Friday, March 23, 2012

Accession state farmers get little money from CAP

96 per cent of direct payment beneficiaries in the new member states received no more than €5,000 in the 2010 financial year according to Commission figures. The average amount in the EU-12 was €1,550 per farmer. In overall terms 80 per cent of farmers received 20 per cent of the payments. It should be noted that payments are still being phased in in the new member states.

Just over 60 per cent of European farmers received less than €1,250, although quite a few of these would be part-time farmers. Nearly 4,000 received more than the proposed cut off point of €300,000. 1,660 of them were in Germany, 390 in the Czech Reoublic, 330 in Spain and about 310 in the UK.

The Commission notes that 'the direct payments have lost their compensatory character over time' (which is how they were justified at the time of the MacSharry reforms) 'and have increasingly become a support ensuring a certain farm income stability and in combination with cross-compliance, promoting sustainable farming activity.'

If the objective is to stabilise farm incomes, Single Farm Payments are an inefficient way of doing it and a blunt instrument to promote sustainability.

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Thursday, March 15, 2012

More regulation urged in French presidential election

One would not expect candidates in the French presidential election to advocate less spending on the CAP or looser regulation, but there are significant differences of emphasis.

President Sarkozy said that he would focus his efforts if re-elected on improving the competitiveness of French farmers. 'Farmers are entrepreneurs, they want to live from work, not from direct aid.' he said.

One might question how far the CAP in its current form encourages them to be enterprising. However, Sarko was clear that France 'would fight against all attempts to reduce the CAP budget.'

Francois Hollande said that basing aid on farm size was unfair to specialist producers who had holdings of only a few hectares. Aid should take employment on farms into account. Needless to say, some French producers would benefit.

He also said that there should be more regulation of supply, saying that there too few policy instruments and specifically regretting the phasing out of milk quotas as a regulatory tool.

Many commentators, of course, favoured getting rid of the rigidities which this system introduced and which did nothing to boost the international competitiveness of the EU's dairy sector. But then that is clearly not a concern for Hollande.

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Friday, March 09, 2012

Subsidy cuts could be deeper than anticipated

The cut in single farm payment subsidies could be deeper than the anticipated four to five per cent according to Richard King of Andersons. He thinks that pressure on the EU budget could see the amount of money available through the reformed CAP reduced by twelve to fifteen per cent.

In real terms the loss would be even greater and farmers in Scotland and Wales could see bigger cuts as payments moved from an historic to a flat rate basis.

Snaller traditional family-run mixed farms were likely to be hardest hit by the cuts, as many relied on subsidy payments to get anywhere near making a profit.

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Thursday, March 08, 2012

Panorama programme causes controversy

A Panorama programme on Monday evening on farm subsidies has not surprisingly caused controversy: Panorama

I felt that the programme focused too much on the issue of 'sofa farmers' which admittedly makes for good journalism. If one is going to have subsidies, this arrangement is actually a second best solution as it allows farmers to convert their entitlement into a capital sum - although a bond scheme would do that more efficiently.

The programme also did not really tackle the contradictory objectives of the CAP. If it is a social policy, then it should be designed as such. But if it is intended to promote the competitiveness of EU agriculture, then it is not so inefficient to subsidise larger farmers who are generally more efficient.

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Monday, March 05, 2012

14,500 farms would be hit by capping

Some 14 500 farmers or businesses in the EU could see their direct payment cut in two years’ time, new figures indicate.

Any farmer receiving a net entitlement of more than €150 000 in aid payments is likely to see their payment reduced under the Commission’s controversial proposals on aid ‘capping’. New figures from the EU, relating to 2010, reveal for the first time the extent to which farmers throughout Europe would be affected.

The figure also show that those 14 500 businesses received almost 11 per cent (€4.4 billion) of the total €39.7bn handed out to 7.79 million recipients. Around 4 000 farms got more than €300 000 each, netting more than €2.2bn between them.