Defra’s consultation on the Common Agricultural Policy (CAP) may hinder agricultural development - the foundation of the rural economy, according to the Country Land and Business Association.
The Association said the announcement that, potentially, 15 percent of farmers’ direct payments may be transferred to fund rural development will limit their ability to invest in agriculture.
CLA Deputy President Henry Robinson said: “Farmers in England will be severely disadvantaged if modulation is at 15 percent - the full amount possible – which is not in alignment with our European neighbours, who may even benefit by switching funds from rural development to direct payments.
“This announcement fails to recognise that agriculture underpins the rural economy and taking money away from this sector will restrict its ability to become more efficient through greater investment.
“The government seeks to provide much needed growth in the rural economy but the impact of modulating at the full rate will achieve the exact reverse.”
But the National Farmers' Union said the CAP announcement was a 'critical step forward'.
Responding to the launch of the Defra consultation on the future CAP, NFU President Peter Kendall today said: “Over the past two years the future CAP debate has dragged on at the European level, but today’s announcement is a critical step forward in how that policy will be applied here in England.
“We have consulted widely with NFU members over the past year to hear directly how they want to see the new policy implemented. It is clear that nobody is happy with this round of CAP reform. There are unnecessary complications and financial pain ahead but it’s in everyone’s interest to try to find workable solutions to those issues.
“On the back of a horrific farming year in 2012, confirmation that farm business income is down 32 per cent underlines the importance of the CAP to farm businesses. Many elements of today’s consultation will directly impact on farm businesses and their bottom line in the future.
“We will study the consultation and accompanying impact assessment closely, but I am sure that a key element of concerns for my members will be the comments that transferring the maximum amount of money from pillar 1 to pillar 2 is the right thing to do. I have repeatedly stated that English farmers are already significantly disadvantaged in comparison with their near neighbours in the EU. I will hold the Government to its word that they will only modulate the maximum 15 per cent if it can demonstrate it would deliver worthwhile and valuable outcomes for farming and society.
“We know that new schemes take time to design and make operational and we therefore believe that it would be much more appropriate to make use of the flexibility available to government to implement a two staged approach to future modulation rates, if additional funds are required.
“Based on our own internal calculation we believe that Government could afford to levy modulation at no more than nine per cent initially and then this would continue to finance half of the Entry Level Scheme (ELS) and maintain everything else at currently levels in the RDPE. We know that 66 per cent of the existing ELS agreements are expiring in the next two years, those remaining will be affected by the greening rules coming into effect from January 1 2015 and that the scheme has now closed to new applicants.
“In the meantime farmers continue to see nine per cent modulation taken off their Single Farm Payments, but we also know that the next agri-environmental scheme will not be operation until January 1 2016 with payments not being made until autumn of 2016 at the earliest.
“Government will be simply creating a war chest of modulated funds, which could disappear out of the farming industry if it modulates at 15 per cent from next year.
“By taking advantage of a potential staged approach to modulation rates, the Government can pragmatically assess how much of the old ELS measures have been retained by greening and also evaluate the longer term demands of the new agri-environment schemes. Only when this assessment has been made should we consider whether higher modulation rates are desirable.
“For the majority of farmers, today’s confirmation that Defra will follow the broad EU approach as opposed to introducing a more demanding form of greening through a national certification scheme will be very good news. However it is disappointing that Defra looks like it will close the door on giving flexibility to farmers troubled by the requirement to grow three different crops on arable land. The NFU is not ready to give up on that yet. I have requested an urgent meeting with the European Commission to discuss what alternatives there could be and hope we can find solutions before the end of this consultation.
“Elsewhere in today’s announcement, I am very pleased that Defra has listened to the NFU on how to deal with payment entitlements. Rather than maintaining uncertainty among farmers the Secretary of State has today announced that he will roll on the existing payment entitlements which is directly in line with what NFU members have been calling for.”
On greening, the CLA said Defra have chosen the easiest option with the lowest risk; to settle for the three basic measures set out by the EU – ecological focus areas, crop diversification and national permanent grassland rules.
Robinson said: “European proposals are not altogether relevant to English farming systems and will stifle economies of scale.
“This is particularly true of the crop diversification measure, which will do very little for the environment and result in negative impacts on farming.
“Defra must look to provide an alternative to this measure and stand by their commitment not to place unnecessary burdens on the farming industry.“
The Association said it was pleased to see that Defra agrees with the CLA view that a redistribution of funds under Pillar 1 should go to upland farmers and land managers.
Mr Robinson said: “This is a much better way of supporting those farm businesses in areas facing greater natural constraints.”
