Reform of the so-called ‘Intermediate’ Less Favoured Area (LFA) measure draws closer with the publication on April 21 of a Communication by the European Commission on how to improve the targeting of the measure.

Standard delimitation criteria

Responding to stinging criticism from the Court of Auditors and following on from a lengthy period of discussion and consultation, the Commission proposes the standardisation of criteria for the delimitation of LFAs, to be called Natural Handicap Areas (NHAs) from now on. The classification criteria for Mountain LFAs are not affected.

All socio-economic criteria for determining these intermediate LFAs have been dropped – only soil, climate and terrain can now be used to justify support through the measure, and the thresholds for these are, it is proposed, to be set at the EU level.

The possibilities of difficulties arising from this major change is, we understand, the main reason why the Commission has published a Communication before moving to issuing legislative proposals. They are asking Member States to trial the suggested criteria and thresholds and are promising to take note of the resulting feedback.

The criteria are explicitly biased towards difficulties posed for crop production, raising concern in some livestock-producing areas that some areas, which are extremely exposed but otherwise potentially productive, could be excluded.

More widely, it will be interesting to see how many problems are caused in countries such as Ireland where the LFA has crept inexorably onto better and better land over the years. Will the criteria merely exclude the least handicap or inadvertently miss out producers experiencing considerable limitations on production?

Peripherality dropped

A major concern, but one long since clearly flagged, is the dropping of distance to market – peripherality – as a recognised physical handicap. The logic seems to be that the costs associated with distance can be overcome through appropriate fiscal measures or public support – the costs of ferry transport, for example – while ‘the market’ is itself a very fluid concept.

Arguments that other costs, such as those imposed by tachograph or working time or animal transport rules or the uncertainties and costs of sailings cancelled due to weather are real and in addition to the cost of the transport itself, have fallen on deaf ears.

The Commission’s position seems to be that such areas are more appropriately managed by the ‘Areas with Specific Handicaps’ measure.

Targeting within the LFA

Stressing the changed rationale of the NHA since 2005, when it was made explicitly focussed on sustainable land management, the Commission also flags its intention to tighten farm-level eligibility rules within the NHA, and in particular to oblige Member States to exclude applicants who have managed to overcome the natural handicap from payment.

Examples given are farms which are on drained former wetlands or which use irrigation in otherwise dry zones. In other regions the obvious tool to reflect this principle is stocking density – where these exceed a certain threshold on a given farm, it could be assumed that the natural handicap either is not significant or has been overcome through land improvement.

Some might think that It would also be reasonable to say that the correlation to intensity of management is a better test of the suitability of the Commission delimitation criteria than the precise match to the current LFA boundary.

Of course, we could also question the necessity of an LFA boundary. Many of the weaknesses of existing implementation stem from the fact that more emphasis is placed on drawing the boundaries than on setting rigorous farm-level eligibility criteria. If the Commission and Member States would focus on getting the latter right, the whole idea of the boundary with all its associated problems could be put behind us. A farm’s natural handicap, and whether the farmer is operating within this handicap, would be determined at the farm level, as occurs with most CAP payments.

Future of the measure

One implied message in the Communication is that the NHA measure is here to stay for the foreseeable future. The new arrangements are to be introduced in 2014, as part of the yet-to-be-designed next incarnation of the CAP.

Difficult issues remain to be addressed. What is the purpose and logic of the NHA measure when the EU is meant to be following the ‘Lisbon Agenda’ of being competitive in a world free market?

How does it fit in with the SFP? In particular, how do the requirements of cross-compliance and of any NHA measure fit together? How can minimal activity be incorporated into cross-compliance without causing insurmountable trouble at the world trade talks? What is the logical basis of payment calculation if no minimal activity is required to qualify for either SFP or NHA support?

In EAFRD the measure fits neatly into the Axis II objectives of maintaining HNV farmland and protection of soils and water (e.g. by the control of fires using unirrigated management systems). However, the Commission Communication limits itself to using the vaguer concept of ‘sustainable land management’.

Since this is, by convention, considered to have social and economic aspects as well as environmental, and since forgetting the third at the altar of the first two is the main problem is some Member States’ implementation of the LFA measure (and the nub of the Court of Auditors’ criticism), a reminder that the Community Strategic Guidelines for Rural Development refer rather to Improving the Environment and the Countryside would have been helpful.

Key points for the EFNCP regarding the future implementation of NHA are as follows:

• Peripherality is a significant natural handicap and if not addressed through NHA it needs to be addressed through other measures.
• Farm-level eligibility criteria are key to determining which farms get support, and thus are key to an effective measure; LFA boundaries are a crude mechanism and should not aim to be too restrictive.
• Farm-level criteria should be defined in such a way as to target support on the farms that suffer most handicap and that farm in a way that is inherently most favourable to the sustainability of the natural environment. Essentially these will be low-intensity farms.
• If payments are intended to maintain a minimum farming activity for its value in sustaining the environment, then payment levels should reflect the true socio-economic situation of the farming systems involved, including minimum wage and maximum working hours requirements.