Farm subsidies to run until 2020

Philip Hammond as Chancellor has undertaken to maintain current farm subsidies until 2020 when the current EU multi-year programme ends. According to some reports, that may not be that long after Brexit takes place.

Not only does enable farmers to make business plans for the next four years, it allows full time for a debate about the future support regime for farming.

When Brexit does take place it will be necessary to fix farm subsidies with a sterling value.

There is still some uncertainty about exactly what is on offer. Chief secretary to the Treasury David Gaulke has stated that 'the agricultural sector will receive the same level of funding it would have received under Pillar 1 of CAP until the Multiannual Financial Framework in 2020.' Will this be inflation adjusted? Inflation looks likely to rise to a higher level over the next year or two.

Farm business consultants Andersons have pointed out that the final year of the MFF actually pays the 2019 Basic Payment. It is thus possible that the guarantee lasts only until 2019.

It is clear that agri-environmental agreements already under way will be honoured, but there are questions over Countryside Stewardship agreements due to start this autumn. Applications to other rural development projects, including Leader projects that help rural businesses to grow, are guaranteed only if they are agreed before this year's Autumn Statement.

The Government statement says, 'The Chief Secretary to the Treasury, David Gauke, has also written to each devolved administration to confirm the same level of assurances offered to UK government departments in relation to programmes they administer but for which they are expected to rely on EU funding. The Treasury will work closely with the devolved administrations on subsequent funding arrangements to allow them to prioritise projects within their devolved responsibilities.'

This was well received in Northern Ireland where it was seen as removing uncertainty, but declared to be not good enough by the Scottish Government finance minister.

What I told farmers at the GYS

With Meurig Raymond at the Great Yorkshire Show

Here is the text of my address at the NFU breakfast meeting.

Harold Wilson used to say a week in politics was a long time. We have recently learnt than an hour in politics is a long time. Fortunately, we are now entering a period of greater stability as far as the Government is concerned. We have to wait to see who will be Defra secretary. I would expect Theresa May to approach the start of the Article 50 negotiations with some caution. Little preparatory work was undertaken by government, or at least little that was committed to paper. I think that our YAS report is actually quite helpful in terms of highlighting the issues that need to be considered.

Brussels is on holiday in August. Of course, too long a delay could lead to Article 7 being triggered. This invokes sanctions against an EU member for ‘failing to uphold the values on which the Union is based.’ However, I do not think that would be a very likely scenario.

How long the negotiations will take is a matter for speculation. They have to be completed in two years, but could be completed in less. France has a presidential election in April and May 2017, where the outcome is uncertain, and Germany has a federal election in September 2017. France is trying to carve out a leading role for itself in the negotiations and has set up its own task force led by their secretary-general for European affairs.

A few words about the negotiation process. The role of the European Council in the negotiations is to set the guidelines and key conditions while Commission staff will make concrete recommendations. The Council task force on the UK is headed by Belgian diplomat Didier Seeuws. There was some feeling in the Commission that he had been appointed too early. President Juncker’s chief of staff Martin Selymar is expected to be the Commission’s lead, at least unofficially.

The European Parliament won’t be directly involved in the negotiations, but will try to make itself felt before it carries out its official role, ratifying the final agreement. The Commission is likely to issue progress reports on the talks and the Parliament will vote on non-binding resolutions on them. One of our objectives with our report was to try and get greater attention given to agriculture and the food chain in the referendum debate. We were not very successful and I am concerned that this will happen again in the Article 50 negotiations.

The work of the YAS working party will continue and will have two main tasks:

• 1. Monitoring the negotiations in terms of their impact on agriculture
• 2. Contributing to the debate on a new domestic agricultural policy. That will be a policy for England as agriculture is a devolved matter. Up to now the constraints of the CAP have limited the scope for policy divergence. In future I would expect Scotland and Northern Ireland to spend more on agriculture and the rural economy, although budget constraints limit the scope of such divergence. I am less certain about Wales.

I have been asked to be positive today and I will try to be so, but it has to be recognised that farmers face political challenges and no longer have the support of farmers elsewhere in Europe. ‘Time to cut our greedy farmers down to size’ says this article in last Saturday’s Times. It is a very ill informed article and I have criticised it in my blog. The only good point in it is when it says that the NFU is a well organised lobby. But we can expect more of this sort of thing.

