CAP reform 2014-2020: EU Agreement and Implementation in the UK and in Ireland

The Common Agricultural Policy reform package for 2014-20 is in its final stages of EU negotiation and overall political agreement was reached on the main elements in June 2013. The main reform provisions will be implemented in January 2015 and 2014 will be a transition year.

This paper sets out the reactions to the new reform package and emerging implementation decisions of the four countries of the UK and also of Ireland. It indicates where the key differences and common approaches are emerging and also considers the possible trajectory of future CAP reform.

The new agreement allows Member States and their regions an unprecedented, and welcome, amount of flexibility in terms of how they implement the CAP provisions to allow them to tailor the policy to their particular agricultural needs and approaches. This means that the implementation decisions taken within the UK and in Ireland have the potential to differ considerably, despite the intra-UK and international (UK/Irish) shared borders. The increasingly multi-national nature of food production, processing and retailing means that the differing approaches have the potential to significantly impact upon the farming and wider agri-food industries, particularly within neighbouring jurisdictions. It is now common place for food to be produced in one region/EU Member State, be processed in another and then marketed or sold in many others.

Overall, the administrations and farmers of the UK countries and Ireland believe that they have an acceptable reform package that they can work with. However, many environmental stakeholders have been disappointed that the ‘greening’ requirements linked to direct payments (Pillar 1) have been watered down from the original proposals and are now looking to rural development funds (Pillar 2) to bolster the CAP’s environmental credentials.

The governments in England, Wales, Northern Ireland and Ireland are currently consulting on their implementation approaches and Scotland will be consulting before the end of the year. In November 2013, the UK Government announced that CAP allocations within the UK would remain the same for the next funding period which allows all four countries to plan according to known resources. This allocation has been welcomed by all administrations except the Scottish Government which believes that Scotland should have received a greater share. It argues that its low payments per hectare reduce the UK average payment thereby enabling the UK to qualify for an additional “uplift” payment from the EU which Scottish farmers should receive. This payment is intended to even out direct payments across the EU Member States (known as external convergence).

From the initial proposals put forward, it is clear that very different, “bespoke” approaches are likely to emerge in all of the areas of flexibility permitted by the new reforms, especially in regard to: coupled support (direct payments linked to production), using a National Scheme to apply equivalent greening requirements, and modulation (transfer of funds from Pillar 1 to Pillar 2). There is some common ground in terms of proposing minimum claim sizes (at 5ha) and not implementing Small Farmers Schemes. What is not clear, however, is how far this flexibility in CAP implementation can be extended before it starts to undermine the ‘common’ policy approach and generates an uneven playing field in terms of Europe-wide competitiveness.