The changing state of CAP

Ulster Unionist MEP Jim Nicholson discusses the principles behind the Common Agricultural Policy with Peter Cheney and outlines the main challenges on the horizon for agriculture.

Europe has come full circle and again finds itself as a net importer of food, Jim Nicholson relates as he looks back over the history of the Common Agricultural Policy. Its origins go back to the aftermath of the Second World War when some parts of the continent were experiencing starvation. Europe then went through a time of surplus but now registers a trade deficit for food in most financial years.

The people of Europe, he notes, want “security of food supply … more than anything else” and this was only underlined by the horsemeat scandal. “The consumers want food produced to a certain standard,” Nicholson continues. “In other words, what it says on the outside of the tin, they want on the inside of the tin – and they’re entitled to that.”

There is, though, no such thing as cheap food. Food production can either be supported by paying the full price at the shop counter or through subsidy. The level of support is gradually decreasing as the EU spends more money on R&D, job creation and infrastructure.

Back in 1989, CAP took up 55 per cent of the EU’s budget. It now stands at 39.8 per cent and Nicholson expects that share to fall to 35-36 per cent by 2020.

EU enlargement has been another important driver for CAP reform. The MacSharry round of reforms in the early 1990s covered 12 member states. The Fischler reforms, later in the decade, applied to 15 countries. In July, Croatia joined as the twenty-eighth EU member state.

“You actually have doubled the problem of getting an agreement,” Nicholson comments, “because the problems facing Romania and Bulgaria are totally different to the problems that face the United Kingdom or the Republic of Ireland.” This indicates the need for more national and regional flexibility; one of his major frustrations with the EU is that “one suit cannot fit everyone.”

Compromise is a constant theme in EU politics. “The one thing you have to learn about Europe is nobody gets everything they want,” he states. “It’s all subject to compromise and consensus but the danger with a lot of the compromise and consensus is that you end up with a bad policy.”

The Commission, for example, has admitted that its greening proposals will increase the cost of CAP by 15 per cent: a high cost for national governments. Nicholson wants to see that corrected but he rejects calls to abolish CAP.

“There would be no farmers if it wasn’t for that direct payment,” he explains. If the subsidy were removed, rural and urban dwellers alike would be unable to afford European food and the continent would need to depend more heavily on imports.

CAP also represents a €320 million (£272 million) investment into Northern Ireland which farmers can, in turn, spend in the rest of the economy. It brings its own bureaucracy but “the harsh truth is nobody gives you anything anymore for nothing, you have to do something for it.”

The state of global markets, Nicholson says, poses the key challenge for agriculture going forward. Local dairy producers are receiving a good price at the moment but this is mainly due to New Zealand’s drought earlier this year.

“But next year could be totally different,” he adds. Local farmers have come through two of their worst years in living memory due to severe weather and the industry is “very much subject to the elements.” For that reason, he anticipates a serious fodder shortage next winter.

Major changes will also come in agri-environmental policy with greater demands on farmers to reduce environment damage which arises from production.

Closer to home, Nicholson emphasises the importance of solving the problem of poultry litter, which must be effectively disposed of under the Nitrates Directive. A planning application for Rose Energy’s energy-from-waste incinerator, near Glenavy, was turned down by Environment Minister Alex Attwood in December 2012 after four and a half years of discussion.

He contrasts how Michelle O’Neill highlights “tremendous opportunities” for agri-food with Sinn Féin’s opposition to incinerators which is “holding us back in getting a solution” for poultry litter.

In response, the Agriculture Minister said she was being “pro-active in seeking a solution” and hoped to award up to four contracts for recycling phosphorous in poultry litter later this year.

Nicholson views pollution from phosphate fertilisers as an impending environmental problem with the potential for serious damage to Lough Neagh.

“I have a simple philosophy. I’ve had it all my life,” he elaborates. “Those of us who have the responsibility [as] we pass through this world: we should at least hand it on to the next generations in at least as a good a condition as we inherited it.”

On the positive side, new companies such as Mash Direct show how agri-food businesses can innovate and excel. Northern Ireland has the potential to compete with the best in Europe but he thinks that the agri-food strategy should be more ambitious. “You’ve got to encourage the farmer to produce the food,” he states, otherwise more farmers will go out of business. Any politician from Northern Ireland has to adapt to that need for compromise and pragmatism but, in conclusion, Nicholson rejects any suggestion that he has “gone native” in Brussels.

He remarks: “I get out and about and meet enough people in Northern Ireland that keep me close to the grassroots.”

Britain’s risks outside Europe

Jim Nicholson and the UUP support a referendum to “clear the air” on the UK’s relationship with Europe. As a pragmatist, he sees many benefits in membership and wants Britain to improve the EU from within. “Europe has gone too far, it’s too meddling in people’s lives,” Nicholson acknowledges.

Northern Ireland has, in particular, benefitted from CAP, the Peace programmes and structural and regional funding for peripheral regions. The MEP also poses four dilemmas for the UK if it were to withdraw:

• British products would still need to meet strict regulations in order to be exported

into the EU;

• the Treasury at Westminster (with its focus on cuts) is unlikely to support farmers

to the same extent as CAP;

• leaving the EU is likely to reduce European support for local research centres

(e.g. AFBI and Almac); and

• the UK could miss out on the planned free trade deal between the EU and USA.

With the Republic retaining its membership, Northern Ireland would have the UK’s only land border with the EU. He wants to see a “parallel negotiation” between Stormont and Westminster on the financial consequences of withdrawal.

Eurosceptics often point to Norway as a successful state outside the EU. It benefits from being in the single market but still has to pay its way. Norway contributes around

€2.4 billion per year towards co-operation and direct aid for poorer European countries.

If the UK negotiated a similar position, he thinks that “we could probably survive and do quite well” but the real question is whether the country would be performing as well in 20 years’ time.