INTRODUCTION

  The Common Agricultural Policy (CAP) underwent its third and most significant reform in 2003, but the need for further reform has never been so urgent. There is a need for a review of the objectives for the CAP (with or without a revision to the Treaty itself) and an assessment of how well it currently achieves these. For example, the bulk of the CAP is now expended on the Single Payment which is described by the European Commission as an income support for farmers, but there seems to be no evidence about how efficiently it does this, or whether support is directed at social groups most needing it.

  To the extent that the CAP is an environmental policy, evidence strongly suggests it is failing. Biodiversity decline is continuing across Europe and agricultural intensification is one of the main drivers of this loss, whilst agricultural expansion, often to meet demand in affluent countries, is the principal cause of loss worldwide. The need to reduce greenhouse gas emissions from all sectors, including agriculture, which is responsible for approximately 10% of EU greenhouse gas emissions, is increasingly urgent, whilst the impacts of climate change are already being felt and will place further stress on wildlife. Furthermore, the pressure on our land base to increase production is increasing exponentially as agriculture is relied upon to feed a global population that is growing both in size and affluence, and is now being turned to produce fuel, heat and power.

  Farmland makes up almost three-quarters of Europe's land, and provides a crucial habitat for many species, but farmland biodiversity is in crisis across the continent. Farmland bird populations in Europe, which, as indicator species, reflect the welfare of farmland wildlife as a whole, fell by 44% between 1980 and 2005. In the EU-15, where this decline was most serious, populations fell by over 40%, and for some species as much as 60%, whereas the decline in the new Central and Eastern European Member States has been more moderate as agricultural intensification slowed following the collapse of the Soviet Union, but already populations are beginning to decrease again.

  The intensification of agriculture is the main driver of this collapse in farmland bird populations, but the abandonment of traditional farming systems also represents a critical threat. Wildlife in Europe has co-evolved with traditional farming systems and many species depend on their continuation for the provision of appropriate habitats.

OVERVIEW

  1.  The CAP, and its aims, as enshrined in the Treaty of Rome 50 years ago, is no longer appropriate for dealing with the social and environmental problems faced by rural areas in the EU. Increasing agricultural productivity, stabilising the agricultural market, assuring the availability of food at a fair price to consumers and ensuring a fair standard of living to farmers were appropriate aims half a century ago. Today, they fail to deal with the urgent challenges of our time, such as reversing biodiversity decline, mitigating and adapting to climate change, and ensuring the continuation of ecosystem services that provide adequate clean water and healthy soils. Like all areas of policy, the CAP must evolve as our needs evolve and knowledge develops.

  2.  The aims of the CAP should reflect what we as a society genuinely need and expect from our land, including sustainable agriculture, healthy biodiversity, landscapes and clean water.

  3.  The RSPB therefore proposes that the EU transforms the CAP into a common policy for rural land use with an appropriate level of subsidiarity allowing national and regional programming to account for differing priorities—not dissimilar to the current European Agricultural Fund for Rural Development. There is a clear rationale for such a common policy: because land management is associated with externalities that affect the whole of the EU and directly impact on EU level commitments, the costs of addressing these externalities imposes costs that individual states may perceive as a competitive disadvantage and yet generates benefits for the whole EU.

THE REFORMED CAP

  4.  The fundamental driver for reform was bringing agricultural production more into line with world markets through the decoupling of agricultural support. The RSPB supported the broad thrust of this reform because of the incidental benefits this would afford to the environment, and indeed decoupling appears to have brought some benefits of de-intensification (sheep in the uplands, optimal input use for arable farming), but cautioned that decoupling could lead to accelerated abandonment of High Nature Value farming across Europe. Thus, the environmental impacts of the reform needed to be understood and managed; and resources made available for environmental mitigation (eg through agri-environment). This has been imperfectly achieved and highlights the need for a sophisticated understanding of the likely variable impacts of further reform, and good environmental impact assessment as part of future reforms. Domestically there have been some welcome benefits from the 2000 and 2005 reforms, particularly the expansion of agri-environment schemes and the creation of a clearer environmental baseline through cross-compliance. The UK could better capitalise on the positive experiences of reform so far when it makes the case for further reform across the EU.

THE SINGLE PAYMENT SCHEME

  5.  As much as 78% of the total CAP budget goes to the Single Farm Payment, but we await clarification on the question of what the payment is for. It is a highly inefficient income support; it secures little positive environmental gain; and it seems powerless to prevent abandonment of farming in High Nature Value areas. We therefore believe it should be phased out and replaced with payments that can efficiently secure public goods. Meanwhile, we think that all CAP payments should be linked to rigorous baseline standards of environmental performance through and improved and harmonised cross-compliance scheme.

