1.  ABOUT WHICH?

  Which? is an independent, not-for-profit consumer organisation with around 700,000 members and is the largest consumer organisation in Europe. Entirely independent of government and industry, we are funded through the sale of our Which? range of consumer magazines and books. Which? was formerly known as Consumers' Association.

2.  THE CONSUMER INTEREST IN THE CAP

  2.1  The CAP continues to be a significant item of household expenditure. Based on the figures on EU agricultural expenditure and the impact on consumers contained in the OECD 2004 report "Agricultural policies in OECD countries", we estimate that the cost of the CAP is around £1-£14 a week for an average household of four people in the EU in tax and higher food prices.

  2.2  The CAP keeps EU food prices higher than prevailing prices elsewhere, and particularly hits low-income families who spend a high proportion of their income on food. However, the changes to the CAP agreed in June 2003 will change little for consumers.

3.  THE NEED FOR FURTHER REFORM OF THE CAP

  3.1  The 2003 agreement following the Mid-term Review of Agenda 2000 leaves many of the most objectionable features of the CAP untouched. Import tariffs and restrictions are unaffected, as are export subsidies. WTO members have agreed in principle to improve market access and phase out export subsidies, but there are not yet any figures or firm dates.

  3.2  The CAP remains a substantial misallocation of resources. It is inefficient, and is poor value for taxpayers, with a significant level of fraud. It is anti-competitive and distorts markets, and is actually in some sectors a barrier to a single market: anti-competitive measures such as dairy quotas continue. The Commission's DG Agriculture and the EU Agriculture Council appear to be immune from the ten year strategy agreed in March 2000 by the European Council at Lisbon to make the EU the world's most dynamic and competitive economy.

  3.3  A recent paper published by the Commission makes clear that, despite the 2003 agreement, overall support levels for the agricultural sector remain high and a burden to the rest of the economy, and that most farm support still stems from market price support which it notes is "one of the least efficient CAP instruments currently in place".[2]

  3.4  Which? welcomes the decision to break (at least partially) the link between support for farmers and support for production. However, the single farm payment scheme means that most farmers will continue to receive more or less the same subsidies as before, in return only for compliance with existing legal requirements. In effect, farmers will receive subsidies for being farmers.

  3.5  This does not in our view amount to a coherent environmental and rural policy. We believe that any public support should instead be linked to measurable and transparent public policy objectives. The single farm payment scheme by contrast is likely to maintain current patterns of production, regardless of whether or not they are economically sustainable.

  3.6  Which? would like to see an end to the current CAP and its replacement with new food, rural and environmental strategies. Agriculture should be integrated within a broader food policy framework as part of a "plough to plate" approach that includes food safety, quality and nutrition. It should also be subject to normal EU single market and competition rules.

  3.7  The remaining direct and indirect subsidy mechanisms, including quotas, export subsidies and set-aside, should be abolished and replaced with green subsidies designed to encourage environmentally friendly agricultural practices, and non-agricultural policies designed to maintain rural communities and promote tourism.

  3.8  We believe that the production of basic agricultural commodities should be left to the working of the market. The EU's role should focus on ensuring food safety, the provision of appropriate consumer information and the promotion of a competitive single market in both food and primary agricultural produce which can deliver the range and quality of products, value and choice that consumers are entitled to expect.

4.  THE DOHA DEVELOPMENT ROUND

  4.1  The Committee asks whether market support and direct subsidy will be affected by any concessions which the EU may have to make on export and domestic subsidies. In our view, a strong WTO agreement is the best hope for Europe's consumers: CAP policy-makers generally only confront economic reality when forced to do so by external pressures.

  4.2  Which? wants to see a WTO agreement that includes the abolition of EU agricultural export refunds, the phasing out of tariffs and the phased annual reductions of existing level of support in the developed countries, with specific annual reductions of support on every major agricultural commodity. All production related subsidies should be eliminated.

5.  FUTURE OF THE RURAL DEVELOPMENT BUDGET

  5.1  Which? wants all agriculture spending moved from Pillar 1 to Pillar 2, with any support linked to environmental, rural and other objectives, and the removal of the remaining single market distortions.

  5.2  We would like to see an EU agreement to achieve this transition over a set period, with the share of the current overall CAP budget spent on rural development progressively increased. However, we want decisions on the overall level of expenditure under the present agriculture heading (ie for both Pillars 1 and 2) to be subject to the same scrutiny as other Community expenditure and indeed subject to degressivity.

17 December 2004