There is some confusion about the scope and terminology surrounding the mid-term review of Agenda 2000 and the mid-term evaluation of the England Rural Development Plan. This paper seeks to clarify the scope and opportunities presented by the former...
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Mid Term Review of Agenda 2000 (AP02/01)

Principal Manager Responsible: Richard Lloyd Lead Board Member: Peter Fane will present this paper on behalf of Victoria Edwards

FOR DECISION

The Board is recommended:

  • To note the scope and opportunities presented by the Mid Term Review of Agenda 2000
  • To agree that the Agency should:   
- continue to work through the Land Use Policy Group at the UK level as 

the best means to secure CAP reform as the Agency wants it (paragraph 14)

- confirm that the main goals are compulsory modulation across the EU, 

further reform of commodity support, environmental cross compliance, and 

a bigger slice of the EU pot for rural development and agri-environment.

Relevance to Strategy and Corporate Plan:

  • Our aspirations for the future of farming and for rural development, as set out in our Strategy and Corporate Plan, are in large part dependent on reform of the CAP.
  • The proposals directly support implementation of the Agency's Strategy for sustainable land management in England, published in 2001.   

Staff and financial implications:

  • Resources of staff and money for this work have been approved in the Corporate Plan and ELMT business plan for 2002/03.  

Main issues to concern the Board:

  • Will the working principally through the Land Use Policy Group undermine the opportunity to use the Agency's influence to the full?  

AGENDA 2000 MID TERM REVIEW

Background

1. There is some confusion about the scope and terminology surrounding the mid-term review of Agenda 2000 and the mid-term evaluation of the England Rural Development Plan. This paper seeks to clarify the scope and opportunities presented by the former process and sets out key issues. It also proposes an approach to the review in the context of our Strategy for sustainable land management in England, seeks the Board's endorsement for this approach, and outlines a strategy for influencing and related action. More detailed plans for influencing will be developed in the light of the Board discussion and in response to EC proposals for the Agenda 2000 mid-term review as they emerge later in the year. 

Agenda 2000 mid-term review in the context of CAP reform

2. Further CAP reform is not due officially until 2006 to cover the period 2007-13. The Commission's current position is that the mid-term review of Agenda 2000 will be limited to reviewing a few commodity production sectors. Beyond these aspects, the likely scope is unclear. Franz Fischler has confirmed simply that the Commission is planning to publish its thinking on the future shape of CAP by the end of 2002. The table attached to the annexes sets out the key dates and events up to 2006. 

3. DEFRA and our European consultants, the Institute of European Environmental Policy (IEEP), think that the EC are most likely to produce proposals on the Agenda 2000 mid-term review after the French elections in June/July. Proposals on the commodity reforms will be made later in 2002 or 2003. There is no fixed timetable for any part of the review. This uncertainty makes it impossible to develop a detailed, timed strategy for influencing the review. It will be important therefore to remain flexible in seeking to achieve our aspirations.

4. There is no Commission commitment to review the Rural Development Regulation (RDR). However, IEEP believe that it is possible that the review might now include compulsory modulation, which would affect funding of RDR measures. DEFRA also consider it more likely than before that the review will address some elements relevant to the RDR. 

Prospects for more radical reform 

5. IEEP advise that if Member States can build pressure for more substantial reforms, Commissioner Fischler is likely to strongly support them. Several developments point to the need for a more radical mid-term review of Agenda 2000, in particular:

  • EU enlargement, starting in 2004, bringing up to 10 new Member States and the debate on the extent to which new Member States will be eligible for direct payments under CAP, what mechanism would be used and how payments would be phased in. Such eligibility would have implications for the post-2007 CAP budget and might slow down future reforms geared at reducing pillar 1 payments. 
  • commitments under the EC's sustainable development strategy.  The EC 2002 Work programme states that the mid-term review of the CAP should include promoting 'production methods which favour environmental protection and more efficient use of natural resources as well as increasing support for rural development within the agreed existing financial framework'. This implies a commitment to further shift resources to Pillar 2 at mid-term review.
  • WTO negotiations  are likely to increase pressures for further CAP reform (e.g. to reduce internal subsidies and other market supports and to review the criteria for the payments that remain)  but are unlikely to be completed until 2005 or later. However, the Peace Clause (which allows the current direct payments to farmers) expires in 2003 and will need to be extended or renegotiated. The EC is likely to want to keep any significant reforms beyond the agreed Agenda 2000 package as a negotiating tool.   

6. DEFRA consider that these issues are likely to result in the Commission publishing a paper after the French elections which will include a number of options for reform rather than firm proposals. Their discussions with Member States suggest that there is growing pressure for reforms, at least informally (e.g. Denmark, Holland, Sweden, Germany and to a lesser degree France). Positions, however, will not become clear in Germany and France (key players) until after their elections later in the year. In Germany, there is some doubt that the current coalition involving the Green Party (which has resulted in their current radical polices for CAP reform) will survive. 

7. Discussions within the Land Use Policy Group (LUPG) agencies have concluded that action towards reform needs to start almost immediately if reforms are to apply before accession by new Member States in 2004. 

