COLUMN: Hume Hargreave - Test looms for Irish diplomacy

WHAT help will CAP reform provide? Only a vague answer can be given - there will be less money for farm support this year, less in 2014 and perhaps even less when the Basic Payments scheme replaces the Single Payments scheme in 2015.

WHAT help will CAP reform provide? Only a vague answer can be given - there will be less money for farm support this year, less in 2014 and perhaps even less when the Basic Payments scheme replaces the Single Payments scheme in 2015.

The amount available for Single Payments this year depends on whether the European Parliament seeks to unpick the EU budget for 2013-20 and on the euro/pound exchange rate in September.

The amount available in 2014 depends on how new EU legislation, which comes into force next year, applies to the Single Payments scheme.

The effect of the legislation is unknown until the negotiations conclude between the three parties to the reform process, the 27 member states, the European Commission and the European Parliament, chaired by the Irish, who hold the EU Presidency until the end of June.

The Commission says that payments this year have to reduce by 5% to bring spending within the 2013-20 budget which the member states agreed in February at the instigation of Germany and the UK at a lower level than the Commission wanted.

The Parliament has threatened not to approve the budget. If it does – perhaps unlikely – there may be a smaller reduction, and, for UK farmers, the effect may be mitigated by the exchange rate which at present is some 6.5% more favourable than last autumn.

Next year the levelling of rates, to bring the money for farmers in Eastern Europe into line with those in Western Europe, begins, and the new rules for “modulation” – shifting money from farm support to rural development – apply.

The levelling of rates was dealt with in the Budget and is unlikely to alter. The modulation rules are the stumbling block in the tripartite negotiations.

At present, if a member state wishes to shift money, it has to “match fund”, – put up an equivalent amount in national funds as well – which particularly in the UK, has been a powerful disincentive. In February, the member states agreed that there need be no more match funding.

The Commission is not happy, and the Parliament even less so. Resolving this impasse will be a test of Irish diplomatic skills.

The outcome is important for the UK. As matters stand, member states will be allowed to move 15% of money for farm support to rural development, and vice versa, without match funding. The Secretary of State for the Environment, Owen Paterson, has made it clear that Defra would move the full 15%; the Scottish Government may also do so, perhaps to a lesser extent.

:: Hume Hargreave, retired partner at Dickinson Dees

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