Written Statement - The Common Agricultural Policy budget for Wales 2014-2020

I made an Oral Statement to the National Assembly on 9 July 2013 about the political agreement reached in Europe about reform of the Common Agricultural Policy (CAP).  I outlined the main points agreed and also updated Assembly Members about the responses to my spring ‘conversation’ exercise with stakeholders in Wales.  At the Royal Welsh Show I launched a consultation exercise about direct payments to farmers – CAP Pillar 1.  The consultation paper explained the main features of the reforms and the decisions I am proposing, in principle, to take.  As part of the consultation I have held public meetings throughout Wales this autumn.

My July statement, and the consultation paper, made assumptions about the CAP budget because negotiation between the European Parliament, the Commission and the Council of Agriculture Ministers did not conclude until September.  This delay confirming the budget figure for the UK meant that decisions could not be taken within the UK about how the UK budget would be shared.  I have already stated my regret about decisions in Europe in February of this year which cut the budget and resulted in the UK receiving less, with obvious consequences for Wales.  Nevertheless whilst I am critical of the role the UK Government played in that budget settlement, there has been willingness on Defra’s part to try and ensure a fair distribution of the budget across the UK.  Assembly Members will be aware of the vociferous case made by Scotland to secure a much larger share of the UK budget pot.  I have opposed that argument, not only because I felt it was unjustified but also because it would have reduced the funding available to Wales further. My aim, in a time of declining funding, has been to secure for Wales at least the same share of the UK budget it has had until now.    

I wrote to Defra in the summer setting out in detail how I wished to see the budget divided up. I am happy that these proposals have been accepted and the UK budget has been agreed in this way.

The Pillar 1 budget is to be allocated in the same proportion as now, 2013.  This will mean a Welsh annual budget of €322m come 2019, based on current prices.  All parts of the UK will take the same size percentage cut of 1.6% with respect to the budget for 2013. This is the best outcome for Wales in which we will receive some 8.96% of the UK budget ceiling.  Alternatives, notably any option which would have provided additional funds for Scotland, would have meant a bigger cut for Wales.  I am pleased that the Secretary of State has recognized the importance of being even handed across the UK and sharing the budget reduction equally.  

For Pillar 2, Wales will receive €355m in current prices over the period 2014-20 an increase of 7.8% compared to the period 2007-13.  All parts of the UK will benefit to the same degree in the uplift of the UK’s Pillar 2 budget ceiling.  In my view this is the fairest outcome and a good result for Wales.  

With confirmation of the Welsh budget, I am now able to firm up the data modeling work we have undertaken with stakeholder representatives.  I will publish further modeling information updating the scenarios in my consultation document.  In view of the time taken to reach firm budget figures, and also my desire to consider CAP reform alongside Kevin Roberts’ review of farming resilience, I have extended the direct payments consultation closing date to the end of this month (30 November).  In addition I will publish a more up-to-date map showing moorland in Wales which, following trial work, will use altitude to determine which areas within the 1992 moorland map should reasonably be classified as ‘moorland’ for Pillar 1 payment purposes.  This will reduce considerably the area of land initially categorized as ‘moorland’ and will, I hope, address some of the concern expressed recently about treatment of improved and semi-improved land within the original line.  

It is my intention to take final decisions on Pillar 1 – direct payments – from Christmas 2013, and I will make an announcement in January on the way forward, including on transfers of funding between the two Pillars of the CAP.  I will also set out at that time my indicative proposals for Pillar 2 - the Wales RDP – including in relation to future agri-environment measures.  Pillar 2 is running to a slightly different timetable, and I will consult on the planned new RDP schemes next spring.