SAC Rural Policy Centre

The European Union’s Common Agricultural Policy (CAP) provides financial support to farmers for farming as well as intervening in EU agricultural markets. It supports farmers through two ‘Pillars’ – Pillar 1 provides support through the Single Farm Payment and Pillar 2 covers environmental and rural development activities and the Less Favoured Areas. The 2003 CAP reforms led to significant changes in the way farmers are supported and the European Commission released its legislative proposals for post-2013 CAP reform in October 2011.

Q1: Why is the CAP being reformed?

A: To build on previous reforms, to save money following the reduction in agriculture’s share of EU budget, to better address food security concerns and volatile markets while at the same time enhancing sustainable management of natural resources and responding to climate change. There is also a desire to create a more equitable and balanced system of support targeting active farmers in all Member States.

Q2: What do different groups want from CAP reform?

A: Pro-reformists, typified by many environmental groups and governments concerned about the cost of the CAP are keen to see radical changes to the levels and distribution of support with a much greater emphasis on Pillar 2 activities which benefit the general public. Some farming lobbyists want support targeted at productive agriculture and argue that good environmental stewardship and economic sustainability of rural areas relies on viable farming businesses. Other farming interests see the current support system restricting the long term competitiveness of the sector, favouring existing farmers and making it harder for new entrants.

Q3: What is likely to happen post 2013?

A: There is likely to be a general reduction in CAP payments due to EU budget cuts and a move away from support based on historic activity levels to area-based payments. Support is likely to encourage a minimal level of farming activity whilst reducing the overall support to the largest, most productive farmers. Such reforms may take several years.

Q4: What happens next in the reform process?

A: The commission paper on EU farm policy was formally released on 18 November 2010. Reforms will be negotiated between member states and the European Parliament. Legislative proposals are expected in July 2011. A major question will be the overall allocation to the CAP from the EU budget. The Scottish Government commissioned a detailed inquiry into ‘Future Support for Agricultural Support in Scotland’ which published its final report in November 2010. This will form part of the negotiation process with Defra.

Q5: Why are the changes important to Scotland?

A: CAP support accounts for 22% of total farming output and up to 100% of the total income generated from farming in Scotland. A potentially smaller budget and a change in the basis for distributing support are likely to have a profound effect on the sector. Scotland’s farming industry plays a fundamental role in our £7.5 billion food sector and is intimately linked with our environment and tourism industry. Any reductions in farming support should not be viewed in isolation. Reforms may favour the more efficient producers while markets will respond with a rise in many prices. Presently no consensus on support exists across EU amongst member states.

For more information

• Rural Policy Centre Policy Briefing on a Proposal Scottish Integrated Farm Scheme
• Rural Policy Centre Research Briefing on Alternative payment approaches for ecosystem services)
• Rural Policy Centre Research Report on Raising the competitiveness of Scotland’s agri-food industry
• Rural Policy Centre Policy Briefing on the Future CAP for Scotland
• SAC Rural Policy Centre – CAP Briefing
• The Pack Inquiry Report – The Road Ahead for Scotland
• Defra – CAP reform
• European Commission - Agriculture and Rural Development – CAP post-2013
• Agriculture Facts and Figures (Scotland) 2010
• Scottish Government – Farming and Rural Issues
• CAP 2020 – Debating the Future of the CAP
• The CAP towards 2020: meeting the food, natural resource and territorial challenges of the future

10 Key facts about the CAP

The CAP budget

1. The Common Agricultural Policy (CAP) accounts for more than 40% (or more than €53 billion) of the EU’s budget. This is approximately equivalent to 1% of EU public expenditure and less than 0.5% of EU GDP.
2. The addition of 12 new member states has added seven million more farmers to the existing six million in the old 15-nation EU. Payments in EU15 member states average nearly €300 per hectare compared to €185 in the new member states.
   
   The CAP and Scotland
   
   
3. Total CAP expenditure under the main payment schemes in Scotland was estimated at £595million in 2009.
4. In 2009, 19,929 farmers received direct CAP support worth £594.5 million at an average of £29,850.
5. The average farm business income in Scotland for 2008/09 was £38,725, which included an average of £43,618 of support payments per farm.
6. The average 2009 Single Farm Payment in Scotland was approximately €125 per hectare, the fourth lowest in the EU. The equivalent figure for the UK as a whole was approximately €260 per hectare, around average for the EU27.
7. At less than €10 per hectare, Scotland receives the lowest level of co-financed, Pillar 2 rural development spending in the EU.
8. Agriculture accounted for 0.8% of Gross Value Added at basic prices in 2008. 67,000 people were employed in agriculture in 2009 (2.5% of total employment).
9. Scottish agricultural output in 2009 was £2.26 billion which includes non-agricultural activity.
10. 85% of Scotland is classified as Less Favoured Area with regard to agricultural production.

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