EU farmers’ aid payments under threat?

The Single Farm Payment (SFP) has established itself as a core component of European farmers' incomes over the past few years – but there is growing concern as to the extent to which the value of SFP entitlements could be eroded in the coming years.

The two main threats to the SFP are "modulation" – the mechanism by which a proportion of each farmer's aid entitlement is deducted at source and transferred over to fund increases in rural development budgets – and "financial discipline" – the rules which provide for automatic aid cuts in order to prevent total spending on the Common Agricultural Policy (CAP) exceeding pre-set budget ceilings.

EU agriculture Commissioner Mariann Fischer Boel has suggested that the rate of modulation should be doubled from the current 5% to 10% by 2013. Such a move would create around an extra €1 billion a year for agri-environmental schemes, rural regeneration programmes and farm support services. But the proportion of each farmer's entitlement which would actually be paid to him each year would fall from 95% to 90%.

Meanwhile, received wisdom has it that the financial discipline mechanism is 'bound' to be triggered sooner rather than later, as SFP commitments increase with EU enlargement.

But a new analysis by Agra Europe, the leading news and information service on European agriculture policy, indicates that reforms in other areas of the CAP could come to farmers' rescue. The amount of money spent on traditional market support measures is likely to fall by almost half between now and 2013, and Agra Europe projections indicate that budget-related cuts in SFP payments will probably not amount to more than about 2% by 2013.