The Countryside Agency agenda for Agenda 2000 mid-term review and longer term CAP reform 

8. Our aspirations for short, medium and long term changes to the Rural Development Regulation and CAP are set out in our Strategy for sustainable land management in England.  Annex 2 summarises the actions we seek and notes further recent policy statements and initiatives.

9. Our vision is that by 2010 the CAP should be transformed into an Integrated Rural Development Policy (IRDP) which would benefit rural businesses and protect the environment. Emphasis would shift from the first pillar (direct commodity payments and market supports) to the second pillar (agri-environment and rural development) through compulsory EU-wide reduction and redirection of direct aids (so-called degressivity - see Annex 2 footnote). This would require a broadening both of RDR type measures and eligibility criteria. Remaining transitional direct payments to farmers would be subject to cross compliance. By 2020 all income and market support would be phased out and public support directly linked to the delivery of public benefits. 

10. As a step in this direction, we have proposed that the UK should increase the rate of modulation to 10% from 2004 onwards (and to 20% from 2006 if Europe fails to reform CAP). 

11. As transitional measures before the next full round of reforms in 2006, we are seeking three key changes at the European level that could only be achieved through a more radical mid-term review. It follows that our first and fundamental objective must be to secure a more radical review. This would include: 

  1. modulation made compulsory across the EU,  perhaps imposing a minimum average percentage rising each year, to shift CAP support from pillar 1 to pillar 2 more quickly;
  2. more flexibility in how the funds generated are administered and used - but scope for change may be limited by EC funding rules for the CAP Guarantee budget which are less likely to be amended at mid-term review. Currently it is unclear whether limitations are caused by the Regulations or by the Commission's interpretation of them, which has changed considerably over time. We may also need to press for changes outside the mid-term review; 
  3. further reforms of the commodity sector policies,  particularly those for livestock, so that they respect countryside character; 
  4. a requirement for Member States to apply more effectively the range of cross compliance measures which already exist under the Horizontal Regulation (these include an option for links with agri-environment measures) to prevent further environmental damage from direct CAP support payments;
  5. revised criteria for allocating the EU RDR budget so that the UK receives a more proportionate share  than the current 3.5% allocation based on historic spending levels on agri-environment and rural development.
Outline strategy for influencing the mid-term review.12. From a European perspective, England is simply a region of one Member State. To have influence at EU level, we need to work primarily at the UK level through our partnerships with DEFRA - the official UK negotiating body for the CAP - and through working in alliance with members of LUPG. DEFRA endorses the view that LUPG offers the most effective way for the Agency to influence the EC, the European Parliament and other key European contacts. They are supportive of the Agency seeking to influence others to adopt a similar stance to that of the UK, provided that we keep them informed of what we do. 
  • 13. Annex 3 sets out our current and proposed approach to influencing work related to the Agenda 2000 mid-term review and further CAP reform. Annex 4 summarises our joint action with LUPG related to these processes. Board members have been invited to attend the LUPG members' seminar on April 17th to learn more about some of the issues and actions described in this paper. 

    14. The main elements of our influencing strategy are:
    1. to concentrate on working jointly at the UK level, principally through the Land Use Policy Group;
    2. where we have the opportunity:
      1. to continue to press the Government and other relevant organisations and contacts to seek the changes at European level that we seek (e.g. through contacts with DEFRA and OECD, responses to consultations, press releases etc);
      2. to use Countryside Agency initiatives and experiments to inform and influence developing European policies  that will contribute to sustainable land management and integrated rural development;
      3. to organise occasional meetings in response to policy developments to promote our policy messages;
      4. to liaise closely with DEFRA, to keep them informed of our activities and to share information and thinking.
15. Related to i., there is an urgent need to work with our counterparts in the other LUPG agencies (and the Environment and Heritage Service in Northern Ireland) to persuade the devolved administrations to support higher rates of modulation (see Annex 3 for details).

Risks associated with the approach proposed

16. There is no guarantee that action by the Countryside Agency, DEFRA and others will succeed either in broadening the mid-term review or in hastening reforms. For maximum effect, any UK action will need to be focussed, targeted, timely, co-ordinated and sensitive to European politics. Working with others we need to form effective negotiating alliances with other Member States as opportunities and needs arise. However, we must take care not to alienate any potential European allies by pressing openly for too radical a change. 

Resource implications 

17. The proposals are ambitious and staff resources are very tight, comprising only around 1.1 full time equivalents, mainly at S grade. Joint working with other agencies is essential to deliver the outputs. Greater efforts in this area would mean cuts in other work unless more staff resources were found. £100,000 is allocated for joint research.

Views of the Policy Commission on the future of farming and food

18. The Report of the Policy Commission was published on 29th January 2002. It urges the Government to press for substantial reform of the CAP as soon as possible, which would remove remaining price supports and production controls, decouple any support from production and increase the resources available to pillar 2. In the short term, the report urges an increase in modulation to 10% by 2004 and to 20% by 2006 if substantial CAP reform is not achieved. These proposals closely mirror our policy position. 

