The Welsh Government is currently consulting on the effectiveness of the Agricultural Sector (Wales) Act 2014. The Act aims to support a ‘resilient, sustainable and well-trained agricultural sector in Wales’, and in particular, regulates agricultural wages. The Act contains a ‘sunset clause’, meaning it will cease to have effect after 30 July 2018 if no new legislation is made to preserve it. The Welsh Government will use the outcome of the consultation to help it decide whether or not to maintain, amend or discontinue the Act.
01 November 2016
Mark Reckless AM, Chair of the Assembly’s Climate Change, Environment and Rural Affairs Committee, will make a statement in Plenary on 9 November on the future of agricultural, environmental and rural policies in Wales. The Committee is currently holding an inquiry into the future of agricultural and rural development policies.
What is the current situation?
The Common Agricultural Policy (CAP) is the EU’s main mechanism for providing direct support to farmers, protecting the countryside and supporting the development of rural communities.
The CAP is split into two ‘Pillars’; direct payments to farmers (Pillar 1) which provides income support to farmers and market management measures, and the Rural Development Programme (RDP) (Pillar 2). The RDP in Wales provides support for rural communities and rural businesses, and includes Glastir agri-environment schemes, which aim to conserve and enhance the environment in rural areas. Agriculture is devolved so the Welsh Government is directly responsible for implementing CAP in Wales.
Under the current round of CAP (2014-2020) Wales was due to receive €260 million per year in direct payments to farmers and €655 million for its 2014-2020 Rural Development Programme over the programme period.
Welsh agriculture is heavily dependent on the support it currently receives through CAP. The UK Government has recently committed to honouring current levels of direct payments to farmers until 2020, and RDP contracts signed before the UK leaves the EU.
A key question will be whether the current levels of funding for agricultural support are maintained in the long term, given that the UK Treasury has for some years expressed a preference for reducing direct income support to farmers.
What could a future policy framework look like?
The extent to which there would be a UK agricultural and environmental policy or four separate policies within the UK is an issue that will need to be considered.
Many experts suggest there is likely to be greater divergence policy in the UK following withdrawal to take account of the differing nature of farming across the UK. The farming unions in Wales are currently consulting their members on options for future farming policies. A number of farming and environmental stakeholders have already outlined an initial preference for a UK wide framework within which the devolved administrations would have freedom to create their own policies.
… made it very clear to my ministerial counterparts that agriculture has been devolved to this place for 17 years and we expect full repatriation of the legislation, policies and powers to this place when the time comes.
A key consideration underpinning any future policy framework will be how the policy is funded. For example, if devolved administrations are to create their own policies to a greater or lesser extent, should the associated funding be incorporated into the block grant received by the devolved administrations, or be ring-fenced for the specific purpose of supporting agriculture, the environmental and rural development?
What could the impact be on future trade arrangements?
Approximately 60 to 65 per cent of the UK’s agri-food exports (PDF 2.47MB) are exported to the EU and approximately 70 per cent of the UK’s food is imported from the EU. The Cabinet Secretary has said that ‘full and unfettered access to the EU single market is a fundamental priority and a red line’.
The average charge imposed by the EU on agricultural produce not granted preferential access to the European market is 12.2 per cent but this rises for some meat products to up to 67 per cent. However, if a successful free trade agreement is reached with the EU and it covered agricultural products and services then these tariff rates would not apply.
There are potential risks and opportunities for agriculture depending on the nature of any trade deals reached. An NFU study on the impacts of different trade scenarios (PDF 2.47MB) concluded that some sectors such as the poultry sector could have opportunities to increase productivity and incomes under a free-trade agreement with the EU, whilst other sectors, such as the livestock sector, which is particularly important to Wales, are likely to see reductions in income.
Consideration will need to be given as to what happens to Welsh foods protected under the EU protected food names scheme, such as Welsh Lamb, Welsh Beef, Conwy Mussels and Carmarthen Ham. The Farm Scientist Network (PDF 6.16) says that the EU places great importance on protected food names as a means of encouraging high quality value added food that can increase returns to farmers.
The Network also stated that the EU is likely to insist the UK protects protected food names in the UK market as part of any trade deal. In addition it concludes that in any case World Trade Organisation (WTO) rules would require the UK to offer at least minimum protection for the EU’s protected food names, such as Parmesan Cheese and Parma Ham.
What will happen to all the EU legislation?
A significant amount of current environmental legislation is also derived from European Law. Since the 1970s, the EU has agreed over 200 pieces of legislation to protect the environment. This includes policy areas such as waste and recycling, water, planning and development, biodiversity conservation, air and noise legislation, industry and chemical safety and assessment.
The Prime Minister has announced her intention to bring forward the ‘Great Repeal Bill’ which will repeal the European Communities Act 1972 (which established the supremacy of EU law over UK legislation) from when the UK formally leaves the EU. This Bill will also convert the existing body of EU law into UK law and allow amendment or repeal of any legislation subject to any ‘international agreements and treaties with other countries and the EU on matters such as trade’.