  6.  Decoupling payments from production has lessened the incentive to intensify and will therefore deliver environmental benefits relative to the pre-2003 system of support. However, environmental criteria were not well considered in the calculation of direct payments, and farmers that reduced production during the reference period as part of an environmental scheme may even be penalised by the system. Indeed, the historical allocation of payments, which has been the preferred method of distribution in most Member States, will favour those with the most intensive production practices during the reference period.

MARKET MECHANISMS

  7.  The RSPB is broadly content with bringing the agriculture sector more closely in line with market conditions, provided that tools are in place to mitigate environmental impacts of market reform (eg the loss of set-aside, abolition of market mechanisms), and that adequate funds are available for positive purchase of public goods.

RURAL DEVELOPMENT

  8.  The "second pillar" of the CAP has funded valuable measures to deliver environmental public goods in a number of countries—for example the conservation of valuable hay meadows, protection of habitat for stone curlews and bustards and "broad and shallow" measures to ensure better environmental management of environmental features in the wider countryside. The UK countries have developed some imaginative agri-environment schemes based on clear science; these have great potential to deliver results and give farmers a long-term incentive to build the environment into their farm businesses. Environmental payments through the rural development measures represent the most promising part of the CAP, but they lack funding, receiving only 20% of the total budget, are often misused, and can even be used for environmentally destructive practices. There is an urgent need for the UK to commit more funding to agri-environment: we are very supportive of many of the UK schemes but concerned that lack of resources will compromise them. This would help the UK develop a counter-case to the inappropriate use of Rural Development funds in some Member States which includes:

i.  Funding unsustainable drainage and irrigation expansion;

ii.   Funding inappropriate afforestation;

iii.   Using agri-environment to pay for practices that do not have a demonstrable environmental benefit, or for practices that would be followed anyway;.

iv.   Less Favoured Area payments that go to farmers that are not practicing environmentally friendly farming.

  9.  The high level of subsidiarity permitted in schemes funded through the European Agricultural Fund for Rural Development (EAFRD) means that their success in meeting their objectives depends on Member States and regional Governments for successful implementation, and while there are many examples of schemes successfully delivering on their objective, there are equally many failing schemes as a result of poor implementation. Research[1] and our own experience[2] with agri-environment schemes suggest that if the following rules are followed they will deliver:

i.   The scheme rewards farmers for delivering public goods and should be well targeted at the achievement of measurable specific environmental outcomes (such as the conservation of certain species or habitats)

ii.   Schemes must be backed by a budget sufficient to deliver their aims

iii.   The scheme design should be based on good science

iv.   Management required should be agronomically feasible and practical

v.   The scheme design should be an iterative process

vi.   Schemes should be targeted initially at existing biodiversity interest where is can be demonstrated that there is real potential for habitat species recolonisation

vii.   Monitoring of the environmental impact of agri-environment schemes necessary, and the results should feed into further design stages

viii.   Stakeholders, including farmers and environmental experts, should and involved throughout scheme design and implementation

  10.  These rules should be a requirement for future rural development schemes, and greater power needs to be granted to the Commission so that they ensure these requirements are met as part of the scheme approval process. All EAFRD measures need to be screened to ensure that they are indeed contributing to, and not acting contrary to, the overall goals of the EAFRD.

FINANCING OF RURAL DEVELOPMENT

  11.  In the long term we see a complete diversion of CAP funding to create a single sustainable land management and rural development fund, but accept this should be phased. We urge the UK to be cautious in this regard since the 2005 budget deal brokered by the UK is widely perceived as a device whereby EU funding for rural development and the environment actually falls as modulation creates funding through one stream whilst core funding is cut back. This approach undermines the concept of creating a sustainable and reformed CAP, and leaves the UK politically isolated with its laudable reform agenda.

  12.  Maintaining co-funding of rural development measures would ensure Member States feel ownership of the policy and increase the domestic pressure for accountability, but higher rates of EU funding should be made available for lower income countries.

  13.  Increased modulation into a co-funded instrument would increase the cost of the Common Policy to Member States, but this could be prevented by progressively introducing co-funding to Pillar I, and, in the long-term, applying degressivity to total spend or reducing the co-funding requirement for rural development expenditure.

