Wednesday, 8 December 2010

Reforming the CAP

Is a Jaffa Cake a cake or a biscuit? Is Dolmio a soup or a vegetable? I suspect that most of us don't really care but the European Parliament has hours of fun arguing over issues like this, usually because how such products are defined can affect VAT or taxes of some sort.

As long ago as the 70’s, James Callaghan bemoaned the fact that he was tired of going to Brussels to argue about the size of rear view tractor mirrors. Earlier this summer I was elected to the select committee on the Environment, Food and Rural Affairs and last week we went to Brussels for a briefing ahead of an Inquiry we are about to launch into CAP reform.

The Common Agricultural Policy takes up about 43 percent of the EU's total budget. For as long I can remember, the CAP has always been followed by the word “reform” when discussed which suggests that changing it is a slow process indeed. In the early days the CAP was seen as a success, ending the shortage of food in the aftermath of the war but then it came under fire for creating so called "butter mountains" and for a controversial market support mechanism which distorted world trade.

In the 1990s it was slowly reformed and market support systems were taken away and direct subsidy payments were paid to farmers instead. Finally, ten years ago the direct subsidy payments made to farmers were switched to a simpler "single farm payment" based on land area rather than what was being produced on the land to discourage intensive farming. More support also went into schemes to enhance the environment and wildlife.

But guess what? Now people are worried that we don’t have enough food again. The butter mountains are long gone. With a rising world population, food security has become a pressing issue and farmers, who have often been derided as subsidy junkies, are suddenly needed again. One of the most fascinating statistics I came across last week was that 35 percent of farmers are over 65 years of age and only 7 percent are under 40. What happens in twenty years time? I think we need to do more to support and encourage young farmers in Britain today.

I have long held that the expansion of the European Union from the original 12 member states to 27 means that we need to significantly streamline the role of the EU. It is currently a failing institution and has become so big that the countries can rarely agree and struggle to get anything done. There are two possible solutions to this problem. The solution favoured by the European Commission is to undermine the power of member states even more and centralise power. But a better solution is to cut back the role of the EU so that it does much less but does what it does much more efficiently. We will find out in the year ahead how strong the mood for change is.