UK Agricultural Policy Post-Brexit Editor: Will Melling Writers: Bence Borbely, Trevor Chow, Tom Nott, Yang Zuo
1. Introduction 1.1 Background - The CAP and its Problems Making up 37.4% of the European Union’s budget, the Common Agricultural Policy constitutes the EU’s largest single program.1 It provides direct income support for farmers, engages in market measures to mitigate volatility, and funds rural development measures. Consequently, the CAP has a profound influence in shaping the economic conditions of the agricultural sector in member countries. The Common Agricultural Policy has two main pillars. Pillar I is responsible for the payments to farmers – this manifests itself in two ways. The first is via direct income support, which is a subsidy paid based on the amount of land a farmer owns. This is contingent on meeting certain minimal cross-compliance standards of environmental management, animal welfare and traceability. These include greening measures such as crop diversification or setting up Ecological Focus Areas to plant nitrogen-fixing crops. The second is via market support, which is funding used for minimising the effects of market volatility on farmers. Pillar II is about rural development, whether that be for environmental purposes of combating climate change, to help achieve a balanced development of local rural communities or as a way of improving agricultural productivity by ensuring sustainable resource management and competitiveness. Within the UK, agriculture takes up 72% of all land and 1.45% of all employment - for that, it received €4.2 billion in payments from the CAP.2 The UK’s CAP payments were dominated by direct aid, which took up 75%, with less than 1% going to support stable market prices. The remaining 24% came from Pillar II programs under the European Agricultural Fund for Rural Development as well as domestically co-financed schemes, like the UK’s Rural Development Programs. The United Kingdom’s withdrawal from the European Union meant that it needed a new set of agricultural policies following Brexit in order to replace the funding its agriculture sector previously received from the CAP. The government proposed and passed the Agriculture Act 2020 in order to do so.3 This replaces the framework of agricultural payments set up in CAP for a few reasons. Firstly, the direct payments under the CAP have been criticised because they are given based on farm size. This means that these payments are helping the rich get richer, with around 20% of farmers receiving 80% of the money.4 Not only is this inequitable, it is inefficient, because it is the larger farmers who face fewer risks of income volatility affecting their livelihoods and are more able to take advantage of economies of scale. Indeed, the fact that the direct European Commission, ‘CAP expenditure in the total EU expenditure’ (2020) <https://ec.europa.eu/info/sites/info/files/food-farming-fisheries/farming/documents/cap-expendituregraph1_en.pdf>, accessed 5 January 2021 2 Department for Environment, Food and Rural Affairs, ‘Agriculture in the United Kingdom 2019’ (2020) <https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/904024/AU K_2019_27July2020.pdf>, accessed 5 January 2021 3 Agriculture Act 2020 4 European Commission, ‘European Union Statistical Factsheet’ (2020) <https://ec.europa.eu/info/sites/info/files/food-farming-fisheries/farming/documents/agri-statistical-factsheeteu_en.pdf>, accessed 3 January 2021 1
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