A clause within the EU’s draft proposals for the CAP health check that would allow member states to deduct a further 10% from farmers’ single farm payments created much concern at NFU Council this week.

The leaked proposals, which are not due for official publication until 20 May, outline a number of changes that would simplify the current system for single farm payments.

But of greatest concern was the inclusion of Article 58 (formally Article 69) that was described as “additional modulation by the back-door” by NFU chief economist Carmen Suarez.

France

The UK government is understood not to favour the option, which is a French idea to help boost funds available to compensate farmers for losses incurred as a result of bluetongue.

“The French are particularly keen to use it, as they have already used their quota of state aids for bluetongue and would like to direct more money at it,” Dr Suarez said.

But she noted that several UK environmental groups and government agencies have become very excited by it and are pressing for the rate to be increased to 15% to allow more funds to be directed to environmental schemes.

WTO rules

Under the proposals, the withheld funds would not require co-funding from the Treasury as the money must remain within Pillar One of the CAP. However, it does not have to remain within the sector from which it originates.

The issue is further complicated by WTO rules, which would limit the amount that could be taken to 2.5% of the total support budget, meaning a maximum £40m could be raised from farmers in England.

“Overall we remain concerned about Article 58. Our government could potentially try to use it as modulation through the back-door. Others could use it as a means to re-introduce coupled payments via the back door,” Dr Suarez added.

Former livestock board chairman Thomas Binns raised fears that DEFRA might use the clause as a means to supplement its proposals on cost and responsibility sharing. But Dr Suarez said that under the current plans the funds could only be used to compensate for consequential losses.