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Common Agricultural Policy reform must focus on delivering Public Goods

16 May 2016

The EU Energy and Environment Sub-Committee today publishes its report, Responding to price volatility: creating a more resilient agricultural sector, investigating what needs to be done to boost the resilience of the farming sector in the face of challenges such as volatile prices. It called on the European Commission to reform the Common Agricultural Policy (CAP) to primarily support the provision of public goods, such as increased food security, high animal welfare standards and stewardship of the land.

Key findings

  • The Committee recommends that the UK Government encourage tenant farmers seeking to diversify and strengthen their resilience.
  • The Committee recommends the UK Government promote the use of financial instruments and raise awareness among farmers with operations of different sizes and in different sectors.
  • The report also calls for the UK Government to work with the private sector in developing new financial tools which could be accessed under Pillar 2 of the CAP.
  • The Committee further recommends the European Investment Bank speed up the work on financial instruments and work more closely with Member State governments and agricultural bodies to disseminate their work.
  • The Committee also urges the UK Government and the European Commission do much more to promote links between research projects and agribusinesses.


Commenting, Baroness Scott of Needham Market, Chairman of the Committee, said:

“Farmers across the EU do a vital job in ensuring the safe supply of food, managing the land and contributing to the wider rural economy. They do so in the face of risks including price volatility and unpredictable political decisions.

“Evidence we received suggested it is time for the Common Agricultural Policy to be reformed to more fully recognise the holistic service farmers provide for society by directing funding towards the provision of public goods, including environmental management, food security and stewardship of the land. We believe that income support for farmers in the UK and in the wider EU should continue as the conditions for agriculture are more challenging than in many other major producing countries. Nevertheless, public money should not be used to simply prop up inefficient farmers.

“Direct Payments still have a role to play and we do not propose a move to a US style insurance based approach. However, there is a real risk with the pronounced focus on blanket income support, as opposed to more targeted subsidies, that innovation is stifled and new farmers are discouraged from entering the industry.

“Last year we saw catastrophic flooding in parts of the UK which caused real hardship for farmers in the affected areas. One-off support packages can help farmers through such episodes beyond their control, but a long-term policy should focus on building the sector's resilience to withstand a wide range of risks including low prices. Our inquiry found that better business skills are key to competitive farm businesses.”

Further Information