File refs: 24102A ANNEX 1 

Agenda 2000 mid-term review in the context of CAP reform

EC position on the mid-term review of Agenda 2000

1. The official Commission position on the scope for the mid-term review of Agenda 2000 is that it is limited to reviewing a few supported production sectors. The Commission takes the view that the CAP has already been reformed, most recently through Agenda 2000 covering the period 2000-2006. They consider that support has moved away 'from production subsidy to direct area payments and to animal premia which encourage less intensive methods'. However, changes to the sheepmeat regime (not reformed under Agenda 2000) were agreed in December 2001. These include provision for a flat rate headage payment and a sheep national envelope that could be targetted at environmentally sustainable production and for quota buyout. Further CAP reform is not due until 2006 for the period 2007-13. 

2. It may be hard to press for major reforms since most markets and budgets look in reasonable condition at present. DG Agriculture has been evaluating market prospects to pinpoint sectors that will need proposals for change at the mid-term review which are likely to include the beef sector, the dairy sector and possibly rye. An EC report on the oilseeds sector presents a strong case for including this sector too. 

3. Beyond these aspects, the likely scope for the review and the timing are all unclear. Franz Fischler has confirmed only that the EC is planning to publish its thinking on the future shape of the CAP by the end of 2002. The Commission will have to put forward a paper for a discussion on rural development by the informal council in Spain in April 2002, but this may be limited to describing the current position of Member States.


4. DEFRA now think it likely that the EC will publish a paper setting out options for the mid-term review some time after the French elections in June 2002, allowing time for debate before publishing its thinking in the Autumn after the German elections. They also consider it more likely than before that ideas will include aspects relevant to the Rural Development Regulation (RDR).

5. IEEP also expect the first EC papers on the mid-term review to be published after the French elections but stress that there is no fixed timetable. More specific proposals, possibly including draft Regulations, would be produced later in 2002 or in 2003. The various commodity review papers are due later this year and in 2003. These could be published separately or together. Again there is no fixed timetable. The EC has considerable discretion and will be influenced by political circumstances and their judgement of Member States' positions. The EC are not required to produce a formal paper on the second Pillar of the CAP but IEEP consider it likely that they will. They note that recent suggestions to make modulation compulsory for all Member States have been widely discussed. 

6. Our strategic programme of joint research and influencing work on CAP reform and the RDR, mainly working through the Land Use Policy Group (see below), is based around the need to influence now the officials preparing proposals for the EC, and the expectation that EC ideas will be published after the French elections and more detailed proposals will emerge later in 2002. However, we are aware of the need for flexibility if this timetable changes. 

Prospects for more radical reform 

7. Despite the EC official position, several developments point to the need for a broader mid-term review, in particular:

  • EU enlargement with up to 10 new member states starting in 2004. The negotiations of accession treaties are underway. The EC plan is to finalise the Draft Common Positions on all chapters of the negotiations, including agriculture, by mid-2002. 

    DEFRA expect the agreements, including the agricultural chapter, to be signed off at the Copenhagen summit in December 2002. The EC is expected to produce its proposals in early February 2002 with likely adoption by the Agricultural Council before the end of June. 

    A key issue for the new Member States is the extent to which they will be eligible on entry for the same CAP payments that existing Member States receive and whether/how these would be phased in. All applicant countries want direct payments although they accept that it is unlikely these will be paid in full. Due to delays in accession, it appears that the Agenda 2000 budget would enable all new Member States to receive some CAP direct payments although there is no consensus yet about what proportion is practical. DEFRA estimate that the current budget (to the end of 2006) could provide for all to receive up to 10% of the full direct payments.

    In January 2002, Commissioner Fischler proposed a simplified scheme for payments to new Member States based on a flat-rate payment per hectare instead of the conventional first pillar support. This would have a lower administrative cost similar to the new 'Small Farmers Scheme' under the current CAP. Due to the low payments likely to be received by most farmers, they would not be subject to IACS requirements. Payments would be phased in, possibly over 5 years. A ceiling for total aid would need to be agreed with each candidate country. Further details are expected in the next month. An attraction for the EC could be that such a scheme would reduce the link between direct payments and production and might be accepted as 'decoupled' support qualifying for the allowable 'green box' payments within WTO rules.

    As with the Small Farmers Scheme, there are three key issues for sustainable land management. These are the extent to which:
    1. such payments of public funds would be subject to cross compliance with environmental conditions to prevent damage - currently this appears very limited under the Small Farmers Scheme;
    2. a successful, simplified decoupled scheme for the accession countries might be seen as a model for transforming remaining production linked Pillar 1 direct supports in the livestock sectors across the EU but without effective links to the protection or delivery of public benefits;
    3. agreeing to new Member States receiving direct payments (probably on the basis of a gradually increasing percentage) will affect the future CAP budget and may also slow down future reforms geared at reducing Pillar 1 payments. The new Member States are likely to be reluctant to agree to proposals to remove or reduce direct payments they have only just received. This could have the effect of fossilising an amended Pillar 1 CAP system.  Pre-accession reforms are therefore desirable but action is needed very soon if this is to be achieved;
      • the implementation of the EC's sustainable development strategy, the 6th Environmental Action Programme and Biodiversity Action Plans.  The EC Work programme for 2002 states that in relation to sustainable development (author's italics):
      • 'The mid-term review of the CAP should reflect consumers' concerns about wholesome and safe foods. It should promote production methods which favour environmental protection and more efficient use of natural resources as well as increasing support for rural development within the agreed existing financial framework, while ensuring the economic viability of the farming sector and taking into account the social effects of adjustment on income'.
      • This implies a commitment to a further shift of resources to Pillar 2 at mid-term review.

