Commissioner’s first visit

The first of the EU Agriculture Commissioner Phil Hogan’s programme of visits to member states has taken place; he has been to the Netherlands. He met farmers and the farming press, and also the Dutch Parliament’s Agriculture Committee, which none of his predecessors had done.

As predicted, the fallout from the Russian trade ban, and its effect on the already over-supplied market for dairy products, was the first hot potato on his desk. He found funds to help Baltic and Finnish dairy farmers, but was under pressure from his officials who were concerned that aid packages might be sought to fund remedies for problems unrelated to the trade ban. He had to deal with a proposal from Dutch farmers that they should combine together and reduce production  to boost prices – a practical idea, you might think, but apparently it has implications for EU competition law, and is likely to be banned.

‘The longer term and sustainable answer’, the Commissioner told the Dutch, ‘is to open up new markets, with the EU selling to the USA, Japan and other Asian States like South Korea and Vietnam’. He will play a part in the negotiations to put together the Transatlantic Trade and Investment Partnership (TTIP), an ambitious deal between the EU and the USA, but, if the experience of his Irish predecessor as Agriculture Commissioner, Ray MacSharry, is anything to go by, he will find himself in conflict with the Swedish EU Trade

Commissioner, Cecilia Malmstrom. In the 1990’s Mr MacSharry did battle with then Trade Commissioner, Frans Andriesson, who, he considered, was not protecting  the interests of EU farmers sufficiently in  the negotiations for the General Agreement on Tariffs and Trade (GATT). The Dutch will have made clear to the Commissioner their concern that the animal welfare standards imposed on their produce might not be made mandatory for imports from the US, and he will hear the same as he visits other member states.

The TTIP negotiations will take time. A more immediate objective for the Commissioner is the simplification of the Common Agricultural Policy – although, as he said in the Netherlands, ‘simplification is not simple’; it would be a rolling process; as a start he said, his officials have identified 200 measures for removal from EU regulations.

The challenge for the Commissioner is to forget that he is Irish. In his talks with the Dutch he used Commissioners’ traditional phraseology and referred to Ireland as ‘the member state that I know best’. That is as far as he can go; he has to take a pan-EU view of his responsibilities. At least he appeared enthused by his appointment, being reputedly one of the few people in President Jean-Claude Juncker’s new team of Commissioners who ‘keenly and actively wanted the job’. A depressing thought, just to add to the gloomy prospect of lower Single Farm Payments than anticipated thanks to the fall in the value of the euro on the currency markets.


The value of Basic Payments

Although the UK has not adopted the euro, UK farmers are not immune from the consequences of recent events in the EU. The value of their Basic Payments, denominated in euros, is likely to be less than anticipated, if, as seems likely given the European Central Bank’s programme of ‘quantitative easing’ and the lack of a proper solution to the problems in Greece, the euro continues to weaken and sterling to appreciate against it; at €1.40 = £1, the euro is worth 71p, some 10% less than recently.

In contrast the Greek farmers are likely to be the only traders in that country with a comforting each way bet. If Greece remains a member of the euro-zone, they will get their Payments in euros from the EU Agriculture Budget, which will not be raided to find the funds to prop up Greece yet again –  new loans or whatever will come from other EU funds, preferably those to which only the member states in the euro-zone will have contributed. If Greece leaves the euro-zone, their farmers will still get their payments in euros, and how much more will they then be worth than the newly adopted drachmas? Perhaps there will be a sudden increase in the number of claimants? Not that that would be a surprise – because of administrative problems in the Greek equivalent of the Rural Payments Agency.

The EU Agriculture Commissioner, Phil Hogan, has recently announced that the Commission has used a recently introduced power to reduce reimbursement of CAP payments made by a member state. It appears that the Greek Government does not have an effective Land Parcel Identification System. The Commissioner says that ‘Greece has made considerable progress in recent years in addressing the shortcomings for this very important element for managing CAP Direct Payments. However, several Commission audits carried out in the last  3 years have shown that the Greek LPIS is still not compliant with EU rules. As a consequence, the maximum eligible area recorded in the LPIS is overstated, which had led to irregular payments being made to beneficiaries under the single payment scheme.’

‘Despite an action plan by the Greek authorities and efforts made to remedy the situation’, the Commissioner reported that an audit carried out in November confirmed that the objectives of the action plan were still not met and ‘could not be achieved in the immediate future’, ie for payments due in claim year 2014. Reading between the lines, it seems that the irregularities have been known for years but the Greek Government has still been reimbursed by the EU, no doubt in return for ‘promises to do better’, and finally the Commission’s patience has snapped. The official announcement dryly records that ‘The Commission has therefore taken the precautionary measure for the first time of reducing the reimbursement of payments to Greece. The amount of the reduction corresponds to the amount considered at risk, which is estimated at €17m.’ Not likely to help the Greek Government’s efforts to stay afloat.


