This article was first published on Brexit Central.
The Common Agricultural Policy (CAP) was heralded throughout the EU referendum campaign as the saviour of UK farmers. But in reality, it’s a wasteful policy, arbitrarily funding wealthy landowners at the expense of taxpayers, for no benefit in return.
Agricultural subsidies account for 38% of spending in the EU budget, costing over £40 billion per year. Of this, the UK makes a net contribution of £1 billion, once EU subsidies for UK farmers are accounted for – but the term ‘EU subsidies’ is of course incorrect. Instead, reference should be made to the UK’s subsidisation of EU farmers, as the UK gets far less in return than it puts in. This leaves UK farmers more than £1 billion out of pocket.
But why is the UK disadvantaged in such a way? Because of an arbitrary decision to allocate funds to countries on the basis of historical production. Under this system, the average Belgian and Dutch farmer receives €460 per hectare while the average UK farmer only receives €220.
Our enormous net contributions to the CAP make it clear that EU agriculture depends on the UK, rather than the other way around. If a sovereign UK outside the EU so wished, it could create its own vehicle for farming subsidies. This could be even more generous without further draining money from the taxpayer, as these funds are already spent, they just aren’t spent in the UK.
However, this policy of emulating the CAP should be treated with extreme caution. In practice, the CAP is not the zenith of EU achievement – it is the opposite. It is the EU at its most wasteful, and most unjust.
Initially the EU agricultural subsidy was a success, helping Europe’s farmers when food supply was short, at a time when Europe needed to recover from its lowest ebb. But we aren’t living in the shadow of a world war anymore, and our policies must reflect this.
Hopelessly out-of-date policies should not be followed simply because it is how things have been done in the past. We must design a policy which genuinely facilitates efficient food production, rather than the acquiring of land.
In 2015-16, 16 of the 100 largest CAP payments went to entities owned or run by those included in the Sunday Times Rich List, totalling £87.9 million. The Dukes of Westminster and Northumberland receive over £400,000 a year each, the Earl of Iveagh a whopping £915,000 and even Prince Khalid Abdullah of Saudi Arabia being a major recipient.
The CAP is made up of two parts. The first is the Single Farm Payment (SFP) accounting for 80% of CAP spending, the second is a rural development fund. Additionally, tariffs are erected on a whole range of non-EU produce to protect farmers even further (averaging 15.4%, and up to 156% on some produce), driving up prices for consumers.
The SFP is a payment made on the basis of every hectare of available land. Available land is of course not determined by food production, but absurdly on the condition of the land. Although some nations (including Wales, Scotland and Northern Ireland), make historical payments on the basis of the amount a farmer has received previously, there are however some exceptions, requiring subsidies on the basis of production, but these are few in number.
Making payments to landowners rather than food producers is understandable, but it is not justifiable. The reform to make payments on the basis of land ownership was a way to avoid wine lakes and butter mountains in a hungry world. But in practice, it has shifted subsidies from farmers who work day and night to feed the country, to multi-millionaires. This is then aggravated by genuine food producers who are paid not to produce food, through set-aside grants.
To make matters even worse, the top 100 recipients of the SFP received more in payments than the bottom 55,119 recipients, increasing inequality even further – with at least five of the top 100 recipients being aristocratic families, and four of the companies are owned offshore.
In relation to the rural development fund, the UK receives ‘far less funding for rural development than it should under any objective criteria’ according to the Fresh Start Project.
Despite the UK Government losing out on the entire CAP process, the European Commission is able to make some money out of it. When the market price of food falls below a specified level, the Commission purchases the produce – in theory to sustain the viability of farms. However, in practice, the Commission stores the produce and sells it back to the market when prices rise, keeping the profit rather than reimbursing the producer.
Get Britain Out believes leaving the EU will allow the UK to have a tailor-made agricultural policy, rather than a one-size-fits-all scheme. Whether this means increasing or reducing agricultural subsidies; keeping or removing subsidies altogether; increasing or reducing regulations; rewarding producers or land owners. A sovereign UK Government will have the power to make these necessary changes. But keeping the current policy which fails to reward efficiency and hard work, ought to be avoided at all costs.