ENVIRONMENTAL PROTECTION THROUGH CROSS-COMPLIANCE

  14.  Cross-compliance is likely to deliver some benefits depending on how it is implemented at the Member State level. It has, as a minimum, given a significant boost to the importance of farmers complying with European law, but overall there is no evidence yet that it has contributed to a significantly improved level of environmental protection, due to inconsistent and inadequate implementation. Furthermore, there will be problems demonstrating its effectiveness in delivering environmental benefits as there are no measurable targets or output monitoring. Nor should it be assumed that the Single Payment is commensurate with public goods delivered since the payments are massively disproportionate to any additional requirements over the regulatory minimum.

  15.  Cross-compliance has been implemented with a very high level of subsidiarity and flexibility, much greater than that allowed for Rural Development measures, for example. Only the UK, Germany, Sweden and Austria have comprehensively implemented the good agricultural and environmental (GAEC) requirement to protect landscape features. In the UK this has seen welcome protection for hedges and water courses. Other countries have either ignored this requirement or have translated it into such vague language that removing or damaging landscape features will still be acceptable. There is an opportunity to address this issue during the CAP Health Check.

  16.  Another critical farmed habitat in the EU that is supposedly offered protection by cross-compliance is permanent grassland. This is one of the most valuable farmland habitats in Europe, but many Member States still allow it to be ploughed up, irreversibly destroying its biodiversity value, on condition that, at the national level, the overall amount of permanent grassland remains within 10% of the amount present in a reference year.

  17.  Since the demand cross-compliance places on farmers, and consequentially the benefits it delivers, are disproportionately small relative to payments, it appears the bulk of the direct payment scheme is not about maintaining these standards but about improving farmer incomes. On the RSPB's conventionally managed 181ha arable farm in Cambridgeshire, for example, it was calculated that the costs of implementing cross-compliance were approximately €75 compared to €27,000 received in direct payments.

  18.  Cross-compliance does not currently include requirements that specifically address the Water Framework Directive although the requirement in England to leave 1m buffer strips alongside watercourses may contribute. Again the CAP Health Check provides an opportunity to more closely link the Water Framework with cross-compliance and the CAP.

CLIMATE CHANGE

  19.  Agriculture is responsible for 9% of greenhouse gas emissions in the EU. Much of this is a result of unsustainable, intensive practices such as the excessive application of artificial fertilisers and pesticides. For example, in the life-cycle of wheat production, 51% of emissions are associated with the manufacture and use of nitrogen fertiliser. Every sector has to reduce its greenhouse gas emissions if we are to avoid dangerous levels of climate change and reduce our emissions by 60% by 2050.

  20.  Bioenergy could play an important but limited role in reducing EU greenhouse gas (GHG) emissions, but it also poses a number of environmental risks. Bioenergy requires large amounts of land if it is to become a significant renewable energy source. Indeed, our energy and fuel needs are so great that bioenergy represents a potentially limitless new pressure on our land resource that threatens to leave little room for wildlife conservation and natural habitats. Our aim must therefore be to optimise the food and fuel we can generate whilst preserving natural and semi-natural habitats and moving towards a low carbon, sustainable agricultural system.

  21.  The second problem presented by bioenergy, and particularly biofuels, is the variability in GHG savings according to different production pathways. Producing biofuel from wheat, for example, offer up a range of GHG savings compared to conventional petrol, as high as 77% and as low as -7% (ie an increase in emissions). Support for bioenergy should therefore be contingent on delivering significant and quantified GHG savings and meeting minimum sustainability standards that ensure unacceptable damage to biodiversity and the environment is not caused.

  22.  Within the scope of our vision for the role of an EU sustainable land management and rural development policy, it is important to stress the need to ensure public money is spent to deliver public goods. The production of biofuels, or any other agricultural product, cannot be seen per se as a public good that should be publicly supported. GHG emission reduction and carbon storage on the other hand, however, can be seen as a public good. Farming can deliver for climate change mitigation through decreased emissions, increased soil carbon storage and substitution of fossil fuels with less carbon intensive fuels. It is the climate benefit that can justify targeted public support.

  23.  Climate change will also pose very significant adaptation challenges to agriculture, and it is likely that we will see changing cropping and agricultural practices as climatic conditions change. This may present unforeseen challenges for biodiversity conservation that will need to be monitored.

  24.  Climate change thus places a further importance on improving the sustainability of agriculture practices and the value of farmed land for wildlife. The quality of agricultural habitats will determine the ability of many species to move effectively between protected areas in order to follow their shifting climate envelopes, ie the areas with the climatic conditions appropriate for the species in question. EU support for farming and land management must secure the provision of corridors and transition habitats such as managed coastal retreat to facilitate adaptation. Similarly, extreme weather events and decreased water availability will require a much more ecologically sensitive land management of watersheds and agriculture will have a key role to play. The €50 billion expended each year on the CAP should be assisting in this process, but there is little sign it currently that it is doing so.

