Water UK report on CAP reform
Published March 2013
Water UK briefingApril 2011
The purpose of this paper is to provide a brief background on the history of the Common Agricultural Policy, the current drivers for reform, and how the water industry could benefit from change.
Although the word ‘subsidy’ brings to mind the Common Agriculture Policy, governments have intervened to keep the price of basic commodities stable for hundreds of years, and after World War II – many years before the UK joined the European Union – farmers were paid to produce food. As Lord Plumb, President of the National Farmers’ Union in the 1970s and of the European Parliament in the 1980s , pointed out: “It was Sir Winston Churchill who said, just after the war, ‘30 million people all living on an island where we produce enough food for, say, 15 million, is a spectacle of majesty and insecurity this country can ill afford’.”
The Common Agricultural Policy, or CAP, was originally set up to increase productivity and stabilise markets in a Europe still haunted by the spectre of wartime hunger. It did this in part by a system of intervention, buying up produce when the market price dropped below a certain rate, to ensure agricultural returns remained constant. However, by the 1970s and 1980s tales of butter and beef “mountains”, bought and stored by European officials to keep the price of produce artificially high, led to calls for reform.
It took many years, but after the CAP Health Check of 2008 payments are now being shifted from what are known as Pillar 1 payments (direct food production support) to Pillar 2 funding (for environmental and rural development), to encourage rural cohesion and good environmental practice on farms.