        The Sixth Environmental Action Programme also highlights the environmentally damaging farm practices that have been encouraged by CAP agricultural price support and commodity linked payments. It notes that the positive impact on the rural environment of past CAP reform can be developed further by 'ensuring that a greater share of funding available under the CAP goes to measures that are environmentally friendly'.  It considers that the CAP can help the accession countries to modernise their farming sector 'but it must be introduced sensitively, concentrating on rural development'. It also proposes that EC regional and agricultural policies should 'ensure that landscape protection, preservation and restoration is properly integrated into the objectives, measures and funding mechanisms'.
  • WTO negotiations will increase pressures for further CAP reform to reduce internal subsidies and other market supports and to review the criteria for the payments that remain.  The Doha WTO Ministerial meeting in November 2001 agreed to launch a negotiating round which will increase trade liberalisation in a number of areas, including the agricultural sector. WTO is not expected to reach agreement until 2005 or later. However, the Peace Clause (which allows EU direct payments to be classified under the 'Blue Box' category of subsidies) expires in 2003 and this aspect will need to be extended or renegotiated. So called 'modalities' (i.e. the general areas of negotiation) have to be established by March 2003.

    The Doha declaration includes a commitment, without prejudice to the outcome of negotiations, to substantial improvements in market access, to reductions of all forms of domestic subsidies (with a view to phasing them out), and to substantial reductions in trade-distorting domestic support. It takes note of non-trade concerns (which includes the environment) and confirms that these will be taken into account in the negotiations provided for in the Agreement on Agriculture.

    The declaration reaffirms the objective of sustainable development. It states that members are convinced of the aims of the trading system, and that protection of the environment and the promotion of sustainable development can and must be mutually supportive. No country should be prevented from taking measures for the protection of human, animal or plant life or health (relevant to the GMO issue) or of the environment at levels it considers appropriate, subject to the requirement that they are not applied in a manner which would constitute arbitrary or unjustifiable discrimination.

    Whilst the WTO negotiations (and particularly the expiry of the Peace Clause) are likely to increase pressure for reform, this could occur after the time scale for the Agenda 2000 mid-term review. The EU will want to maintain scope for negotiating so may not want to make further liberalising reforms until the negotiations are agreed. The EU negotiating strategy is likely to have four main strands: 
    1. preserving the 'blue box' category to enable the EU to continue to subsidise agriculture; 
    2. minimising further reductions in tariffs; 
    3. limiting any reductions on export support to those that can be achieved by any commodity support changes (e.g. dairy) made in the mid-term review of Agenda 2000; 
    4. making the most of 'non-trade concerns' such as food safety and environmental considerations as a 'get out' clause against any reductions in Pillar 1 support that the EU consider to be unacceptable.   
ANNEX 2

The Countryside Agency's agenda for CAP mid-term review and longer term reform, as set out in our Strategy for sustainable land management in England  and in subsequent policy statements and initiatives

"Strategy for Sustainable Land Management in England"

1. Our Strategy for sustainable land management in England sets out our agenda for short, medium and long term changes to the Rural Development Regulation and CAP. Our key requirements that require change at the European level include:

Short - medium term 2002-2006

  1. revised criteria for allocating the Rural Development Regulation (RDR) budget between Member States to ensure that the UK receives a more proportionate share of the RDR budget than its current 3.5% allocation based on historic spending levels;
  2. reform of the direct commodity support payments (particularly livestock sectors) so that they respect countryside character  (and are subject to cross compliance - see 1.iii);
  3. appropriate cross compliance measures applied effectively across the EU as long as direct payments remain to prevent them causing further environmental damage;
  4. the UK making the case for a new approach to support for land managers and rural communities by transforming the current Common Agricultural Policy into an Integrated Rural Development Policy (IRDP);
Longer term CAP reform(beyond 2006)

2. Our overall aim is to achieve transformation of the CAP into an Integrated Rural Development Policy (IRDP)  - a new system of aid that will link all public support for agriculture to sustainable land management practices and rural development measures. This would include:

