Impact of the Mid-Term Review of the CAP on the Red Meat Sector in Scotland

Likely Impact of Partial Decoupling

In recent weeks, the EU farm ministers have steered the CAP reform debate closer towards some form of ‘partial’ decoupling, although there is no clear idea of what this may mean in practice. So many member states have proved hostile to the original MTR proposals – with only Denmark, the Netherlands, Sweden and the UK basically in favour – that some sort of watered-down version seems inevitable. However, the possibilities put forward at this stage are legion and generally vague. The only really concrete proposal to emerge is that livestock aids could be made partially independent of production, with perhaps 50 per cent of the subsidy linked to output as now and the other 50 per cent put into a grassland premium paid per hectare of permanent pasture. The proposers, Germany, are also arguing that the decoupled element should be phased in over a period of time. If adopted, such a proposal would clearly reduce the impact of decoupling on the livestock sector, especially cattle rearing. If the beef suckler premium, for instance, continued to be paid on a headage basis, this would reduce the likely contraction in the suckler beef herd, which is expected to be large under the current proposals. For the moment, there has been no real assessment of the likely impact that such proposals would have on cattle, sheep and pig farming in either the EU or the UK. As a result, any projection of the impact of partial decoupling is purely speculative. However, if implemented, the losses in income and employment in Scotland would clearly move closer to those projected in scenario 1 (“Managed Market”), namely a loss of up to £100M in income and 1500 jobs. However, it is unlikely that partial decoupling would totally prevent any decline in beef and sheep production.