EC Grants and Loans

Question

To ask the Secretary of State for Environment, Food and Rural Affairs what information his Department holds on the subsidies granted by the European Commission to EU member states in each of the last five years; and what recent discussions he has had with his EU counterparts on the criteria applied to applications for such subsidies.

Answer

The European Commission list direct aids to farmers as presented in Table 1. Producers must comply with a number of criteria in order to qualify, with the most significant being that production is required for receipt of coupled direct aids, but not decoupled aids.

Table 1: EU direct aids for Budget years 2004-08
€million
	2008	2007	2006	2005	2004
Decoupled direct aids
Single Payment Scheme	28,234	28,119	14,226	0	0
Single Area Payment Scheme	2,974	2,083	1,721	1,449	0
Separate sugar payment	206	167	0	0	0
Separate fruit and vegetables payment	0	0	0	0	0
Other direct aids
Arable Crops	1,781	1,853	7,951	17,158	17,095
Beef	1,641	1,697	2,637	7,730	7,312
Sheep and Goats	314	330	907	1,837	1,471
Dairy	0	0	1,454	1,370	0
POSEI	410	81	81	185	110
Fruit and Vegetables¹	104	202	255	483	595
Sugar	25	17	0	0	0
Rice	168	173	261	427	110
Olive groves	99	119	2,312	2,240	2,302
Tobacco	301	336	811	918	924
Silkworms	1	1	0	0	0
Cotton	248	254	0	0	0
Payments for specific types of farming and quality production	435	420	199	0	0
Other (direct aids)	—	761	958	75	0
Additional amounts of aid	563	434	316	0	0
Ancillary direct aids, small producers, agrimonetary aids, etc.)	0	0	0	4	1
Recoveries	0	0	-39	-21	-12
Total	37,505	37,046	34,051	33,856	29,908
¹ Includes starch potatoes and grain legumes.
Source:
Provisional Draft Budget 2010 and previous budgets, EC.

The UK has argued forcefully for further decoupling of aid payments from production in order to reduce market distortions, and the 2008 Health Check made a step in this direction, decoupling approximately a further €3 billion of direct payments. This increases the level of decoupled support from around 89 per cent. of all direct farm payments to around 96 per cent. The payments currently scheduled for decoupling and the relevant dates are presented in Table 2.

Table 2: Direct aids scheduled to be decoupled
Sector	Current situation	When/how to be phased out
Fruit and vegetables	The EU Processed Fruit and Vegetables Regime was subject to major reform in 2007, with agreement reached on a phased approach to full decoupling:	Tomatoes for processing—1 January 2012
	Tomatoes for processing—member states may allow a maximum four year transitional period provided that the coupled element of the payment does not exceed 50 per cent. of the corresponding component of the national ceiling
	Other processing aids—member states may allow a maximum five year transitional period until at the latest 31 December 2012, provided that after 31 December 2010, the coupled proportion of the payment does not exceed 75 per cent. of the corresponding component of the national ceiling in 2011 and 2012 respectively.	Other processing aids—1 January 2013
Sugar	There are no direct aids in the sugar sector, but there is a transitional fund to help the sugar sector restructure.	The transitional aid is due to end in 2010
	There are also separate sugar payments as part of the Single Payment Scheme.
Tobacco	Progressive reduction in coupled support from 2006 to 2010.	2010
Crops	Member states may retain partial coupled payments in:	Full decoupling from 2010 and integration into Single Payment Scheme (SPS)
	Arable Crops Payments (up to 25 per cent.)
	Durum Wheat Quality Supplement (up to 40 per cent.)
	Hops (up to 25 per cent.)
Olive oil	Aid for olive groves could remain up to 40 per cent. coupled.	Full decoupling in 2010 and integration in SPS
Livestock	Member states may retain coupled payments in:	Slaughter premium for young animals, slaughter premium for adult animals and Special beef premium: Full decoupling from 2012 onwards and integration into SPS. No change in suckler cow and sheep and goatmeat.
	Suckler Cow Premium (up to 100 per cent.)
	Special beef premium (up to 75 per cent.),
	Slaughter Premium (up to 40 per cent. for adults and 100 per cent. for calves)
	Sheep and Goats (up to 50 per cent.).
Flax and Hemp	Option of 25 per cent. partial coupling as arable crops area payment. Short fibre flax to be phased out in 2008-09. Long fibre flax to be increased to €40/tonne in 2009-10.	Decouple long fibre flax processing aid and integrate into SPS from 2012.
Dried Fodder	Retain processing aid (per tonne, uniform for dehydrated and dried fodder)	Decouple processing aid and integrate into SPS in 2012
Starch potato	Aid for starch producers (60 per cent. of pre-2003 level) paid per tonne of starch delivered. A transformation aid is granted to the manufacturers per tonne of potato starch with guaranteed minimum prices within the quota limit. Finally, production refunds for starch are granted when using starch for the production of certain goods.	Decouple aid to growers and integrate into SPS from 2012 at the latest; decouple processing aid and integrate into SPS in 2012
Energy crop premium	Aid of EUR 45 per hectare for energy crops for the production of biofuels and electric and thermal energy produced from biomass	Abolish in 2010
Durum Wheat	Aid of EUR 40 per hectare, granted subject to the use of certain quantities of certified seeds of varieties recognised as being of high quality for the production of semolina or pasta.	Full decoupling and integration into SPS in 2010.
Protein crops	Aid of EUR 55.57 per hectare of protein crops (peas, field beans, lupins).	Decouple and integrate into SPS in 2012 at the latest.
Specific payment for rice	Aid per hectare, the value set according to the yields in the member states concerned	Decouple and integrate into SPS in 2012 at the latest.
Nuts	Aid per hectare granted to farmers producing nuts, with a possibility of granting additional national aid.	Decouple and integrate into SPS in 2012 at the latest.

It is a condition of all direct payments that claimants both keep their land in 'good agricultural and environmental condition' (GAEC), as defined by member states in accordance with a set EU framework, and comply with 18 statutory management requirements (existing EU regulatory environmental, public, animal and plant health and animal welfare requirements).The UK "Vision for the Common Agricultural Policy (CAP)" is clear that by 2015 to 2020, CAP Pillar 1 should be phased out completely. Instead, payments to farmers should be targeted at delivering public benefits, including environmental benefits, through a re-shaped Pillar 2.