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Implications of CAP Reform: Forming a Devon View. Michael Winter University of Exeter. Aims of Talk. To consider the immediate prospects for the Mid-Term Review of CAP. To examine the possible implications of modulation. - PowerPoint PPT Presentation
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Implications of CAP Reform: Forming a Devon View
Michael Winter
University of Exeter
Aims of Talk To consider the immediate prospects for the Mid-
Term Review of CAP. To examine the possible implications of
modulation. To suggest that a new orthodoxy is emerging
around the positioning of European agriculture in the international policy context.
To question the significance of CAP in this wider context.
1. Mid-Term Review (MTR) of CAP EC has just published “Prospects for
Agricultural Markets 2002-2009”. This includes analysis of the latest US
Farm Bill.
MTR cont/ Milk – market improving. Therefore no early
reform to dairy sector. Quotas to continue. Beef - market improving. Therefore no early
reform. Sheep- no changes expected. Cereals - market expected to improve (following
this year’s difficulties). Likely cut of 5% in intervention price.
MTR cont/ Modulation – up to 20% of direct aids
skimmed off for Rural Development. Likely to be gradually in 3% steps.
Rumours that modulation savings may not be handed back to governments that trimmed them – perhaps shared instead with poorest areas of the EU.
2. Modulation Currently voluntary (UK and France only,
with Portugal and Germany considering). In UK rising from 2.5% in 2001 to 4.5% in
2005/06 across board. MTR offers possibility of compulsory
modulation.
Implications of compulsory modulationA. Very difficult to determine until we know:
B. How the modulated money will be spent.
C. The precise details of any new Agri-Environment Scheme.
D. The level of scheme uptake.
The impact of 10 % modulation and the implementation of a Broad and Shallow Agri-environmental Scheme in the SW
-
5
10
15
20
25
30
35
40
45
50
£ million
2000 NFI NFI accounting for10% modulation
NFI accounting for10% modulation &BSS (60% uptake)
Scenario
Arable
Dairying
Cattle and Sheep
3. The New Orthodoxy Farmers must be responsive to markets Globalisation of food markets Segmentation of food markets Farming is multifunctional Farming has negative environmental and other
impacts (externalities). Rewarding multifunctionality and regulating
externalities is the only justification for policy intervention.
Background to Orthodoxy
Farming & FMD crisis Maturing of agri-environmental debate Europe’s response to WTO
Who buys into the new orthodoxy? EU and UK policy community Mainstream farming organisations Mainstream environmental and food NGOs
Tensions and uncertainties
Global Markets v Regulation Positive v Negative Externalities State Regulation v the New Governance
How important is CAP? It is not the sole determinant of prices. It is not the sole driver of the rural economy. It is not the only source of rural policy. It is not the only consideration for farmers.
In short CAP is but one factor and not necessarily the most important one to the future of rural Devon. The challenge is to ensure that we use the opportunities of CAP reform but are not held back waiting for THE reform.