Pillar one payments could face cap

While the UK will be out of the EU and the CAP before a reformed policy is in place, the difference between it and whatever eventually emerges to support agriculture in the UK remains central to that debate here.

There are now growing signs that Brussels is moving into line with the comments of the Defra Secretary, Michael Gove, that it is wrong the CAP should create millionaires among large landowners.

A leaked policy paper in Brussels, which is due to go to the European Commission as a proposal before the end of November, suggests capping pillar one payments at figures as low as 60,000 euros per farm.

The commission believes doing so would be a major plank in delivering on its key objective for the CAP, that direct support payments help the ‘resilience’ of the seven million farms that account for 90% of the EU land area.

The idea of capping payments has come up in every reform, back to the early 1990s, but this time without the UK to help rally opposition, the time for implementation might finally have arrived.

The commission also has plans for toughening up greening requirements.

The French president, Emmanuel Macron, has hinted at a radical change of approach over food pricing.

In a speech targeted at farmers and the food industry he said there was a need to curb the power of the major retailers to set prices.

Instead, he wants the price of food to be determined by what it costs farmers to produce.

This is a radical suggestion, and Macron has said that if a voluntary approach is not forthcoming he is prepared to introduce legislation.

This goes well beyond European Commission plans to introduce more fairness to the supply chain, to tackle the weak selling position of farmers.

Macron’s plans have been welcomed by farmers and food processors.

It is not clear however how they will work, since under EU Single Market regulations French supermarkets could get around legislation by importing from other countries.

However this might damage their reputation with consumers, provided Macron’s plans are to reduce supermarket margins rather than driving up prices on the shelves.

The European Commission will soon confirm the end of an era as by early next year it will completely drop export refunds.

It has told the World Trade Organisation that the mechanism to pay refunds will be removed by the end of this year.

This is in line with a commitment by all WTO members to eliminate trade-distorting export aids, but the commission is ahead of other countries in scrapping the legislation.

This will bring to an end an era that goes back to the 1980s and the excesses of milk lakes and beef mountains.

Export refunds were then used on an almost daily basis to dispose of these surpluses, creating some very rich players in the beef and dairy sectors.

With refunds gone support will be limited to intervention buying, which has a rigid ceiling, and to private storage schemes where product is stored until markets improve.

Meanwhile on trade, the Mercosur countries have said the EU’s limit of less than 70,000 tonnes on reduced tariff beef imports to the EU is insufficient to trigger access to South America for industrial goods and services from Europe.

As low as 60 euros per farm