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CAP Budget Stakeholder Letter

With Europe edging towards a new budget settlement, Westminster appears gripped by a wave of euro scepticism at this important time for rural Scotland.  Looking for controls on Europe’s spending must be a priority as domestic budgets are cut.  However, headline grabbing calls to cut ever deeper into those EU budgets that support and develop the wider economy risk overwhelming the real political challenges in Europe and blocking potential benefits for the UK and devolved administrations.

As the EU budget dominates the political agenda, the Common Agricultural Policy (CAP) - one of the foundations of European unity - is in the middle of a reform process that will gather considerable momentum once a budgetary agreement is reached.   The public image of EU agricultural policy was scarred by the era of over-production that resulted in wine lakes, grain mountains and butter stores.  Those days are long gone, and the debate for this and the next generation must focus on adequate and affordable food supplies while safeguarding ecosystem services.  

The modern CAP is an engine for economic activity, while acting as an anchor to crucial agricultural activity that is key to future food security in a world where supply is no longer guaranteed.  In Scotland, where our iconic livestock production has been falling, the new CAP has the potential, through coupling payments to stock to bring production back into balance.

Direct support at farm level and rural development funding also enable environments to flourish, water quality to improve and biodiversity to thrive, as well as allowing rural communities to prosper.   Scotland, at the fringe of Europe, is an extraordinary mix of landscapes and precious ecosystems with farming at their core and this typifies how the CAP delivers simultaneously for farming and the wider public interest.  Sustaining farming systems also underpins rural communities and a vibrant food and drink sector, which is a growing part of Scotland’s manufacturing and export capability.  

The CAP reform process will take place under the shadow of reduced spending, but within the reform package there is a commitment to move funding to those Member States and regions - like Scotland - that have been disadvantaged by low levels of support historically.  

Scotland is near the bottom of the CAP funding league, with direct farm support less than half the average rate in Europe.  In rural development spending, which includes agri-environment and habitat management payments, Scotland only draws down 15% of the EU average.  Other parts of the UK also face significant disadvantage. So unsurprisingly, the UK as a whole is not favoured by CAP budget allocations.

Cuts to these currently low budgets would only erode agricultural production, risk our food security, and threaten the viability of rural communities.  Any fracture of the rural economy will risk the maintenance of landscapes and the management of important habitats and their iconic wildlife.   The level of EU spending and the reform process will develop a new framework for the CAP, including a new focus on ‘greening’ support to secure environmental benefits.  A CAP reform deal will shape the future of Scotland’s rural areas over the next decade and beyond.   In Brussels, the door has been opened to a fairer distribution of rural development funding and there are real opportunities for the UK and Scotland, but only if the Defra Secretary of State Owen Paterson MP engages positively in the process.  

The present focus at Westminster on cutting further into the European Commission’s proposed CAP budget, which already moves spend down in real terms, would severely undermine the best interests of Scotland’s rural economy and its food and drink sector.  The political posture risks sidelining the UK from key decision-making in Europe and, in so doing, removes the potential of negotiating an increased share of rural spending.

There is a real opportunity to win a more sustainable level of rural development funding too, which could drive business development in a more diverse rural economy, allowing communities to become more self-reliant, and ensure that we safeguard and enhance our priceless environmental assets.

UK ministers have now to look beyond rhetoric and work with the Scottish Government and Europe for the future of rural Scotland.

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