NFU Cymru gives initial views on Axis 2 review

Axis 2 measures make a significant contribution to farm business income and therefore are a major determinant of the economic viability of farms in Wales – that’s according to NFU Cymru which has today given oral evidence to the Rural Development Sub Committee of the Welsh Assembly on the current Axis 2 Review.

Bernard Llewellyn told the Rural Development Sub Committee, "Without Axis 2 measures there would be adverse economic, environmental, social and cultural ramifications in Wales. Farmers and stock are integral to the management of the landscape and without which it will deteriorate."

Historically, the UK has had a poor allocation of just 3.5% of the EU Rural Development budget and this has reflected pro-rata in the budget allocation for the Welsh Rural Development programme. NFU Cymru today explained that because of unreasonably low levels of support from the EU, farmers in Wales have faced both compulsory and voluntary modulation which has placed them at a competitive disadvantage vis a vis their EU colleagues (with the exception of Portugal) in the past.

Bernard Llewellyn said, "In recent years Welsh farmers have had their Single Farm Payments (SFP) modulated in order to fund the agri-environment schemes under Axis 2. We envisage that increasingly there will be pressure on pillar 1 payments of the SFP in favour of rural development which is under pillar 2. If this is the case then it is imperative that all farmers are given the opportunity to recover these lost SFP receipts otherwise the future viability of these farms may be prejudiced."

Farm business survey data for Wales shows that in 2006 / 07 income from Axis 2 measures contributed on average some 27% to the farm business income with the income from agriculture excluding this and other support representing a loss of £9,600 for the year. The impact of Axis 2 measures in the LFA grazed livestock sector is even greater at some 47% of farm business income and where without such support the extent of the income loss would have increased to £17,000.

When considering successor arrangements for the current Axis 2 measures, NFU Cymru considers it essential that the farming industry in Wales should be sustainable in the broadest terms ie. economically, environmentally, socially and culturally and the driver for all this will be determined by profitability.

Bernard Llewellyn concluded, "NFU Cymru has made it clear today that any successor measures must maximise the level of resources that reach the individual farm business. Farmers need to be able to recover modulated SFP funds, particularly as the level of modulation rises and that there is no significant redistribution of resources under the Axis 2 measures which may have the potential to undermine business viability and result in the loss of more farming businesses."

NFU Cymru has made it clear that any views given today as part of the oral evidence are only preliminary as the deadline for submissions to the Axis 2 Review are not due until December.