a conclusion of sorts today although some of the details remain unclear. This morning BBC Radio Scotland invited me to speak about the implications of “capping the CAP” – an upper limit on what any claimant can receive in EU farm subsidy. You can hear the interview here.
This is a very short blog to highlight the key issues covered in the interview.
The current distribution of EU farm subsidy in Scotland is grossly unequal as the graph above shows. (see previous CAP blog) for further discussion). The top 10% of farmers receive 48.6% of the total 2011 Scottish farm budget of £710.4 million.
This is not surprising since the distribution of agricultural land in Scotland is concentrated in relatively few hands and Scottish farms (average size 107ha) are the largest in the EU. (1) Fully 75% of Scotland’s agricultural area is held by fewer than 9% of farmers in holdings of over 200ha in extent.
As a consequence of this and the operation of the system of Single Farm Payments (a system of transferable “entitlements” to subsidy that have been much abused over the past 10 years), the amount of subsidy received by the top 50 recipients has risen from £22 million in 2008 to £35 million in 2011.
The simple fact is that these 50 people (who include the Earl of Moray, Earl of Seafield, Earl of Southesk, Duke of Buccleuch and Duke of Roxburghe) do not need any of this money but they are the beneficiaries of the system.
There is a proposal to cap farm subsidies at €300,000 (£254,000). Neither this nor the question of whether it is to be mandatory or voluntary have yet been agreed and are to be dealt with separately within the Multi-Annual Financial Framework for the overall budget. (2) In any event, it may have little immediate effect since the Scottish Government seems keen to phase in the new CAP regime over, perhaps, as long as five years.
At a time when welfare payments to the poorest and most vulnerable in society are being capped at £26,000 per year, perhaps it is time to consider capping farmer welfare at a level considerably lower than £254,000
UPDATE 27 June 2013
George Lyon MEP reports in a tweet that capping will be voluntary. He says this is good news. I am not sure why.
Press Release from European Commission on the final shape of the CAP.
UPDATE 28 June 2013
Excellent analysis from Professor Alan Matthews – “A triumph for the Irish Presidency – a damp squib for CAP reform” including the astute observation that “The bulk of the CAP budget will continue to be spent on land-linked payments under Pillar 1 with no obvious rationale other than that to remove them is opposed by the current beneficiaries.”
(1) For detailed analysis of farm holdings see Eurostat – Large farms in Europe.
(2) According to Alyn Smith MEP today, “capping of direct payments is “square bracketed”. Council are adamant that capping should not be mandatory for Member States to apply. A likely compromise will revolve around degressivity of payments above 150,000 EUR, with Member States deciding on the percentage to be applied.”