The Scottish Government

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2. The CAP Health Check proposals

2.1 The European Commission ( EC) published its initial proposals for the Health Check of the CAP reform in November 2007 ². These were considered by both the European Parliament and the Agriculture and Fisheries Council of the European Union ( EU) ³. Subsequently, the EC published its draft legislative proposals on 20 May 2008 ⁴.

2.2 The stated objectives of the CAP Health Check are to assess the implementation of the 2003 CAP Reform, and to make necessary adjustments to simplify the policy, to grasp new market opportunities and to prepare for new challenges (such as climate change, water-management, biodiversity and bio-energy). The draft legislative proposals that seek to achieve these objectives include:

• changing the cross-compliance requirements by withdrawing specific measures from existing SMRs and by introducing GAEC requirements that partly retain the environmental benefits from set-aside and address water management concerns;

• abolishing set-aside and set-aside entitlements;

• further decoupling of support payments;

• increasing flexibility in relation to the national reserve, transfer of payment entitlements, modification of entitlements and payment dates. Clarifying definitions of "agricultural area", "farmer" and "eligible hectare";

• allowing Member States who have adopted the historic model for SFP to move towards flat rate payment entitlements from 2010 (with decisions being taken by August 2009);

• making changes to the Single Area Payment Scheme (applicable in new Member States);

• increasing flexibility in relation to the national envelope ⁵, for example by allowing the money to be transferred between sectors; used for restructuring and development programmes; and used for certain risk management measures;
  

• increasing compulsory modulation from 3% to 8%, with progressively higher rates for businesses benefiting from higher levels of SFP. The additional funding will be used in Rural Development Programmes to help address challenges relating to climate change, renewable energy, water management and biodiversity. However, countries, like Scotland, that make use of voluntary modulation will have to reduce voluntary modulation in line with increases in compulsory modulation;

• setting a minimum threshold (of either €250, or one hectare) below which no payments will be made;

• simplifying and harmonising mechanisms for intervention in commodity markets;

• gradually increasing milk quotas as a prelude to ending milk quotas in 2015 and the abolition of private storage aid for cheese and the disposal aid for a number of other dairy products;

• changes to a number of small support schemes, including decoupling of the protein crop scheme and abolition of the energy crop scheme.

2.3 Annex 1 gives more detail on measures that are likely to be of particular interest to readers of this consultation paper. The UK Government is publishing a partial Regulatory Impact Assessment. In addition, there is further information in an Impact Assessment prepared as a European Commission Staff Working Document ⁶ and in the Guide to the Health Check ⁷ published by the EC, as well as in the draft legislative proposals themselves.

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