Before looking at various areas of policy, I want to say something about sterling. A falling rate against the dollar and the euro brings many advantages to farmers, but also some downsides. Exports become more competitive and the value of EU subsidies rises, but the cost of inputs such as fertilisers and soya increases. Fuel prices also increase, which is why the future of red diesel is something that needs to be watched.

The future of subsidies is clearly a matter for concern as for many enterprises they make the difference between running at a profit and a loss. Pillar 2 subsidies are in many cases protected by contracts that run beyond 2020, but we were also confident in our report that there was a strong domestic coalition of support for the continuation of agri-environmental subsidies, but hopefully putting right some of the failings in the existing scheme. There needs to be some discussion about whether subsidies should move up the hill to livestock farms.

We were much less confident about Pillar 1 or basic payment subsidies. We didn’t think they would be abolished, but we did think they would be a target for the Treasury. It has to be recognised that falls in tax revenue, some of which may be longer term, will put public expenditure under greater pressure, even though the budget surplus target has been rightly abandoned.

Inertia would suggest that a modified form of the basic payment would be used, hopefully with fewer form filling complexities and payments being made to farmers on time. I am clear that there will be no return to the deficiency payments that were used in the past because it is difficult to forecast how much they will cost in any one year.

The justification for general subsidies (or support payements) needs to be articulated. In my view the strongest argument is the need to maintain a level playing field with farmers elsewhere in Europe that will continue to receive CAP subsidies. There are also food security arguments given that our ability to grow temperate foodstuffs has declined over time. One also needs to consider environmental protection and the maintenance of the appearance of the countryside.

As far as regulation is concerned, hopefully we will see the back of the monoculture regulations that interfered in farm decision-making without making any contribution to environmental objectives. I think that it should be possible to eventually get rid of the Nitrates Directive in its present form and some aspects of the Water Framework Directive.

It does need to be recognised, however, that there is a strong coalition of domestic lobbies - environmental, conservation, animal welfare, consumer, public health – that often do not have a good understanding of the challenges that face farmers.

Take the case of badgers and bovine TB which I have written about a lot, indeed I am giving a presentation at the vet school at Surrey University next week. In forty years of working on agricultural policy, I have never encountered such an intractable policy problem in which emotion often trumps the evidence.

Plant protection legislation has not worked well in the EU. The internal market is not complete. Many of the national agencies suffer from very serious problems. There is too great a willingness to accept hypotheses about risk which are not evidence based. However, the UK Government is not necessarily sympathetic, as has been shown by the recent decision to reject a revised application to use neonics this autumn. It won’t be too easy to operate a pesticides regime in the UK that is at odds with that in the EU.

Trade agreements between the EU third countries or groups of countries, of which there are over fifty, provide one of the greatest challenges, although my guess would be that probably only fifteen of these are really important for agriculture. Trade negotiations are very complex and we lack enough experienced trade diplomats, although I believe that the Government is thinking of hiring them in from private firms, which will not be cheap.

There is a major issue about migrant labour which is particularly important in terms of planting and harvesting field vegetables and fruit. I don’t have time to go into this in detail, but in my view the way forward is through a revised version of the SAWS scheme that extends to specific countries beyond the EU. As far as the border with Ireland is concerned, I think that the most likely solution is to move it back to England.

The NFU is undertaking a major consultation with its members, probably one of the biggest it has ever undertaken. I await the results of that with interest, but in the meantime the work of our working party will continue.

Sources close to the NFU suggested to me later in the day that the biggest challenge would be managing the expectations of farmers.

Single market is key for agriculture

The importance of the single market to agriculture was emphasised by Martin Haworth, deputy director-general of the NFU, in a presentation earlier today at a conference in London organised by the UK in a Changing Europe programme. Subsidies to farmers were not the most important issue. 65 to 70 per cent of agricultural exports from the UK went to Europe and there was no other alternative. He also noted that the EU had over fifty trade agreements with third countries.

The uncertainty inherent in the Article 50 process was of itself damaging and the CBI had estimated that it could lead to a fall in GDP of 0.75 per cent to 1.5 per cent.

UK agriculture required 20,000 - 25,000 seasonal workers and there were another 35,000 full-time EU workers in agriculture. Analysis by Oxford University of the effects of a point system showed that 96 per cent of the workers would not get through.

Governments of other EU member states showed more sympathy with agriculture. Britain was a more urban society than most of the rest of Europe. He noted, 'I get much more access, interest and sympathy in Brussels.'

