CAP reform 2014-20: EU Agreement and Implementation in the UK and in Ireland (updated) – Commons Library Research Paper

The Common Agricultural Policy reform package for 2014-20 is currently being implemented in EU Member States after overall political agreement was reached on the main elements in June 2013. The main reform provisions will be in play from January 2015 and 2014 has been a transition year.

The new agreement allows Member States and their regions an unprecedented, and welcome, amount of flexibility in terms of how they implement the CAP provisions to allow them to tailor the policy to their particular agricultural needs and approaches. As a result, the implementation decisions taken within the UK and in Ireland differ considerably, despite the intra-UK and international (UK/Irish) shared borders. The increasingly multi-national nature of food production, processing and retailing means that the differing approaches have the potential to significantly impact upon the farming and wider agri-food industries, particularly within neighbouring jurisdictions. It is now common place for food to be produced in one region/EU Member State, be processed in another and then marketed or sold in many others.

On the whole, the administrations and farmers of the UK countries and of Ireland believe that they have an acceptable reform package that they can work with. However, many environmental stakeholders have been disappointed that the ‘greening’ requirements linked to direct payments (Pillar 1) have been watered down from the original proposals and are now looking to rural development funds (Pillar 2) to bolster the CAP’s environmental credentials.

Very different, “bespoke” approaches have emerged in the UK and in Ireland across all of the areas of flexibility permitted by the new reforms - around eighty decision points. There are only a handful of common decisions. These include: the UK and Ireland not implementing Small Farmers Schemes and the UK administrations applying a minimum claim size (England and Wales both at 5ha). Meanwhile, the divergence is especially apparent in regard to: modulation rates (transfer of funds from Pillar 1 to Pillar 2), coupled support (direct payments linked to production), capping of direct payments, choice of payment rates, and choice of eligible features for Ecological Focus Areas (EFAs).

The key question now seems to be at what point greater flexibility in CAP implementation might start to undermine the ‘common’ policy approach and generate an uneven playing field in terms of Europe-wide competitiveness. It may be hard to tell because the CAP reform packages vary so greatly that meaningful comparisons across, and within, Member States, are difficult. However, this flexibility is only likely to increase as the new EU Agriculture Commissioner has indicated that he will introduce a simplification and subsidiarity strategy for the CAP in 2015.

This paper updates the previous briefing of the same name produced in November 2013 when consultations on implementation were still ongoing in the UK and in Ireland.