  1. within a European policy framework, Member States being given wide discretion to develop a suite of support measures tailored to the needs of their own communities;
  2. transitional and degressive commodity support payments with the savings switched annually to the other elements of the IRDP budget;
  3. land management payments based on the outputs of multi-functional land management rather than on income foregone;
  4. by 2010, one third of the IRDP budget allocated to agri-environment measures, one third to rural development and only one third to farm income/market support;
  5. transitional direct support to agriculture subject to cross compliance to prevent environmental damage;
  6. all income/market support phased out by 2020.
    1. 3. The strategy also highlights our 'Eat the View' and 'Land Management Initiatives' both of which are contributing to policy development. The latter in particular has an important role in researching and demonstrating practical solutions to sustainable land management and reviewing the policies, mechanisms and structures that help deliver it. 
More recent policy initiatives and statements

Countryside Agency agenda for the Mid-term review

4. Based on the above Strategy, our December 2001 evidence to the Environment Food and Rural Affairs Committee Inquiry into "The future of UK Agriculture: Farming beyond subsidies?" asked the Government to press for three things in the mid-term review:

  1. changes in the Rural Development Regulation to allow for more integrated delivery of the full range of measures;
  2. changes to the Horizontal Regulation to allow Member States flexibility in deciding how money generated from modulation can be spent (i.e. across the full range of measures, not just the Accompanying measures);
  3. a better deal for the UK in the allocation of EU RDR funds.
Increased use of modulation

5. Our 21st January 2002 press release urged the Secretary of State to commit the UK government to increasing the UK modulation rate to 10% from 2004 onwards and to 20% from 2006 if Europe fails to reform the CAP. Our aim is to switch money into 'schemes that benefit rural businesses and protect our environment ...' and to 'encourage more rural diversification'. 

6. To achieve this fully would require changes to the range of rural development measures and eligibility criteria for support under the Rural Development Regulation and changes to the Horizontal Regulation and to the CAP Guarantee funding rules.  The latter are less likely to be achieved under the mid-term review. The changes needed will be informed further by the findings of current Countryside Agency research projects into Integrated Rural Development (IRD) (due to be completed later in 2002 - a Board seminar on IRD is being planned) and through LUPG research into the implementation of the RDR (e.g. Europe's rural futures project). 

The desirability of compulsory modulation across the EU. 

 7. We also propose that modulation should be made compulsory across the EU and that the CAP funding rules should be changed to allow Member States more flexibility in deciding how to spend the money generated from modulation. The current rules impose considerable restrictions including limiting spending of modulation funds on the accompanying measures. 

8. Our December 2001 seminar on Using modulation to support rural development  showed that that the EU might be encouraged towards compulsory modulation (i.e. requiring all Member States to apply it), as a short term means of shifting resources into the second pillar. However, this does not necessarily mean that there would have to be a common method of implementation. There are a number of ways by which the cuts in direct aids in the current Horizontal Regulation can be applied. This flexibility is widely seen as a strength, enabling national modulation schemes to respond to local conditions. 

9. Member States would be unlikely to agree a common method that specified which method should be applied. It was suggested that it might be simpler to agree that Article 4 should be made obligatory and that Member States should simply be required to raise a certain minimum proportion of second pillar funds from modulation, but given choice about how they did so. Some consideration of different co-financing rates might also be required.

10. Modulation was seen as having value in the short-term in  sending a message to farmers about the future direction and rationale of CAP support and in enabling Member States to meet some current needs and priorities in relation to RDR spending.  However it is a complex mechanism and is limited in scope. A different mechanism is probably needed to achieve a shift in CAP resources to the second pillar in the longer term.

ANNEX 3 

Outline Influencing strategy for Agenda 2000 mid-term review and CAP reform

Background

1. Our experience in influencing the Agenda 2000 reforms demonstrated that the most effective approach was to work in partnership to promote an agreed UK policy position with the EC and other EU member states, working in alliance with the Land Use Policy Group (LUPG) (see Annex 4).

2. Our action, and that of the LUPG agencies, is informed by an ongoing contract with the Institute of European Environmental Policy providing regular briefing on key policy developments in Europe, an LUPG contract with the International Centre for Trade and Sustainable Development (ICTSD) on WTO matters, and regular liaison with DEFRA.

3. Action has included:

  • joint work with other UK agencies (and sometimes other EU Member States) through the Land Use Policy Group to present at European level a unified and thus stronger UK position. We pool staff and financial resources to commission and promote research, organise European policy seminars, and develop and promote joint policy papers. The approach proved to be highly successful in the Agenda 2000 process, influencing aspects of the outcome and in gaining credibility for LUPG and its constituent agencies in the EC and other Member States; 
  • joint working with other EU Member States - the Agency (and its predecessor the Countryside Commission) has successfully worked with organisations in France, Denmark and the Netherlands to organise seminars on Modulation, the Rural Development Regulation and environmental cross compliance. The findings of a seminar with Swiss organisations on the alternative Swiss approach to agricultural support reform are still being used in developing EC policies. 
  • action with the UK Government and DEFRA, who are the official UK negotiators on agriculture - e.g. formal and informal contacts with DEFRA and Ministers; our response to the Food and Farming Policy Commission; and inputs to relevant Government commission's, task forces and reviews;
  • targeted contacts with Commissioners, other key officials and politicians at a variety of levels to promote the Agency's policies, initiatives and ideas at European level;
  • using the Agency's initiatives to test and demonstrate alternative policy approaches and to provide case studies.   