Farming formed part of a food chain and virtually the whole chain was in favour of staying in the EU. Food manufacturers would have to consider relocating in the event of Brexit. The catering industry was highly dependent on migrant labour.

He had not heard a credible argument on agriculture that suggested we would be better off leaving.

Responding to questions he said that the Ciolos reform had not offered a strategic vision of agriculture, but was a tactical attempt to green the CAP to attract more support. The division between Pillar 1 and Pillar 2 had been blurred.

Britain in the EU had been sullen and budget obsessed and had never punched with the weight we should have done.

Natalie Bennett, leader of the Green Party, said that going around the country food issues had been raised relatively rarely. However, she occasionally heard the demand 'We must take control of our fish' which created the vision of a fish swimming round with a passport tucked under its fin. We now had a reasonably sustainable fisheries policy that took account of the biological capacity of the ocean. The fact that we had been able to reform the CFP raised hopes for the reform of the CAP.

What is very clear is that fishers want to get out of the EU, in contrast to the more divided views of farmers: Fishermen and the EU

As for the referendum debate, it had degenerated into a Tory leadership contest masquerading as a EU referendum debate.

Parliament has its say

The European Parliament has had its say on the CAP reform process and, as predicted by Agra Europe last week, has largely backed the amendments proposed by its agriculture committee (ComAgri). The majority of MEPs backed the four ComAgri positions on direct payments, rural development, financing and market measures as the momentum towards a final agreement, potentially within the timeframe of the current Irish Presidency, gathers pace.

However, some hurdles remain. The Parliament vote largely proved that there is still work to be done before a deal that satisfies all member states can be reached. Parliament did back a number of key aspects of the Commission proposals such as the ‘capping’ of Pillar One payments as well as its plans on ‘active farmers’. 'Capping' would have implications for UK farmers in particular, a number of whom operate on a large scale.

10 per cent real cut in CAP budget

It looks as if the outcome of the EU budget negotiations might be a 10 per cent cut in real terms in pillar one for UK farmers and a 22 per cent cut in pillar two: Budget Outcome

A similar estimate of a 9 per cent in CAP expenditure in real terms, with an even bigger cut in rural development expenditure, is made by Oliver Lee of Andersons' Farm Business Consultants: Extent of cuts

It is interesting that he notes that this would bring CAP expenditure down to 39 per cent of the multi-annual financial framework, bringing it below 40 per cent for the first time. Given that it was over 70 per cent in the 1980s, this does show that incremental change can make a difference. But it is still questionable whether anyone starting with a blank sheet of paper would want to spend over a third of the EU budget on the CAP.

France determined to defend CAP budget

The EU budget for 2013 was finally signed off this week after the European Parliament approved a compromise agreement between member states that will give the CAP slightly less next year than was originally proposed by the European Commission, reports Agra Europe

CAP payments for 2013 will total €56.44 billion, a marginal increase from the current year but €350 million lower than what the Commission asked for. This leaves the Pillar One direct aid and market-related payment kitty at €43.93bn, up 0.13 per cent from this year, with the Pillar Two rural development budget set at €12.5bn - 3.38 per cent greater than in 2012.

On the subject of the next long term budget, France set out its stall against any cuts to the CAP budget for 2014-2020 and called for greater reductions from elsewhere in order to appease countries such as Sweden and the UK, who are fighting for greater reductions than are currently on the table. If the CAP is left inviolate, this would mean quite substantial cuts elsewhere, in particular in programmes that might do more to stimulate the growth of the European economy than the CAP.

As the biggest recipient of CAP funding within the EU, France is determined to pull back further funds into the agricultural budget after European Council President Herman Van Rompuy proposed a less drastic reduction of €17bn at the EU budget talks, softening on the €25bn he had earlier proposed.

But 'several billion' euros will still need to be restored to the budget if it is to satisfy France, the country’s European Affairs minister Bernard Cazeneuve told journalists at a European Parliament plenary session this week. But no specific amount to be recovered for the CAP is being aimed for, a spokesperson for the French Agriculture Ministry told Agra Europe.

Top official admits CAP deal will be delayed

A senior European Commission official let slip this week that the Brussels establishment is now preparing for the likelihood that reform of CAP Pillar One will be delayed until 2015, as time is running out on reaching a political agreement in time for the start of 2014, reports Agra Europe.

