The EU spends around 30 billion euros each year on the single payment scheme, by far the largest of the myriad schemes and programmes that together comprise the 54 billion euro budget of the Common Agriculture Policy. The scheme was first introduced in 2005 but it is hard to see it surviving in its current form beyond the end of the EU’s 2007-13 financial perspective. Here are five reasons why the single payment scheme is not politically sustainable. Five more will follow tomorrow. [...]

If Europe’s wealthiest landowners, from the Duke of Westminster in the UK to Prince Albert of Monaco to the fabulously-named Johannes Adam Ferdinand Alois Josef Maria Marko d’Aviano Pius von und zu Liechtenstein (aka Hans Adam II, Prince of Liechtenstein) were having sleepless nights over the future of their six and seven figure annual handouts from the Common Agricultural Policy, they can rest assured that they have friends in high places. Or at least, they have friends in the European Parliament. [...]

It is sometimes said that the Common Agricultural Policy establishes a level playing field across Europe, allowing farmers to take part in the European single market without fears about a plethora of national subsidies distorting prices, giving some a helping hand and holding others back. If only it were true. The fact is that when it comes to the biggest ticket item in the CAP, the €36 billion in direct payments (the decoupled single payment scheme plus various commodity-linked direct payments), the CAP is far from being a common agricultural policy. [...]

When the Commission unveiled its proposals for the health check back in November 2007, the DG Agri spin machine highlighted the proposals to introduce upper limits on the subsidies that are paid to Europe’s largest, wealthiest and most competitive farmers. What got much less attention was the plan to introduce lower limits, at a level of €250 per annum. This could make life even harder for some of Europe’s poorest farmers and shepherds who barely get a look-in when it comes to Brussels handouts. [...]

On Monday 14 July the European Parliament agriculture committee will discuss its response to the Commission’s legislative proposals for the CAP health check. The committee’s rapporteur is Luis Capoulos Santos, a Portuguese socialist MEP and former Portuguese Minister for Agriculture. His working document, suggests a number of changes to the Commission proposals, notably a hard ceiling of 500,000 euros on CAP payments to individuals, in addition to a ‘progressive modulation’ that would see payments above 100,000 euros top-sliced to provide additional funding for the EU’s farmland conservation and rural policies. [...]

Dan Morgan of the Washington Post reports on the legislative passage of a 5-year US Farm Bill, with a sufficient majority in the House of Representatives (318:106) to override any Presidential veto. President Bush had previously threatened a veto unless the Farm Bill would set a new upper limit on the size of subsidy payments and avoid raising any new taxes. He looks to have been outmaneuvered. [...]

This is the latest in a series of leaks of the Commission’s proposals for the health check, due on 20 May. The explanatory memorandum outlines the latest thinking on the various elements of the package including the issue of progressive modulation: a gradually rising level of compulsory modulation, with higher rates for recipients getting more than €100k, €200k and €300k. You can download it here (http://tinyurl.com/4p5h4p) and read for yourself.

What a difference a change of ministerial portfolio makes! Back in 2006, Hilary Benn MP, Secretary of State for International Development, was strident in his criticisms of the CAP:

“Through the Common Agricultural Policy (CAP), two fifths of the EU budget goes on subsidies and support to Europe’s farmers who represent 5% of Europe’s population, and produce less than 2% of Europe’s output. Most is not spent in the poorer parts of Europe where it is needed. Most goes to the biggest farming companies and landowners, not small farmers.”

Times change, Prime Ministers come and go, and Hilary Benn is now Secretary of State at the Department of Environment, Food and Rural Affairs. In this post he is spearheading the UK Government’s fight to ensure that massive CAP ‘income support’ payments continue to be paid to Europe’s biggest farming companies and landowners. [...]

Top Commission officials have confirmed that in the face of opposition from four member states (Czech Republic, Germany, Slovakia and the UK) as well as many farm unions, Mariann Fischer Boel has dropped plans to cut the very largest farm subsidy payments by 45 per cent. The plan, which would have affected an estimated 23,000 farms that receive in excess of €300,000 a year, a list which is dominated by Europe’s wealthiest landowners such as the Duke of Westminster, Prince Albert of Monaco and the Crown Prince of Liechtenstein. [...]

The European Parliament’s agriculture committee published a working paper on the CAP health check at the end of last year. Tamsin Cooper and Martin Farmer at IEEP have already argued that from an environmental perspective it lacks ambition and is internally inconsistent. I have looked in detail at the working paper’s proposals for ‘progressive modulation’ which is put forward as an alternative to both the Commission’s proposals on payment limits and increased compulsory modulation. [...]

As DG Agriculture’s spokesman Michael Mann has been keen to stress over the past few days since the publication of the Commission’s communication on the CAP health check, this is just the start of the process of deliberation and debate. Dr Tamsin Cooper of the Institute for European Environmental Policy has written a useful briefing on the next steps in the process. [...]

Initial media reaction to the Commission’s Health Check proposals has been predictable, with most papers picking up as the lead story the Commission’s proposal to apply a tapering reduction to direct payments to larger farms. The Financial Times story was headlined “Communists and royalty fight farm subsidy cuts.” Much was made of the fact that the Commission’s illustrative proposals would reduce the payments received by the Queen of England, who apparently received £465,000 (€650,000) in 2005, by over £140,000 (€192,000). British and German officials were quoted as saying they would oppose these reductions as they were unworkable and undesirable. [...]

Much initial reaction to the Commission’s leaked Health Check proposals has focused on its renewed attempt to introduce a cap on the Single Farm Payment amount which an individual farmer can receive. In fact, the proposal does not amount to a cap in the sense of an absolute ceiling, but takes of the form of a tapered payment Farmers receiving between €100,000 and €200,000 would face a 10% cut, those receiving between €200,000 and €300,000, a 25% cut and those receiving over €300,000, a 45% cut. Jack Thurston’s blog yesterday highlights the limited impact the measure will have.

It might be useful to put the Commission’s proposal in some historical perspective. Capping was part of the Commission’s initial reform proposals in each of the past three CAP reforms – the 1992 MacSharry reform, the 1999 Agenda 2000 reform and the 2003 Mid-Term Review. In this post I review the evolution of this concept and corroborate the implications of the Commission’s Health Check proposals. [...]

Analysis of the Commission’s leaked proposals for the CAP Health Check show that the payment limitations proposal is significantly less ambitious than the proposal made during the Agenda 2000 (1999) and Mid-Term Review (2003) reforms of the CAP. [...]