DEFRA's common-sense approach to CAP reforms

Defra's ideas, just published, on how the CAP reforms might apply to farmers in England show welcome common sense

A rural farming scene
A rural farming scene

Defra's ideas, just published, on how the CAP reforms might apply to farmers in England show welcome common sense.

There will be formal consultation on the implementation of the reforms in October.

DEFRA suggests moving money from lowland farmers to those in the uplands and moorlands, but without altering the existing three-region structure or the boundaries because that would involve ‘a complex and costly exercise to map new regions’.

DEFRA also suggests a minimum claim size of 12.5 acres (5 hectares). That would exclude 16,000 claimants, no less than 15% of the total, whose claims cover 125,000 acres, a minuscule 0.6% of the Basic Payments scheme’s land area. DEFRA observes that most of those who would be excluded do not farm for ‘business purposes’. The Rural Payments Agency will hope the exclusion is confirmed in the autumn; it would make its task easier, and cheaper.

In a further effort to get money efficiently to those farmers who need it most, DEFRA proposes the adoption of the EU option to limit payments to the largest claimants. It suggests progressive reduction of payments of more than €150,000 (‘degressivity’) , but, interestingly, also puts forward for consideration a last-minute French proposal to attack the issue from the opposite direction and pay a supplement on the first tranche of hectares claimed (’reverse capping’).

DEFRA does not suggest the reintroduction of coupled payments for specific agricultural production. Such payments have been available to farmers in many EU member states since the last CAP reforms were implemented in 2005, though the only payments available latterly in the UK are those to farmers in the beef calf scheme in Scotland. The Scottish Government will probably wish to see that scheme continue, and, if possible, to expand it. If each EU member state is to have a ‘headage allocation’, Scotland may be able to use the UK allocation, though there is a possibility that the Welsh Government may wish to use some of it.

The use of coupled payments in Scotland, and possibly Wales, leads to distortions between beef farmers in the UK. The continued, wider, use of them in other member states seems in conflict with the EU’s commitments to the World Trade Organisation to avoid trade-distorting aid, but the European Council of Farm Ministers of the member states and the European Parliament must be hoping that the payments will slip under the radar.

The Welsh Minister for Natural Resources and Food has also published his thoughts on how the reforms should be implemented. He would like to see progressive ‘degressivity’ of payments above £150,000 and an absolute cap of €300,000, which will appeal to the ‘small farms good, big farms bad’ lobby, but cost very little as there are believed to be only five businesses receiving more than that in Wales. Otherwise he proposes adoption of the EU suggestions for limiting payments to ‘active farmers’ and moving from historic to regional payments over 10 years. Welsh farmers may have other ideas.

:: Hume Hargreave is a retired partner at Bond Dickinson

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