Embargo: 00:01 Thursday 6 March 2008
Contact: Owen Williams 020 7219 8659


The House of Lords European Union Committee has today called for a major restructuring of the CAP. Direct farm subsidies should be phased out, and EU financial support should instead target rural development.

In its report The Future of the Common Agricultural Policy the Committee argues that farm subsidies in their present form are a poorly-focused policy instrument. Payments to farmers and landowners are being used as a proxy for the attainment of social, economic, and environmental goals that should instead be targeted directly, whether at the national or EU level.

The Committee therefore advocates a phased reduction in farm subsidies from 2014, and proposes that a significant proportion of the funds thereby released should be channelled into the rural development element of the CAP - which already exists, but currently consumes only about a fifth of total spending on the CAP. Rural development should cease to be equated with the fortunes of the agriculture industry and should instead address the broader challenges and opportunities facing Europe's rural areas.

The Committee points, for example, to the likelihood of accelerating global demand for agricultural products, and argues that the distorting effect of subsidies - some of which remain linked to specific products - will prevent the EU farming industry from responding to, and profiting from, changes in market conditions.

The Committee also notes that as the effects of climate change set in, the cost of trying to sustain particular types of production in particular areas - often for social and historic reasons - is likely to rise, and may even prove altogether futile.

But although the farming industry may be particularly vulnerable to changes in climate conditions, it is also a significant contributor to greenhouse gas emissions - accounting for nine percent of greenhouse gas emissions across the EU. The Committee highlights the need for the sector to improve its environmental impact, but points out that climate change also presents a business opportunity for the industry, which may be able to tap new income streams by providing environmental services like peat soil or flood risk management.

Commenting, Lord Sewel, who chairs the Committee, said:

"The CAP is in need of fundamental restructuring."

"While encouraging progress has been made in removing the link between farm subsidies and production that has had such perverse consequences in the past, there is no long-term justification for maintaining farm subsidies in their present form. They distort markets for agricultural products and land, and are poorly adapted to the needs of rural communities."

"Agricultural interests can no longer be equated with rural interests. Public money should be targeted directly at environmental benefits and rural development goals, rather than being spent on income support for farmers and landowners in the hope that this will produce the desired knock-on effects."

"Global demand for agricultural products has soared and is likely to continue rising. It is therefore essential to get rid of the remaining production-linked subsidies which distort farmers' decisions about what to produce, and prevent them from seizing market opportunities as they arise."

Notes to Editors

  1. The report The Future of the Common Agricultural Policy is available from The Stationery Office, House of Lords European Union Sub-Committee on Environment and Agriculture, 7th Report of 2007-08, HL Paper 54.
  2. The report will be available online shortly after publication at:
  3. The members of the Committee who conducted the inquiry are:

Lord Sewel (Chairman)

Baroness Jones of Whitchurch

Earl of Arran

Lord Palmer

Lord Brooke of Alverthorpe

Lord Plumb

Viscount Brookeborough

Baroness Sharp of Guildford

Lord Cameron of Dillington

Viscount Ullswater

Earl of Dundee

Lord Greaves

Former members of the Committee who took part in the initial stages of the inquiry are:

Lord Bach

Baroness Miller of Chilthorne Domer

Lord Moynihan

For further details or to request an interview with Lord Sewel please contact Owen Williams, Committee Press Officer, on 020 7219 8659.