SPICe Briefing Pàipear-ullachaidh SPICe Post-Brexit plans for agriculture Wendy Kenyon This briefing sets the scene as the UK agriculture bill is introduced into Westminster. It provides information on agricultural policy now, under the Common Agricultural Policy in the UK and Scotland. It summarises the proposals set out by Defra and the devolved administrations on how the CAP may be replaced with domestic policy in the coming years. 12 September 2018 SB 18-57 Post-Brexit plans for agriculture, SB 18-57 Contents Executive Summary _____________________________________________________3 Agricultural policy frameworks for the UK ___________________________________4 A UK Agriculture Bill _____________________________________________________5 Current UK Common Agricultural Policy funding _____________________________7 The Common Agricultural Policy: Pillars 1 and 2 _____________________________9 UK funding guarantees __________________________________________________ 11 Post-Brexit plans for agriculture in Scotland ________________________________12 Post-Brexit plans for agriculture in England ________________________________14 Post-Brexit plans for agriculture in Wales __________________________________16 Post-Brexit plans for agriculture in Northern Ireland _________________________17 Proposals for the CAP after 2020__________________________________________19 Bibliography___________________________________________________________21 2 Post-Brexit plans for agriculture, SB 18-57 Executive Summary When the UK leaves the EU, it will leave the Common Agricultural Policy (CAP). Defra and the devolved administration will then design and implement their own policies. Scotland, England, Wales and Northern Ireland have published proposals for how agricultural policy might change in the coming years. The CAP will also change after 2020. Under the CAP, UK agricultural policy shares a common framework, although with considerable regional variations. A UK-wide framework for agriculture to replace the CAP is being negotiated. A UK Agriculture Bill is expected in September 2018. This will enable a break from the CAP, and provide the UK with the ability to set out a domestic policy. A budget of €4,574 million from the CAP funds agricultural and rural activities in Scotland between 2014 and 2020. The Scottish Government has set out proposals to replace the CAP up to 2023. There is no indication of policy beyond. In Scotland, basic payments will continue in 2018 and 2019. In 2020-2023 there will be continued payments for current recipients within the CAP architecture, with some possible changes, such as capping. Scottish Rural Development Programme schemes will continue to run under CAP rules to 2020 if the withdrawal agreement is ratified. From 2020-2023 many schemes will continue. Some changes may be made to improve policy outcomes. In England, a agricultural transition phase has been announced from 2020 for a number of years. Basic payments and greening support will continue during this time, but Defra may seek to make changes such as reducing the largest payments by a maximum cap or a sliding scale of reductions. A simplified Countryside Stewardship scheme is proposed. A new domestic policy for England is planned after the agricultural transition period. Basic payments will end. A New Environmental Management Scheme will be implemented based on public money for public goods. In Wales proposals for a transition period between 2020-2023 have been set out with a phased withdrawal of basic payments. A new Land Management Programme from 2024 will include 2 schemes: an economic resilience scheme; and a public goods scheme. In Northern Ireland it is proposed that a regime similar to the CAP will continue until 2022. From 2022 onwards funding may be progressively reduced from area based payments (similar to basic payments and greening) to other options, such as farm income insurance measures, environmental payments, and interventions for cooperation and collaboration within the supply chain. It is proposed that some level of direct support or basic payment scheme will continue to provide income support and act as a measure against market volatility. Proposals for a new CAP programme for the EU 27 from 2020 - 2027 have been published. From 2021 to 2027 it is proposed that direct payments remain, but will have greater emphasis on smaller and medium-sized farms. Under Pillar 2 it is proposed that rural development funding will be similar to current schemes. 3 Post-Brexit plans for agriculture, SB 18-57 Agricultural policy frameworks for the UK Under the CAP, UK agricultural policy is part of the EU’s common framework setting the rules and options on the regulation and support of agriculture and rural development. Within that framework there is considerable regional flexibility on implementation, which has led to differences in CAP implementation within the UK. The UK, Scottish and Welsh Governments agreed the principles that will guide how the UK Government will approach common frameworks at the Joint Ministerial Committee on EU Negotiations on 16 October 2017 1 . On 9 March 2018 2 , the UK government indicated that agricultural support is one of the policy areas where legislative common framework arrangements are needed. But, no further announcements have been made on these legislative common frameworks for agricultural support. Other agricultural related topics are included in the UK Government's analysis of the areas that may require legislative common framework arrangements, such as fertiliser regulations and animal welfare. Whilst UK agriculture is likely to work within a common framework, the design and implementation of the policies themselves are devolved. Proposals have been published by each administration for how agricultural policy might change in the coming years. Proposal for a new CAP in the EU after 2020 have also been published. These are summarised in this briefing. 4 Post-Brexit plans for agriculture, SB 18-57 A UK Agriculture Bill A UK Agriculture Bill was introduced into the UK Parliament on the 12 September 2018. A SPICe briefing which examines this will be published soon. The bill will enable a break from the CAP, and provide the UK with the ability to set out a domestic policy. The Queens Speech, 2017 3 stated that - In line with the manifesto, the Bill will ensure that after we leave the EU we have an effective system in place to support UK farmers and protect our natural environment. The Bill will: • provide stability to farmers as we leave the EU; • protect our precious natural environment for future generations; • deliver on the manifesto commitment to “provide stability for farmers as we exit the EU. The Defra consultation on future agricultural policy in England 4 , states that the forthcoming Agriculture Bill "could provide legislative powers, including: 1. to continue making payments to farmers and land managers, with power to amend eligibility criteria for payments 2. measures to strip out unnecessary bureaucracy and strengthen the delivery landscape 3. to create new schemes for one or more of the following purposes: a. promoting and increasing agricultural productivity and resilience b. preserving, protecting and enhancing the environment c. providing support to rural communities d. animal and plant health and animal welfare e. public access 4. to establish a new basic compliance or inspection regime 5. to take emergency measures to provide aid in extreme events 6. to retain UK-wide frameworks where we need commonality 7. to provide for continuity during the ‘agricultural transition’ period for some elements of the current CAP." The Defra press release about the Bill states that "the introduction of the Agriculture Bill now means that all the necessary measures will be in place for the start of the agricultural transition in 2021, delivering a smooth transition to the new domestic policy." 5 Post-Brexit plans for agriculture, SB 18-57 Relevance of the UK Bill to Scotland In evidence to the Rural Economy and Connectivity Committee on 27 June 2018, Mr Gove Secretary of State for Environment, Food and Rural Affairs 5 said - “ Ideally, we want to bring forward our own agriculture bill in order to make provision specifically for England. We have shared some of the clauses of the bill with ministers and officials in the Scottish Government. I do not want to tie the hands of the Scottish Government, but I imagine that it will want to bring forward its own agriculture bill alongside, or just after we have brought forward, our agriculture bill, in order to explain how direct payments and some of the criteria that are associated with them should be policed. I noted that Fergus Ewing indicated that he would like to remove some of the onerous EU bureaucracy that is tied to some of the payments. Should he wish to do so, we might want to disapply that bureaucracy across the UK, or he might want to go further than we do. That is a matter for discussion. If Fergus Ewing wants to go further, that would only reinforce the appropriateness of there being a separate Scottish farming bill in the Scottish Parliament.” The Scottish Government Programme for Government 2018-19 does not include plans for an Agriculture Bill. 6 Post-Brexit plans for agriculture, SB 18-57 Current UK Common Agricultural Policy funding Over 2014-2020 the UK was allocated €27.6 billion from the CAP. €4,574 million was allocated to Scotland overall (UK Government, 2013). 6 Scotland was allocated a pillar 1 (direct payment) allocation of around €4,096 million, and