Lords Committee calls for reform of EU agricultural funding

• Report: The Review of the Less Favoured Areas Scheme
• House of Lords EU Committee on Environment and Agriculture

The report stresses that the justification for the LFA scheme is to maintain farming in marginal areas where farming activity generates benefits for the environment and landscape, rather than to compensate for regional economic hardship. The Committee point out that there are other EU funds available that offer more targeted and cost-effective means of addressing the socio-economic problems faced by disadvantaged agricultural regions.

The Committee stress that there should be a continued and vigilant assessment of the public benefit of LFA spending, asserting that 'society does not owe unconditional support to farmers wishing to farm in areas affected by natural handicaps'. They also point out that climate change is likely to have an impact on which areas can and should be helped to maintain farming activity.

The report supports recent proposals by the European Commission to establish a set of EU-wide biophysical indicators to identify disadvantaged areas based on natural handicaps such as poor soil, extreme climate and steep slopes rather than economic hardship. However, they warn that the Commission’s proposals may need to be modified to take into account that particularities of the UK and Irish maritime climate, which brings different challenges than those faced by mainland European farmers. Criteria such as field capacity days (which would recognise the impact of consistent rainfall) might need to be included to ensure that genuinely handicapped areas in the UK are captured by the new indicators.

The Committee also call for a common EU-level framework for the criteria used to determine whether farms in Less Favoured Areas qualify for aid. They welcome the European Commission’s recognition of the need to clamp down on the use of criteria irrelevant to the objectives of the scheme (such as the farmers’ age, or place of residence) or contrary to the EU’s commitments as a member of the World Trade Organisation. The Committee suggests that aid should primarily be targeted at extensive farming systems, but the criteria used should not rule out mixed farming, and should leave sufficient flexibility to each country and region to channel aid as it sees fit within those broad rules.

The Committee echo the European Court of Auditors’ finding that they have been unable to draw firm conclusions about the effectiveness of the LFA scheme in meeting its objectives. They call on the European Commission and Member States to assemble the evidence base with which the scheme’s effectiveness as a mechanism for protecting the environment and the landscape in Less Favoured Areas might be kept under review.

Commenting Lord Sewel, Chairman of the House of Lords EU Committee on Environment and Agriculture, said:

"The Less Favoured Areas scheme is in need of an overhaul to ensure it performs the function for which it is intended."

"Historically, the LFA scheme has been perceived as a way of providing economic support to marginal and remote areas in order to prevent depopulation and land abandonment. But since the EU’s rural development policy was reorganised in 2005, other specially adapted policy instruments for achieving those goals have been put in place. The LFA scheme now needs to be adapted to its new role within that wider framework."

"In many parts of the EU, LFA support has not been sufficiently targeted. Support should be channelled to those farms that are least able to earn compensation from the market, yet contribute most to the maintenance of the landscape and the environment."