Gwilyn Jones, a member of EU Agriculture Commissioner Dacian Ciolos’ cabinet, is perhaps the first official to publicly say what many analysts have been thinking for a while now – that positions on this particular part of the CAP are too far apart for an agreement to be reached in the near term.

With the fairly radical overhaul of the Pillar One direct payment scheme proposed by the Commission and the subsequent debate on issues such as the convergence of payments and ‘greening’, it was always likely that this particular part of the CAP would divide member states.

However, the crux of the matter is still almost certainly the failure to conclude talks on the EU’s next long term budget – the multiannual financial framework (MFF) for 2014-2020. MEPs have made it clear they are not prepared to make any decisions on the CAP until they know how much money they have to work with.

Now that a MFF agreement is not likely to happen until late January at the earliest – when the talks will resume – it puts added pressure on efforts to reach a compromise deal and put the relevant measures in place in time for January 1, 2014.

Agra Europe's Chris Horseman believes that an agreement on CAP reform was not likely to happen before next summer at the earliest - but it would appear that even this deadline will now not be met.

So what now? Ciolos has made clear that he is still aiming for an agreement to be made in time for 2014 but has also mooted the idea of a “transitional year” taking us to 2015.

It is unlikely, however, that Pillar One in this transitional year will look any different to how it does now. The exact same structure for CAP direct payments would have to remain, provisionally, in place. The only difference is that if in the meantime agreement is reached on an MFF deal that will see the CAP budget trimmed, there will be less money available from 2014.

The assumption would be that the existing single farm payment scheme would ‘roll forward’ but with a cut in the budget of the order of 2-3% - and under the Financial Discipline Mechanism rules that would translate automatically into a proportional cut in each farmer’s direct aid payment cheque in 2014. This is a scenario which is unlikely to satisfy anyone, but such an outcome is all too familiar with the CAP.

There is more optimism that a common position on Pillar Two – rural development – can be reached in time for 2014, as was expressed at the recent Farm Council. How this could sit with a Pillar One framework that maintains the status quo will be something for MEPs and domestic ministers to ponder as they enter the Christmas and New Year break.

It's not all Balls

The ploy by Ed Balls and Douglas Alexander to call for Dave Cameron to secure real cuts in the EU budget is a way of setting an elephant trap for the prime minister. They know if they were in office they would have great difficulty in securing such cuts given the stance of other member states. But it will give them another chance to score a few political points by portraying the Government as weak and incompetent, as well as increasing disarray on the Conservative benches.

So it's a smart tactical move. But once we get away from the partisan point scoring, they do have something interesting and important to say in their Times article. They point out that for all the fuss about Brussels bureaucrats, administration only takes up 6 per cent of the EU budget. £45 billion is sucked up by the CAP at a net cost to the UK of £1 billion a year (although we do get a budget rebate).

They argue, 'Although the butter mountains of the past are long gone, the need for reform is no less urgent. The CAP is an obstacle to international trade liberalisation, creates too few jobs and introduces distortions so that there is not a level playing field. The EU cannot afford this waste.'

They maintain. 'further reform of the CAP must not just be discussed but implemented.' If only. I think there will be some real cuts, but they will be mainly at expense of Pillar 2 expenditure which helps the environment and the rural economy. The blanket subsidies of Pillar 1 (the Single Farm Payment) will remain largely untouched.

There are a number of net beneficiaries of the CAP who will defend it to the last hedge row. But there is more to it than that. France gets less than it used to from the CAP, but for the French it is more than a question of the financial benefits, important though those are. It is also about a vision of Europe in which agriculture plays a central if often symbolic role. It is about a statist mode of government in which intervention in the market is seen as beneficial in the name of food security. Even though some are questioning whether France can continue to afford to allow 56 per cent of its GDP to be spent by the government, those attitudes are not going to change any time soon.

Interesting that Gisela Stuart, the Labour MP for Birmingham Edgbaston, thinks that Britain should contemplate leaving the EU: Stuart . Admittedly, she has been moving in a Eurosceptic direction for eight years or so and is now something of a maverick on the Labour benches. But she was born in Germany and is a particularly thoughtful MP. What she says needs to be taken seriously.

Where her argument is perhaps weakest is in relation to the possibility of a two-tier EU, although I think she is correct in her judgment that a negotiation would not deliver that much in terms of a repatriation of powers (certainly not an exit from the CAP). This is not one of the usual supspects and it may be an early indication of a real shift in the political climate.

