Following the announcement earlier this month on the division of CAP funding for Pillar 1 and Pillar 2 between the UK administrations, NFU Cymru used their meeting today with the Minister for Natural Resources and Food, Alun Davies AM, to discuss how this impacts on CAP decision making in Wales.
Ed Bailey, NFU Cymru President said, “We applaud the Minister for his robust stance on this matter which helped ensure that Wales maintains a fair allocation of the total UK CAP budget. This decision now allows the Welsh Government to begin to provide some clarity on how they propose to support the industry through the two pillars of CAP.”
NFU Cymru used the meeting to once again highlight concerns over the potential impact of moving additional resource out of Pillar 1 and into Pillar 2. The Minister, within the current CAP consultation document, has said that he is prepared to consider a transfer up to the maximum permitted of 15%. This loss would equate to around 48 million euros being annually taken out of direct payments in Wales.
Bailey said, “A lower EU wide budget for direct payments, alongside the move from an historic to area based system, which will commence in 2015, already places massive pressures on the farming industry in Wales. This will be compounded if the Minister decides at the same time to take a further 15% of funds annually from 2014 out of Pillar one payments. We would ask, at the very least, that the Minister considers a phased approach to modulation or Pillar transfer as it will be termed in future.
“The new Rural Development Plan (RDP) for Wales and the schemes that will operate under that will take some time to design and become operational. We therefore believe it would be appropriate to make use of the flexibility allowed by EU rules to implement a two staged approach to future modulation rates. Only take what is needed from 2014 to fund current commitments and if future schemes prove successful, then make a decision on future funds in 2016, when the next RDP is fully up and running.
“We have previously highlighted the difficult position the industry is being put in, with two pillars that should be seen as complementary but a consultation at present only dealing with one pillar. Transferring funds when we only have an inclination of some of the themes that Welsh Government are actively considering under the next RDP and little detail of how these themes may evolve into schemes strikes us as very much ‘putting the cart before the horse’.
Bailey continued, “We would argue that on the basis of support already modulated from farmers and not spent, Glastir take-up being lower than anticipated, and some uncertainty over how Greening rules will impact on agri-environment schemes from 1 January 2015 - there is a strong argument to keep voluntary modulation close to current rates of 1.5%.
“As a Union we continue to argue against Pillar transfer. EU funding for direct payments is estimated to be cut by 1.6%, equivalent to a 12.6% cut if inflation is taken into account; whereas EU funding for the RDP increases by 7.8%, a loss of 5.5% if adjusted for inflation. The major impact on the size of the next Wales RDP will be if Welsh Government decides to cut its domestic funding of the rural development plan. We do not feel it right that this be made up through raiding EU funds earmarked for support to help farmers cope with market volatility.”
“If Welsh Government considered taking advantage of a potential staged approach to Pillar transfer in a similar way that it is proposing a managed transition from an historic to area based payment regime then I believe that this could help minimise disruption for farmers, a key stated policy driver for Welsh Government.”