FINANCING THE CAP

  25.  The 2005 budget deal was unsatisfactory from the point of view of adequately financing EU obligations relating to the Natura 2000 network, EU BAP commitments and the potential demands of the Water Framework Directive. Added to this will be the potential land management costs of climate change adaptation and mitigation. Much of this problem stemmed from the agreement by Heads of Government in 2002 that largely protected Pillar I of the CAP to 2013, alongside an unwillingness of reformist Member States in 2005 being prepared to underpin rhetoric about CAP reform with hard cash reality.

  26.  The lack of a level playing field in financing of Pillar I and Pillar II—with Pillar I payments effectively being "free" to Member States at the point of delivery whilst Rural Development measures must be match-funded. This can be redressed by introducing national co-funding for Pillar spend, and/or reducing national co-funding for Pillar II measures, perhaps on a sliding scale depending on their European priority.

ENLARGEMENT

  27.  The 2004 and 2007 enlargements have brought very large areas of highly environmentally important farmed land into the EU and thus present huge environmental challenges and opportunities these enlargements present. The modernisation of agriculture in these new Member States needs to be achieved in a way that respects, and capitalises on, this environmental resource. Experience gained through the accession of Spain and Portugal, which have seen significant environmental losses and a move towards agriculture that is often unsustainable in the long term (for example relying on unsustainable supplies of fresh irrigation water) suggests pathways for more ecologically based modernisation in countries such as Bulgaria and Romania. RSPB is actively working with Birdlife partners in these countries to help develop Rural Development Programmes that will enable farmers to preserve the natural environment whilst developing their farming in a way that is sustainable for the long term. However, the task presented is huge and urgent if massive environmental losses are to be avoided, and this requires wholesale political and financial commitment at the EU level, something the UK government would be well placed to spearhead if it chose.

SIMPLIFICATION OF THE CAP

  28.  The RSPB has no problem in principle with the principle of CAP simplification; indeed, as a significant agricultural landholder we share the frustrations of farmers with administrative burdens imposed under the CAP such as the Single Payment application process. As such, we have not opposed simplifying the administrative process of cross-compliance, whilst seeking to ensure that the underlying environmental objectives are not diluted. Thus there is a need for simplicity to be balanced with efficiency—a greater focus in a reformed CAP will inevitably involve greater complexity to deliver real environmental benefits, compared to approaches such as Less Favoured Area payments which are fairly simple to administer yet often deliver little public benefit. The experience with the Single Payment System in England highlights the need to take a long view and reserve complication for where it will deliver real benefits: thus we are sceptical about Pillar I payment capping or redistribution, except where this will have clear environmental benefits. This philosophy underlies the following comments on future prospects for reform:

In the short term:

  29.  Cross-compliance as a tool could be playing a more effective role in protecting the European countryside from the most environmentally damaging practices, such as habitat destruction; and in implementing basic measures to reduce water pollution and ensure the health of soils. It is clear from recent reviews, however, that this potential is far from being fulfilled in most Member States, resulting in widely varying standards in environmental protection across the EU. This must be addressed urgently and cross-compliance schemes should be revised in all Member States. The programming approach used in EAFRD measures could provide a model for harmonising cross-compliance whilst maintaining the flexibility required given the differences in circumstance between Member States.

  30.  The LFA scheme should be reformed so that it specifically targets High Natural Value Farming, as defined by the European Environment Agency, and made conditional on basic management requirements that ensure beneficial farming practices continue. This should be part of a package for HNV farming that also includes targeted use of Axis 1 and 3 type Rural Development measures to improve the rural economy in a sustainable way, through, for example, building local and added value food chains.

  31.  There is scope for an initiative to improve the quality of Rural Development expenditure across the EU through starting immediately on a process of review and networking of experience in the new Programmes.

In the longer term:

  32.  As explained above, we want to see establishment of a sustainable rural development policy for the whole of the EU, building on the current Rural Development Regulation but targeted at sustainability, with support for land management structured according to the pyramid model and based on the principle of public money for public goods at its core.

  33.  The central element of this fund should be a sustainable land management axis, equivalent to the current Axis 2 with tiered layers of intervention and payment. Alongside this axis, Axis 1 and 3 measures should be used to tackle the social and economic challenges faced in the more marginal rural areas of the EU, but they should be explicitly targeted at improving sustainability of farming and land management in these areas (thus addressing EU objectives for climate change, water and biodiversity) and properly assessed to ensure they do not cause environmental harm.

June 2007

2   BirdLife (2005) Agri-environment schemes and biodiversity: lessons learnt and examples from across Europe. Back