Principles behind the Countryside Agency's influencing strategy 

4. Our approach to influencing CAP reform needs to:

  • recognise that in European terms England is simply a region of one Member State. To have influence at EU level, we need to work primarily at the UK level through our partnership with DEFRA - the official UK negotiating body for the CAP, and the Land Use Policy Group. DEFRA endorse the view that LUPG offers the most effective way for the Agency to influence the EC, the European Parliament and other key European contacts. They are supportive of the LUPG agencies seeking to influence others to adopt similar stance to the UK, provided that we keep them informed of what we do
  • reflect the cyclical nature of reform based on the agreement of 7-year programmes (currently Agenda 2000 covering 2000-2006, and the next full reforms expected for the period 2007-13 period) and the need for a continuity of approach;
  • respond to the opportunities offered by interim reviews of relevant individual commodity regimes and other aspects of the Agenda 2000 package or other relevant EC policies;
  • have an eye to influencing the early stages of full reforms (i.e. 2002/3 for 2006 reforms) at the same time as influencing the implementation of existing policies and their mid-term review; 
  • focus in our joint action on influencing politicians and key policy officials within the EC and its Member States and within other influential European or international organisations. Our policy objectives for CAP reform are very close to those of the UK Government but our views are very different from current EC policies and are not shared by many other Member States. We need principally to influence audiences outside the UK, although there will be instances where we need to influence the UK Government, the devolved administrations and other UK bodies. 

    Key European target audiences will be relevant Commissioners, Commission officials and Committees (principally those related to agriculture, environment, regional policy, enlargement and economic and social policy), the European Parliament and politicians and officials in key Members States. The audience and relevant countries will vary according to the policies and issues being promoted;
  • be aware that, as there is no formal EC timetable or agreed scope for the reforms, we need to work flexibly.  It is not practical to prepare a detailed influencing programme. It is more effective to work to an outline influencing strategy which is sufficiently flexible to respond to changes in the timing, scope and direction of European policy proposals. We need to be ready to respond appropriately if there is a more fundamental review in the mid-term review.   

Outline influencing strategy

5. We need to deploy a range of tools that enable us to respond flexibly but effectively to the needs of influencing European policy. These include a combination of research (which often includes influencing as part of the research process), experimentation, policy seminars and papers, targetted meetings with key politicians and officials and advice and influencing in order to: 

  • understand the shortcomings of implementation of current policies for our interests and the changes that would be desirable to address these;
  • understand issues and attitudes in the EC and other Member States that are likely to limit or enable policy changes that would be desirable for our interests (including examples of how other countries implement current policies creatively);
  • look at possible policy alternatives and to demonstrate how alternative approaches might work in practice, for example drawing on the experience from our programme of Land Management Initiatives and work on Integrated Rural Development; 
  • promote policy messages jointly agreed with LUPG and relevant Agency policies and seek to influence the debate and develop new and improved EU policies.   

Priorities for short to medium term changes to the CAP 

6. Annex 2 described the Agency's aspirations for reform to which all our influencing work should be geared. Our current priority is to seek to widen the Agenda 2000 mid-term review, in particular to:

  1. secure more resources for Pillar 2 measures through applying compulsory modulation across the EU. Our December 2001 European seminar in Brussels on Using modulation to support rural development showed that modulation is the likely to be the only tool available in the short term to shift resources from the first to second pillar of the CAP. However, no significant shift will occur unless it is made compulsory, as most Member States will otherwise choose not to implement the measure. This will require changes to the 'Horizontal Regulation'. Current CAP funding rules lack flexibility and limit the spending of funds generated through modulation to only a few RDR measures, essentially the environmental measures. Some changes might be made at mid-term review but others are likely to require more fundamental CAP reform. However, it is unclear at present the extent to which limitations are a result of the Regulations or the Commission's interpretation of them, which has changed considerably since Member States' Rural Development Plans were being negotiated;
  2. to reform further commodity sector policies, particularly those for livestock, so that they respect countryside character and support sustainable land management. An LUPG European seminar Livestock policy reforms in December 2001 underlined the need for changes to commodity policies if sustainable land management is to be achieved; 
  3. require Member States to apply more effectively the range of cross compliance measures which already exist under the Horizontal Regulation. This is necessary because despite evidence that CAP direct payments damage the environment, Member States are being slow to implement the existing cross compliance measures. Currently they are only required to 'take the environmental measures they consider to be appropriate' giving them, in effect, an option to decide that none are appropriate. These measures can include: support in return for agri-environment commitments; general mandatory environmental requirements; and specific environmental requirements as a condition for direct payments.
  4. These changes will require parallel changes to the IACS system to enable it to be used more effectively for administering, recording, auditing, monitoring and evaluating expanded Pillar 2 schemes (e.g. using a GIS based system).
Proposed action

