What would Brexit mean for farmers and the Common Agricultural Policy?

What is the Common Agricultural Policy?

The Common Agricultural Policy is a cornerstone of the EU, costing nearly 40pc of its budget or €58bn a year.

Set up in 1957 to sustain the EU’s food supplies by boosting agricultural productivity, the CAP provides financial support to some 12m farmers across Europe.

Its structure has evolved overtime: the original scheme effectively boosted market prices, leading to over-production and the butter mountains and wine lakes of the 1980s.

The EU responded by introducing quotas on everything from milk to sugar beets, which are only now starting to be lifted, and by changing the system to make direct payments to farmers.

The payments were changed again in the mid-2000s to reward farmers for particular land use, and in 2013 new green incentives were introduced for adopting measures such as tending to wild grassland.

British farmers
The Common Agricultural Policy costs the EU nearly 40pc of its budget or €58bn a year Credit: Getty

How much money do British farmers receive from CAP?

The CAP scheme has two main pillars: direct payments, known as the Basic Payment Scheme (BPS), and funding for the wider rural economy.

In 2015, UK farmers received almost €3.1bn (£2.4bn) in direct payments, according to the NFU.

Farmers have access to the €5.2bn (£4bn) pot of funding that has been allocated to the UK for rural development projects over the period 2014-2020, including €2.3bn that has been transferred from the BPS to the UK rural development programmes.

What would happen if Britain leaves the EU?

That all depends on what – if anything – would replace CAP, which is what farmers have complained is the big unknown.

"It's impossible to measure the impact of being outside the EU since we do not know the relationship the UK would have with the EU nor the conditions under which our farmers would be expected to operate if we left," the NFU points out.

Simply removing the CAP support, while it remained in place in the rest of Europe, "could devastate British farming", Meurig Raymond, the NFU President, told the BBC recently.

Consultancy Agra Europe suggests land prices would crash and 90 per cent of farmers could go out of business.

It concluded: "What is certain is that no UK government would subsidise agriculture on the scale operated under the CAP."

But advocates of Brexit – such as farming minister George Eustice – insist that Britain could opt to continue providing subsidies.

Mr Eustice told the NFU conference that leaving would create an £18bn a year “Brexit dividend”. This could be used to continue payments to farmers through an improved scheme.

“Could we find the money to spend £2bn on farming and the environment? Of course we could. Would we? Without the shadow of a doubt,” he said.

Brexit supporters point to the examples of Switzerland and Norway, which are outside of CAP and have their own versions that provide even higher support to farmers.

George Eustice 
Advocates of Brexit – such as farming minister George Eustice – insist that Britain could opt to continue providing subsidies Credit: Rex 

But others remain sceptical that the UK – which has consistently pushed for CAP payments to be reduced – would really offer such subsidies unilaterally.

The House of Commons library sided with those who believe subsidies would be cut by Brexit.

"Leaving the regime would probably reduce farm incomes," it said in a research paper. "CAP subsidies form a significant part of most farm incomes, and the UK Government and Devolved Administrations would be unlikely to match the current levels of subsidy and/or would require more ‘public goods’ in return for support, e.g. in environmental protection, which the UK Government views as the 'overarching market failure in this sector'."

 

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