Green space controversy grows

The controversy over the so-called 'Green Space' in the CAP reform proposals is growing: Green Space

A somewhat embattled farm commissioner, Dacian Ciolos, is insistent that the proposals do not amount to set aside. As farm as farm organizations are concerned, if it walks like a duck and talks like a duck ...

The farm lobby is up in arms over this proposal and are citing food security arguments advanced by the G20. However, this is not a straightforward food security/productionism versus the environment argument. I am concerned that the Commission has devised a rather blunt policy instrument that would not be very effective in achieving its objectives and would have too many unintended consequences.

Admittedly some of the more subtle policy instruments in Pillar 2 have not always worked well in terms of additionality, i.e., achieving something that would not have been achieved without spending public money. Devising policy instruments that make a difference without too many side costs is not easy, but the effort needs to continue.

The linked report also refers to the enhanced role of the European Parliament in the decision-making process. This may be an advance for democracy, but not necessarily for coherent policies and effective reform.

Birdlife International critique greening delivery mechanisms

Birdlife International have understandably welcomed the Commission's stated intention to devote 30 per cent of Pillar 1 funding to 'greening' the CAP. They think that it could make a real difference in terms of the delivery of public goods by the CAP.

However, as always the devil is in the detail and they think that some of the proposed policy instruments are not fit for purpose. Indeed, on a scorecard they fail six of the twelve and give an 'unclear' rating to the other six.

Read their report here: Birdlife

What does the budget mean?

Sophia Davidova, president of the Agricultural Economics Society, offers her assessment (reproduced from the AES Newsletter):

The Communication from the European Commission on the budget for Europe 2020 is now in the public domain. Does it answer questions such as: whether the CAP budget will be consistent with the vision for future CAP developments; will the direction taken in previous CAP reforms for incremental increases in the funding of Pillar 2 be maintained or there will be a U-turn to what I call a ‘counter-modulation' towards transferring funds from Pillar 2 to Pillar 1; and to what extent will the CAP budget be maintained in real terms? These questions directly target the core justification for the CAP. But if there is no strengthening of Pillar 2, this may undermine the public value of CAP expenditure as a response to the priorities of the European citizens for ecosystem services and rural development.

The budget for the CAP for 2014-20 in 2011 prices is €372 bn, plus €15bn for research and innovation. Year on year the budget for ‘Sustainable Growth: natural resources' will decrease in real terms - by 10% from 2014 to 2020. On the other hand, expenditure on ‘Smart and inclusive growth' (including competitiveness and cohesion) will increase by 17.7%. The allocations plainly assume 2% annual inflation to maintain the budget for both Pillars 1 and 2 constant in nominal terms. The decline in the share of the total budget taken by total CAP expenditure will continue, reaching 33% in 2020 (from 39% in 2014).

It is difficult to say if this budget is a victory for the supporters of CAP and in particular Pillar 2, which recent rumours preceding the decision suggested. However, the lack of political will to rebalance funds in favour of Pillar 2 means that the EU will hardly be able to tackle the enormous rural and agri-environmental tasks ahead - unless we believe that mandatory Greening of Pillar 1 will deliver significant environmental public goods.

The budget could not be anything else than a compromise with such divergent interests amongst the EU-27. Many Member States, not just the UK, have criticised it as too generous. There will be debates on the own resource proposals, and what happens to the adjustments and rebates. It is also worth remembering that there are disagreements on the CAP budget even within the UK between government departments, and between DEFRA and the devolved administrations. Although a compromise, there is no certainty that these are the budgetary outlays that will be decided and implemented, since the European Parliament and the Council will have their say on the Commission communication. Thus, the uncertainty continues.

Real term cuts in CAP budget

Now that more information is becoming available about the CAP budget 'freeeze', it is evident that what is really envisaged are real term cuts. The envelope for the CAP post 2013 is €371.7bn in 2011 constant figures (€281.8bn of that is first pillar and €89.9bn second pillar). This compares to €417bn in the current financial perspectives. There is yet much to be decided in terms of how policy will be revised in the light of these budgetary constraints.

A system of 'reverse modulation' was envisaged whereby money could be shifted back from the second to the first pillar, but after protests by environmental lobby groups this was axed at the last minute. 30 per cent of direct support will be made contingent on adhering to greening measures that go beyond current cross-compliance requirements.

