Help for UK Farmers Mar03

Commissioner Fischler’s Mid Term Review (MTR) of the CAP attempts to progressively reduce EU production subsidies by "de-coupling" (i.e. payments will not relate to present farming activities) in order to meet EU commitments to the WTO. Although farmers will continue to receive support for diversification and enhancing the environment to sustain rural economies, the changes proposed have precipitated grave concerns amongst many UK farmers, particularly in North Hertfordshire.

Whilst the EU subsidises farmers growing cereals, oil seed rape and land set aside, it does not offer subsidy for growing potatoes, vegetables and soft fruit. The MTR proposes de-coupling with a single payment to farmers, basing the payment on average claims between 2000-2002. This mode of compensation has the following consequences:-

1. It bases future compensation on what farmers grew during 2000-2002. Therefore, cereal and oil seed rape farmers who received substantial compensation during 2000-2002 period will continue to receive higher subsidies (€375 per hectare) in future, compared to those who grew vegetables and fruit during 2000-2002, therefore attracting zero EU subsidy.

2. Such a difference in subsidy for neighbouring farms will distort land valuations and penalise existing vegetable and fruit farmers - both landowners and tenants. EU subsidy should be tied to the land and made transferable to whomever farms the land at any time.

3. Farmers deprived of their ability to switch crops from vegetables to cereals will lose their bargaining power with buyers/contractors.

4. Vegetable and fruit farmers will have no incentive to rotate crops by switching their pea acreage to cereals and oil seed rape.

I believe that a fair proposal for the MTR of the CAP would be as follows:

The EU should amend the basis for the calculation of the Payment Entitlements to include an allowance for AAPS (Arable Area Payments Scheme) registered land which had been used for vegetables, fruit and potatoes during the reference period of 2000-2002. Under such a scheme, the entitlements would be based on the total amount that the farmer received under the relevant support schemes as well as the AAPS aid to which he would have been entitled had he grown cereal instead of unsupported crops on AAPS registered land. This would have a diluting effect of about 6.5% on the total UK AAPS payments as the acreage for unsupported crops is very low. This solution would mean:

• Fair treatment of every arable farmer

• Genuine de-coupling

• Total flexibility of cropping into the future

• Compliance with WTO regulation

• No need for detailed annual IACS forms

• No distortion of land values

• Solutions to problems 1,2,3 and 4 listed above

• Reduced intensification of vegetable and potato production

Commissioner Fischler is right to introduce de-coupling to reform the CAP. However, he must formulate an appropriate mechanism for compensation that can sustain good agricultural practice without distorting land values. His proposals must also allow farmers to produce a variety of crops including cereals, oil seed rape, vegetables and soft fruit. I have written to both Mr Fischler and Margaret Beckett expressing these views and await their response.