The proposal for a cap on direct payments has been refused from Countries like United Kingdom, Germany, and Czech Republic. But among the opponents there are some of the States that already benefit the most from the Common Agricultural Policy, the net beneficiaries.
While in the UK the Scottish are the ones that get more from the CAP.
While in the UK the Scottish are the ones that get more from the CAP.
During the meetings held in the first half of the year, the European Council has agreed a political path for the Common Agricultural Policy after 2013. Among the proposals that have been at stake, there was one for a capping on direct payments.
In each Country, the number of farmers most involved negatively by this proposal would be mainly Czech, with 2.04% of them actually affected by the possible amendment;
these are followed by the Slovakian (1.26%), German (0.48%) and Hungarian (0.21%).
In UK 0.17% of the farmers would be interested by the €300,000-capping, slightly more then the Danish (0.12%).
Each Country position has been taken from a last year debate of a Council's special committee and they might have evolved over one year time. However an EU source points out that the ministers strongly against the capping were the ones "more active to express their opposition than those in favour".
Predictably the agricultural ministers of these Countries, apart from Hungary, have been the ones strongly against an implementation of the capping in the next CAP budget.
But some representative of this group have all the reasons to maintain this situation as it is, as they already benefit from the CAP more than others. They are the so-called net beneficiaries of the policy, Countries which contribution to the European budget is less than what they are given.
The 2007-2013 Financial Framework has had at the top of the list Poland, Greece, Romania and Hungary, according to the European think tank Open Europe.
The net contributors, Countries which difference between contribution and earning from the budget is negative, are represented mainly by Germany, Italy and Netherlands, followed by the UK.
Graph 1: number of companies interested by the capping for each
Country (up) and their CAP net receipts (down) in 2011. The colours
show their position toward the proposal.
source: European Commission, own calculations based on the Open Europe report.
The Agriculture ministers' declarations
Germany:
"Germany does not believe that the European Commission's plans for capping are effective and therefore rejects them. [...] Covering thousands of holdings and checking their staffing levels would mean an immense bureaucratic burden. Out of approx. 3000 large-scale farms in Germany to be checked, probably less than 30 holdings would, in the end, actually be concerned by capping unless they choose to split up in order to obtain further premiums. Nothing would be gained by this."
Czech Republic:
"Concerning the capping of direct payments for large enterprises, complete elimination of this measure or alternatively its application only on a voluntary basis was a long-term priority of the Czech Republic during the whole CAP reform negotiations process. The Czech Republic belongs to the group of Member states with the highest average farm size which means that any measure reducing payments for large beneficiaries undermines the competitiveness of our farmers as well as of the whole Czech agrarian sector."
United Kingdom:
"Overall I do not think the CAP package represents a genuine reform. However, thanks to our efforts, working with other like-minded member states, it is in a much better state than the original proposals. By agreeing a deal on these regulations we have provided certainty for farmers and delivery bodies."
The UK situation: the Scottish biggest farms to get the most
In UK the number of farms beyond 100 hectares are mostly in England (27,000), accounting to 25% of the total. But the State having the highest relative percentage is Scotland (16,9 %) and they own 85% of the State's land.
The writer and land activist Andy Wightman, author of "Who owns Scotland?", addresses the system through which the Scottish farmers are subsidised as highly unequal, since just 10% of them gets more then 48%.
"I am not sure a cap set at €300,000 is going to have much of an impact, a cap set at, for instance, €50,000, would be a very different proposition", comment Wightman on the Commission proposal. "€300,000 is still a lot of subsidy and much of it will continue to go to people who have no need for it. So I do not think the consequences will be that significant."
"I am not sure a cap set at €300,000 is going to have much of an impact, a cap set at, for instance, €50,000, would be a very different proposition", comment Wightman on the Commission proposal. "€300,000 is still a lot of subsidy and much of it will continue to go to people who have no need for it. So I do not think the consequences will be that significant."
The reason is represented by the presumed more relevant size of the average British farm in comparison with the other State's.
From this perspective a potential limit on direct payments would be an element of damage for the UK's largest farms. The same opinion is shared by the National Farmers Union.
According to Alan Matthews, professor in Common Agricultural Policy, the size doesn't necessarily determine the production or the efficiency. He alerts:
"The evidence is limited, but additional economies of scale on farms which receive more than €300,000 are probably very limited."
"The evidence is limited, but additional economies of scale on farms which receive more than €300,000 are probably very limited."
Which means that the larger margins of bigger farms' productivity can't be taken for granted.
"Large subsidies are not necessary for profitable businesses", adds Wightman.
"I think targetting and capping the CAP is vital as a means of inhibiting the ever growing moves to larger and larger farms."
Additionally, despite Defra produces comparative data about agricultural productivity for the UK, in the European context such figures are not calculated homogeneously, making any comparison unreliable.
Graph 2: The 2012 land ownership situation
in UK and the number of British companies
potentially affected by the €300,000 limit.
Source: Defra
The proposal for a limitation of direct payments was launched two years ago by the European Commission, but at that time was already welcomed bitterly, with Mr Paterson declaring his opposition toward any limitation.
For this reason, the former Agriculture Council president Simon Coveney, in order to end his mandate with a political agreement between the parties, tabled the proposition to take it off in favour of a mandatory 5% degressivity for payments over €150,000, a decision that is now part of the political agreement.
Now this specific amendment will be discussed together with the 2014-2020 Multiannual Financial Framework on September, when there is the possibility that it will be voted as voluntary for every Country.
However the same proposal have been voted positively by the European Parliament, with a vast majority of the same British MEPs actually voting for it.
The eventuality of a limit in subsidies have been discussed for long time, finding both the UK and Germany in constant opposition toward it. This is the first time that there is the concrete possibility for its introduction, even if not mandatory, in the policy.
While the European Commission and Parliament both agree on its insertion, the contrast that it has caused in the Council of ministers has configured it as a element of destabilisation in the negotiations. In this case the idea proposed by the Commission would be completely reversed, considering its original intent to make it mandatory.
The 2012 list of CAP beneficiaries in UK released by the Department for the Environment, Food and Rural Activities includes several aristocrats holdings, like the Windsor Royal Farms, Sir Richard Sutton Settled estates, the Blakney Estates and the Earl of Plymouth among others.
