De-Capping The Cap - An Update On The Health Check

The EU Commission's latest proposal bins

capping, replacing it with progressive modulation.

Marianne Fischer Boel, the agricultural commissioner, has

always stated that the Common Agricultural Policy (Cap) Health

Check is not a major policy reform but a way of gently

improving current policy to better suit European agriculture.

It aims to examine current policies and negotiate how the

constituent parts might be improved for implementation in

2009.

Of the policies appearing on the negotiating table, the most

important for the UK is dropping the idea to cap aid payments

to large farmers. Instead, the Commission is now proposing to

merge capping with a previous but contentious suggestion

- the rise in the rate of compulsory European Union (EU)

modulation - to form progressive modulation.

On this basis, compulsory EU modulation would rise by 2% a

year between 2009 and 2012 to 13% (Figure 1). But on aid

payments in excess of Ä100,000, Ä200,000 and

Ä300,000, there would be additional modulation of 3%, 6%

and 9% respectively.

Of course, this doesn't take into account the various

additional rates of UK voluntary modulation. The Commission

would certainly like to see the 'extra' percentages of

UK modulation fall as the EU rates increase.

Although the UK Government came out strongly against

capping, it may not be against this proposal. The deductions

are somewhat less and may be considered small enough not to be

too distorting. The proposals also suggest that more money will

be available for rural development within the UK, which the

Department for Environment, Food and Rural Affairs (Defra)

might find attractive.

Fig 1: EU compulsory modulation rates

Single payment scheme income band (Ä)

2008 (current)

2009

2010

2011

2012

Below 5,000

0%

0%

0%

0%

0%

5,000 - 100,000

5%

7%

9%

11%

13%

100,000 - 200,000

5%

10%

12%

14%

16%

2000,000 - 300,000

5%

13%

15%

17%

19%

Above 300,000

5%

16%

18%

20%

22%

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