The Common Agricultural Policy (CAP) is at a crossroads. There are many who say that it should disappear altogether and others who point out that, without it, the great majority of farmers in the European Union (EU) would go out of business. Ironically, at the same moment as the European Commission is asking for an overall increase in funding of 35% to deal with the needs of the 10 new Members States, to be followed in 2007 by the accession of Bulgaria and Romania, their proposed budget for the CAP is a very tight one and effectively shows no increase between 2007 and 2013.

However, some of the most insistent demands from new EU Members will be for help with their antiquated systems of minute rural holdings; while farmers in the EU-15 countries are having to deal with the complication of switching from production subsidies to single farm payments which require compliance with environmental objectives. Terms such as "cross-compliance", "modulation" and "decoupling" pepper the papers that our agricultural community receive from Defra.

This report examines these problems. We look at the intricacies of the current CAP changes and we make recommendations for the future. Some of these will be unpopular either with the farmers or with environmentalists. But, in our view, they are necessary if the European countryside is to remain beautiful, productive and a home for working families.