Milk report contains fresh food for thought

The NFU says an independent report on the effect of CAP reforms on the dairy sector, published today, provides important early indications of the likely impact of changes on the sector.

NFU Milk chairman Terrig Morgan said the report - carried out jointly by Manchester and Newcastle universities – strengthened the industry's hand in pushing for an historic allocation of entitlements under the new single farm payment.

A key conclusion in the report, entitled The Future of UK Dairy Farming*, which was commissioned last autumn by MDC, DIAL and DEFRA argues that: Allocating dairy direct payments on an area rather than historic basis would penalise the most efficient and competitive dairy farmers.

Terrig said: "This is an important report for the dairy sector. It sends out a clear message to government that payments need to be paid on an historic basis if we are to promote the further development of an efficient and, more importantly, profitable dairy sector in Britain."

The report also warns of the challenges of the marketplace and the need for innovation to move away from commodity production.

The NFU says decoupled payments will offer much-needed flexibility to farmers needing to take long-term business decisions about their future.

Terrig said: "It is clear that restructuring will result under a reformed CAP. Government must, therefore, ensure decoupling offers the necessary opportunities for farmers to adapt to the new climate or to make the transition into other areas of agriculture."

The NFU believes a national envelope or prohibitive cross-compliance requirements would work against the principal of creating a sector more in touch with its market.