Greening our pleasant land

I have, at last, found the time to watch Roger Harrabin's Newsnight special on the Common Agricultural Policy.

The overall message came through loud and clear: the policy is a huge taxpayer investment (some £400 p/year per family) but there are serious questions over what this money is actually buying.

The CAP has a dark past: grotesque over-production driven by production related payments and profound negative impacts on the environment and developing countries.

But the CAP has changed a lot in the last 20 years. A series of reforms has established a clear (if somewhat slow moving) trajectory towards reducing negative impacts (environmental and social). The policy now also uses a small proportion of its vast budget to reward land managers who produce environmental public goods, things like wildlife, healthy soils and water.

But as Newsnight revealed, attempts to further ‘green’ the CAP look set to be scuppered. And who’s responsible? Perhaps those pesky (and deep pocketed) vested interests who’d like the policy to stay largely as it is – lots of [public] money doled out with virtually no strings attached?

One key issue that Newsnight didn’t cover is that of modulation. This mechanism allows Member States to move money from Pillar I, which funds direct payments, into Pillar II, which funds things like agri-environment schemes and wider rural development measures. It has been part of the CAP for over 10 years.

The good news is that this flexibility will remain a part of the next CAP. Member States will be allowed to move up to 15% of their Pillar I budget into Pillar II and each of the UK’s agriculture Ministers will decide how much they want to move later this year.

But modulation is a hot political topic now and one which has raised the ire of a number of farming unions, here and across the EU (see here and here) who claim that it would put UK farmers at a competiveness disadvantage. Their latest contribution is to argue that modulation should be subject to mandatory co-financing by national treasuries – put simply governments would have to put their own money in too.

Now I’m all for extra money in Pillar II but co-financing is just not an option for most countries, including our own – we just don’t have the money. Perhaps the NFU and others have not noticed the economic downturn?  So in straitened financial times, I’d much rather have modulation without co-financing than no modulation at all. As would many farmers.

The fact of the matter is that without modulation Defra, and the devolved administrations, will not be able to invest properly in Pillar II schemes – schemes which not only reward farmers for producing environmental public goods but also help farmers to modernise, diversify, in other words become more competitive and market orientated – something Pillar I payments just don’t help them to do.  And without a well funded agri-environment programme, it is widely accepted that Defra will fall woefully short of meeting its ambitions in the Natural Environment White Paper and its own biodiversity strategy for England.

To a logical mind the modulation issues should be a no-brainer. It’s therefore extremely reassuring that Owen Paterson, Defra’s Secretary of State, is continuing to maintain such a firm position on the importance of moving money into Pillar II.

But rather than espouse the RSPB position, I think it would be more apt to quote one of the many farmers we work with – evidence that the big farming unions’ position on modulation is out of touch with what many farmers think.

“As an arable farmer in Suffolk and receiving high prices for wheat and other commodities I can afford to rely less upon direct payments from the CAP, of course I have always taken the view as a farm business I should not rely upon my single farm payment. I have many poor yielding areas of the farm that I have placed into arable stewardship options, making the best of this land for wildlife means I not only provide benefits for wildlife but also demonstrate I am good value for the public investment I receive. Therefore, I can only view a transfer of funds from pillar one at 15% to agri-environment budget as a good and sensible way forward. Taking out these less productive areas has little impact on yield, little impact on my ability to feed people but big impact on my farm sustainability. My agri-environment options produce a range of benefits but without or with reduced agri-environment funding I as well as other arable farmers have no market for this, which is quite different to how my single farm payment works.”

James Bucher, Hall Farm, Suffolk Arable Farmer