The simple CAP

The implementation of the reformed Common Agricultural Policy took another halting step forward with the recent publication of the English handbook for the Basic Payments Scheme. The former EU Commissioner, Dacian Ciolos, claimed that the new policy arrangements were simple, but his successor, Phil Hogan, included simplification of his predecessor’s efforts in his ‘to do’ list on taking up his appointment and soon admitted that ‘simplification was not simple’. The handbook bears this out, as does DEFRA’s admission of defeat when it announced the abandonment of its plan for an all digital application system.

The Commission has had to recognise the problems member states have introducing the new arrangements, and, most unusually, has given them the option of deferring the deadline for the submission of applications from 15 May to 15 June. The later date will now apply in England, and is likely to in Scotland, Wales and Northern Ireland as well because the devolved governments all have differing reasons to welcome delay. The Scottish Government has made slow progress in publishing regulations and guidance; the Welsh Government is struggling with the recalculation of rates after being forced to give up its proposed regionalisation.

The handbook for England provides detail of the evidence farmers have to produce if they are to qualify as ‘active farmers’, ‘young farmers’ or ‘new farmers’.  None of these categories is quite what it seems.

To qualify as ‘an active farmer’ an applicant merely has to show that he has registered himself as a farmer, is in occupation of land that is mapped on the registration system and is not operating an airport, railway services, a waterworks, real estate services or a permanent sports or recreation  ground, and, even then, may be allowed to claim subsidy if he can establish that he occupies at least 36 hectares of eligible land, or his total agricultural receipts were  at least 40% of total receipts within any one of three years preceding the claim, or the value of his Single Farm Payment claim was at least 5% of total non-agricultural receipts in one of those years.

Applicants have to be under 40 on 31 December 2015 if they are to qualify for additional entitlements from the national reserve as ‘young farmers’ and must not have taken control of the business before

1 January 2010. To qualify as ‘new farmers’ they have to show that they are at least 18 at the date of the application, are in control of a farm business that began in 2013 or later and were not involved in, or in control of, an agricultural business in the previous five years.

The handbook also sets out the complex rules for reductions and penalties for breaches of the greening conditions, over-claiming, late applications, failure to declare all eligible areas and breaches of cross-compliance.

Though applications can now be made on paper, digital registration is still necessary for both transferor and transferee to transfer entitlements – a pitfall that may easily be overlooked.


GM food and feed – EU Commissioner bows to democracy

The European Commission is offering to embark on further erosion of the fundamental principle of the internal market – that EU rules and regulations apply in all the member states without exception, by proposing more ‘renationalisation’ of the GM regime.

Genetically modified crops, food and feed have been a Trojan Horse for successive Commissions because of widely differing attitudes to GM technology in the member states – which have paralysed the EU legislative procedures and left the Commission to proceed by default.

At the beginning of April regulations,  initiated by the previous Commission of  Sr Manuel Barroso, came into force which allow member states to ban the growing of GM crops in their territory even if the EU has authorised cultivation. When his Commission was being appointed, the new Commissioner, M Jean-Claude Juncker, included in the Political Guidelines (ie ‘manifesto’) that he submitted to the European Parliament a commitment to review the GM regime, and has now begun to honour that by submitting a proposal  that, if adopted, would allow member states also to ban imports of GM food and feed – even if those too have EU authorisation.

The proposal sets out the context in which  it is made in formal, but rather sorrowful and revealing, language: ‘There has never been a qualified majority amongst Member States in favour of or against a draft Commission Decision authorising Genetically Modified Organisms (GMOs) and Genetically

As a result, the authorisation decisions have been adopted by the Commission, in accordance with applicable legislation, without the support of the Member States’ committee opinion. The return of the  dossier to the Commission for final  decision, very much the exception for the procedure as a whole, has become the norm for decision-making on GM food and feed authorisations.’

It goes on to say that the existing EU legislation ‘allows Member States to adopt measures restricting or prohibiting the use of authorised GMOs and GM food and feed only if they are able to demonstrate that the product in question is likely to pose risks to health and to the environment. The reasons why Member States vote against are diverse. They often express national concerns which do not only relate to issues associated with the safety of GMOs for health or the environment. The Commission therefore proposes to extend the solution agreed in Directive 2015/412 (ie Sr  Barroso’s Directive as to GM crops) to GM food and feed in respect of democratic choice and in the interest of consistency.’

Have the highlighted words ever appeared in a Commissioner’s proposal before?

Assuming the proposal is adopted, EU farmers’ representatives fear that it will distort the market for animal feed, make it less attractive for international suppliers and lead to higher prices.