7. It is proposed 

  1. to focus our attention on working at the UK level by means of joint working through the Land Use Policy Group and through liaison with DEFRA, the official UK negotiating body.  Annex 5 lists the current joint agency LUPG action related to CAP reform and the Agenda 2000 mid-term review; 
  2. related to i., to work with our counterparts in the other LUPG agencies (and the Environment and Heritage Service in Northern Ireland) to persuade the devolved administrations to support higher rates of modulation (and possible compulsory modulation). It was difficult for the Government to get agreement to apply modulation in the UK even at the low current levels. The benefits in England are proportionately greater than in Scotland, Wales and Northern Ireland because of the higher levels of funds generated;
  3. to continue to press Government and other relevant organisations and contacts to seek the changes at European level that we seek,  e.g.  through formal and informal meetings and briefings with Ministers and DEFRA officials, press releases and responses to consultations, and through our work with the OECD;
  4. to seek to maximise the use of information from our own initiatives and experiments in influencing European policies that will contribute to sustainable land management and integrated rural development,  for example the LMIs and IRD projects,  the "Eat the View" initiative  and relevant aspects of Market Towns, Vital Villages and other programmes.
  5. to continue to organise occasional meetings in response to policy developments to promote our approach and communicate the findings widely.  For example, we will complete and circulate the report Using modulation to support rural development from our December 2001 Brussels seminar and use information from the report in other policy influencing work as opportunities arise. The report will be circulated to Board members in February;
  6. to continue to liaise closely with DEFRA to keep them informed of our activities and to share information and thinking.   
ANNEX 4

The Land Use Policy Group (LUPG)

LUPG background and aims

1. The Land Use Policy Group of the GB statutory conservation, countryside and environment agencies (Countryside Agency, English Nature, Countryside Council for Wales, Scottish Natural Heritage, Environment Agency and the JNCC) advises the agencies on policy matters of common concern related to agriculture, woodland and other land uses. 

2. The LUPG agencies cannot achieve their individual and collective land management objectives without a change in the European policy framework, particularly the Common Agricultural Policy. This is the basis for the joint programme of work which includes: research into land use policy issues; inputs into European and other international policy making; and advice to national agricultural and forestry departments where there is a joint UK interest. 

3. LUPG seeks to: improve understanding of the pros and cons of existing policy mechanisms related to land use, particularly farming and forestry; to develop a common view of desirable reforms; and to promote these views at the UK and European levels. It aims to influence UK and international policies that will support the agencies' objectives and is keen to work with UK and continental partners who share its vision. 

LUPG agreed vision for sustainable land management and associated rural development

4. LUPG's concern is to promote sustainable rural development and to safeguard the natural and cultural heritage. Its vision is that basic resources, landscapes and biodiversity are protected and enhanced, rural economies and communities are thriving and people are able to enjoy and visit the countryside. It is working to develop and promote policies to achieve this vision so that by 2011 the following will have been achieved

1. Europe's rural areas are managed in ways that are socially, environmentally and economically sustainable and the inter-dependence of these three strands of sustainability is fully recognised;
2. sustainable rural development is based on the principle that recipients of public support make a contract to provide a range of benefits for society which include:
  1. sustainable management of the basic resources of soils, water, air upon which we depend for survival;
  2. maintenance of landscapes rich in local character and distinctiveness  and restoration of degraded landscapes;
  3. maintained and enhanced biodiversity across the EU through protection and enhancement of wildlife habitats and species e.g. by supporting the management objectives of Natura 2000 sites, but also in the wider countryside;
  4. production of high quality food, fibre and timber primary products and other rural products whose production meets animal welfare, environmental and social standards;
  5. viable rural communities which are socially inclusive, maintain rural cultures and traditions and support a wide range of skills  (including both new and traditional ones) and which are able to compete in increasingly global marketplaces by sustainable use of their natural and cultural resources;
  6. opportunities for public enjoyment of the countryside  through open-air access and recreation and visual appreciation;
  7. a rich resource of historic and archaeological features from which we can continue to learn about the longstanding relationship between people and the land.
3. Europe's rural policies are integrated through a sustainable European rural policy  which covers support for sustainable agriculture, forestry and rural development. The CAP has been phased out over 10 years through degressive payments and transitional support, which has enabled farm businesses to adapt to the removal of direct commodity support payments and reduced market supports to the minimum. CAP has been replaced by a sustainable European rural policy which:
  • meets the needs of rural areas in accession Member States as well as those of existing EU Member States;
  • enables a large degree of subsidiarity with EC policy providing a common framework for implementation, monitoring and auditing;
  • contains measures that are integrated as fully as possible to obtain added value from appropriate packages of measures in different areas;
  • is closely linked to special transitional support from the Structural Funds available to rural areas with specific problems.
4. The new sustainable European rural policy support combines four main elements:
  1. payments for public benefits delivered by the management of rural land and the environment where these are not rewarded through the market. Where possible such support helps to regenerate the economy (e.g. through sustaining/creating jobs or supporting tourism);
  2. investment supports and other fiscal measures  for a wider range of rural business development, training and capacity building; and for changes in land management or ownership which bring added environmental benefits;
  3. limited special social support and the minimum of market supports. These might include transitional mechanisms and other special measures;
  4. to meet consumer requirements and society's expectations all producers must comply with at least the minimum statutory standards related to the environment, animal welfare, food and countryside access. Producers receiving public support are expected to comply with higher conditions for some of these aspects.
5. Rural development is pursued differently in different places. Policies support natural, cultural and economic diversity.  The sustainable European rural policy has a robust European framework but includes a strong element of subsidiarity and devolution which allows each Member State to develop its own programme of rural support measures that reflects regional and local needs, including additional state aids;
6. processes associated with a sustainable European rural policy are designed to be flexible and to minimise bureaucracy and maximise public benefits from the supports. Processes for programming, delivering, monitoring, reviewing and applying for support are as simple and transparent as possible and they reflect EC policy on sustainable environmental, social and economic development;
7. a sustainable rural European policy takes a participatory approach to the development, design and implementation of the rural support programme in each Member State  including local involvement. LUPG Initiatives relevant to CAP reforms and the mid-term review of the RDR 5. The work programme is comprehensive and comprises 
  • Europe's rural futures (CA lead), sponsored jointly by LUPG and WWF Europe and WWF national offices. Outputs are targetted and timed to influence the EC mid-term review of the CAP, and Member States' national evaluations of rural development programmes. The project is exploring how eight European countries (France, Germany, Austria, Sweden, Spain, UK , Poland and Hungary) are implementing the RDR and SAPARD (rural development support in accession countries). It will identify case studies, key issues and policy changes needed to enable the sponsors' vision of sustainable rural development to be achieved. 