There will be a slow convergence process to address the differences in direct payments received by member states, i.e., those that have will not see it disappear immediately. The long-term aim is to ensure that all member states reach 90 per cent of the EU average, but significantly this will take account of differences in wage levels and input costs. The main beneficiaries of this approach are likely to be the Baltic States, Portugal and Romania. Poland and Bulgaria will gain only marginally.

There has been some backing down on the capping of support to major agricultural holdings which will now take account of the 'economies of scale of larger structures and the direct employment these structures generate.' How these might be measured could in itself be controversial. Any savings would be retained in national envelopes and recycled into budgetary allocations for rural development, but influential, large-scale farmers will still lobby hard on this topic.

Environmental groups took the view that the proposed measures did not represent effective steps towards ecological sustainability and a green economy.

Farmers' unions accept CAP budget proposals

Although they are concerned about particular aspects of the CAP budget proposals, such as the flexibility to transfer funds between the two pillars, farmers leaders are unsurprisingly generally satisfied with the deal against a background of fiscal austerity: Budget

Not surprisingly, farming organisations want to claim some of the credit, but much of it must go to France for a resolute defence of what it sees as its interests. It helps if the farm commissioner has strong French links and understands the French point of view.

Equally, the RSPB, as a leading spokesperson for conservation interests, is less happy. C'est la vie.

Threat to biodiversity funds

The RSPB and Defra are concerned about a potential threat to funds paid under Pillar 2 of the CAP to support biodiversity and wildlife schemes: Biodiversity

It would be very unfortunate to say the least if savings in the CAP budget were made by capping payments that compensate for the provision of positive externalities for which there is the strongest case for public subsidy.

The bulk of any reductions should come from the SFP, although the concern here is that an attempt will be made to penalise efficient and competitive farms by capping payments. MEPs have been urged to vote against these proposals: Capping

Defra no longer in charge of CAP reform

The NFU's policy director Martin Haworth thinks that UK policy on CAP reform is no longer being driven by DEFRA. Rather the Treasury and the Home Office is in charge. Their priority is seen as being to protect the British rebate rather than British agriculture. The NFU is fighting to ensure that any deal to protect the rebate does not come at the expense of agreeing to cuts in farm support.

The NFU has been forced to give up its opposition to any 'greening' of Pillar One support and has accepted that CAP reform is likely to impose further environmental conditions on subsidy payments. The emphasis now is on ensuring that any measures are fair and achievable.

The NFU clearly considers that its stance has been undermined by that of the Country Land and Business Association (CLA) which has advocated ranking environmental mesures alongside food security in importance. NFU president Peter Kendall has described the CLA's stance as a 'noose around our neck' in the negotiations. It had made it easier for policy makers to argue that subsidy payments should be shifted from food production to the environment.

The devil is in the detail

This post looks at some of the more detailed proposals in the leaked draft Commission communication on the future of the CAP.

The Commission believes that the CAP should be continue to be framed around two pillars. The idea of a third pillar focusing on climate change had been floated, but is evidently not being pursued.

The difference between the two pillars is seen as one of payment structure with Pillar 1 made up mainly of annual payments to farmers and Pillar 2 beuing multi-annual in nature. Is this the right distinction? Or should Pillar 1 be about the economics of agriculture production, while Pillar 2 focuses on 'additionality' with a particular emphasis on improving sustainability?

The rejection by commissioner Ciolos of a single flat payment is upheld, but it is not clear how the question of equity between member states will be addressed. This is likely to be one of the most difficult political issues in the negotiations given that there are wide discrepancies between member states. Those who don't get very much at the moment will want a bigger slice of the cake and those who have a big slice will want to hold on to it. The only concrete option presented is moving towards an arrangement whereby farmers in all member states would receive a minimum share of the EU-average level of direct payments (about €250/hectare).

It is proposed that there would be a cap on payments to large farms. This would have an impact on competitiveness, as large farms tend to be more efficient. It would also particularly hit Britain, Germany and the Czech Republic.

What makes it worse is a suggestion to link payments to employment levels. In other words, a farm that was employing labour inefficiently would receive more support. This would certainly undermine competitiveness, but then the document as a whole tends to give lip service to that concept.

The proposals as a whole also increase complexity when there is supposed to be a move towards simplification. They would increase transaction costs for farmers and the already substantial costs of operating the policy.