CAP health check deal means little to farmers; EURO VIEW.

Byline: HUME HARGREAVE

THE agreement reached by EU Agriculture Ministers on the CAP health check on November 20 after a traditional all-night session means little to UK farmers.

The final bargain which saw the rise in compulsory EU modulation trimmed to a total of 10% in 2012 rather than 13% is irrelevant as rates in England and Scotland are already set higher.

With the Health Check settled, attention turned to the EU Budget Review, where there is more at stake.

So worried were the French that they launched a pre-emptive strike along the same lines as President Chirac and Chancellor Schroder pulled off in 2002 when they imposed a commitment to maintain CAP spending at its then level plus 1% per year.

Now they have been trying to use their EU Presidency, which runs until the end of the year, to secure an agreement that CAP funding will not be cut in the review. President Sarkozy convened a special meeting in Paris to "discus" the matter.

The EU Commissioner for the budget, Dalia Grybauskaite, a Lithuanian educated in Moscow, will not be pleased at the French initiative.

She has a radically different view of the CAP, complaining recently that it is "a more protectionist policy than a market orientated policy and because of this we pay, all of us, all consumers, two to three times more for food than we would pay without this policy".

She also said that it was unfair that the 12 most recent members of the EU had to use national funds to make up the CAP payments to their farmers whereas the others drew the full payments from EU funds.

The Commissioner has powerful arguments on her side. She said that the CAP was the only EU policy to fail a series of studies commissioned by her department to determine whether it produced added value for EU citizens.

"Agricultural output or input represents about 5% -7% in each member state and we pay about 40% out of the EU Budget - is that proportional?' she asked.

It is estimated that each family in the UK would save pounds 40-pounds 60 per week on food if the CAP were abolished. That will not happen, neither will the British Government produce the same outcome by leaving the EU - no major political party argues for withdrawal - nor will the budget review be much help to the UK.

When Tony Blair agreed to increasing reductions in the UK rebate in 2005, he accepted assurances about reductions in CAP expenditure but no commitments.

The budget review may, if the French initiative fails, see some reallocation of funding away from the CAP, but there is unlikely to be any overall saving for member states.

So the UK contribution to the EU will rise at the worst possible moment, from pounds 2bn in 2008-9 to an estimated pounds 6.5bn in 2010-11, and that will have to be found in euros, against which the pound is now at a record low.

"It is estimated every UK family would save pounds 40 to pounds 60 per week on food if the CAP were abolished