    A European seminar will be held in Brussels on 16th April 2002, targetted at EC officials and key policy makers in Member States  to discuss the interim findings. A policy messages paper is planned for summer 2002 (exact date will depend on the timing of the EC Agenda 2000 mid-term review paper). A European influencing plan is being developed for the project so that it can respond to EC proposals as they emerge. The final comparative report is due to be completed by December 2002.   
  • Forestry in rural development (SNH lead). This research project is designed to: identify coverage and gaps in Rural Development Regulation plans across the EU in relation to forestry; raise the level of debate about forestry in rural development; and develop proposals for policy change. A seminar to discuss the findings is being held on 12th February 2002.
  • reforms of CAP livestock regimes and area payments (EN lead).  An LUPG Working Group  is looking at the effects of the current livestock regimes and developing ideas to promote debate about the need for and nature of integrated reform across the livestock sectors in order to achieve sustainable land management. A policy literature review was produced in 2001 and a seminar held in the Hague (December 2001) to present and discuss issues and outline ideas.
  • LUPG discussion paper on the range of action needed to achieve desirable change before accession in 2004. A joint agency working group is preparing a draft paper for LUPG's February 15th meeting. This will include specific proposals for mid-term review changes and preparatory work for longer term reforms. 
  • other LUPG joint discussion papers will be developed in response to needs and opportunities (currently not known) which may arise through the mid-term review process in 2002-3 - these might include "developing the second pillar" and "funding issues."
  • Advice on WTO issues (EN lead) A contract with the International Centre for Trade and Sustainable Development is helping to develop the agencies' thinking on the multi-functionality of EU agriculture in the context of WTO membership. 
  • advice on CAP issues (JNCC lead). The Institute of European Environmental Policy is contracted to provide advice and regular briefing to LUPG on CAP and related European policies. 
  • Funding the RDR and possible new models (EA lead). A brief is being developed for this research which will be carried out in 2002-3. It will aim to improve understanding of the RDR and other EU funding mechanisms across Member States and related issues. It will help to develop the case for CAP budget reform and possible alternative RDR models. The findings will be used to support the planned 2003 LUPG conference on CAP reform.   
  • LUPG European Conference, Spring 2003 (CA lead). This high profile event is in an early stage of planning. It is intended to be a major influencing event in preparation for the next round of CAP reforms and is likely to be held within easy reach of Brussels in partnership with another Member State or European organisation. Its programme and emphasis will depend upon progress with the mid-term review of Agenda 2000.
  • Developing rural targets and indicators (JNCC lead). The Phase 1 report completed in 2001 looked at the current range of targets and indicators for public benefits from land management. Its findings are being considered before progressing with Phase II. The aim is to define more clearly the benefits we expect to see from land management, targets that need to be reached and appropriate indicators to assess how far targets have been achieved.   
  • Development of farm assurance conservation standards (CA lead). Although this work has primarily a UK focus, its findings will be relevant to improving EU wide standards. A report has been completed.
  • Communicating LUPG messages (EN lead). LUPG organise joint meetings with Commission officials and other contacts, produce joint research notes and reports, and issue joint press releases and articles. A website is being developed to give easier access to key reports, working papers and policy messages. A PR adviser is contracted to provide support in targetting important events, drafting articles, and promoting key messages.  
LUPG Influencing Strategy

6. LUPG is developing a joint influencing strategy on the mid-term review of Agenda 2000. This will be discussed at LUPG's next meeting on 15th February. The Agency's Strategy will need to link with LUPG's joint efforts.