British farmers’ single farm payments could be cut by over a third as a direct result of the EU budget deal struck by heads of state in Brussels last weekend.
Under the agreement, spending on direct payments and market supports (Pillar 1) will be frozen at current levels, as agreed by EU leaders in 2002.
But for rural development, funding is being reined in substantially, with just
Controversially, the UK also succeeded in its plan to allow member states to apply voluntary modulation of up to 20% as a means of shifting more money from Pillar 1 to Pillar 2.
This will not have to be match-funded by government.
“It seems highly likely this option will be used in the UK, but not in other member states, leading to major competitive distortions,” said NFU chief economist Carmen Suarez.
“The UK is the only country that currently has national modulation.
Germany tried it, but then abandoned it.”
If used to the full, UK farmers could see 20% of their SFPs taken by national modulation, on top of the 5% by compulsory EU modulation.
But it does not end there.
While the new budget fixed Pillar 1 spending at
The EU Commission estimates that the accession of Romania and Bulgaria will cost around
“That will take about 7% or 8% off EU15 farmers’ payments due to the financial discipline mechanism,” said Ms Suarez.
“Combined with a 3% cut for the national reserve, farmers could be looking at a total cut in their SFPs of 36%.”
Another matter still to be resolved is how the
It has been a long-term complaint that the UK gets too small a share of the cake, owing to its low historic use of these funds.
But with half the cash reserved for new member states, and with a further
The NFU puts the drop at around
“That will increase the incentive for government to apply national modulation,” said Ms Suarez. “We are determined that the Treasury should continue to match-fund any contribution farmers make.”
Have your say on proposed budget cuts at www.fwi.co.uk/talkingpoint