DEFRA’s decision to reduce direct payments to farmers in England by 12% attempts to tread a middle ground between the demands of farmers and conservationists.

For weeks, DEFRA secretary Owen Paterson appeared determined to modulate direct payments to farmers in England by 15% – the maximum allowed under European Union rules – and redirect the money saved for rural development measures including agri-environment schemes.

But at the last minute, Mr Paterson changed his mind.

The decision to go for 12% modulation is halfway between the demands of the NFU and the RSPB – organisations which have clashed repeatedly over spending money under a reformed CAP.

The NFU had argued that DEFRA could meet its environmental obligations by keeping the modulation rate at its current 9% rate.

The RSPB and other wildlife organisations had called for DEFRA to “modulate to the max” and go for the full 15%, with more money directed towards the environment.

So what does the final 12% deal look like?

Put simply, at least 12% of the budget will be transferred from direct payments (Pillar 1) to rural development (Pillar 2) in each year of the CAP period, which runs from 2014 to 2019.

Halfway through this period – in 2016 – the government will hold a review into the demand for agri-environment schemes and the competitiveness of English agriculture.

Following the review, the intention is to move to a 15% transfer rate in 2018 and 2019, the final two years of the CAP period.

With this rate of transfer, DEFRA says it will be spending more than £3.5bn on the next Rural Development Programme for England.

This would rise to about £3.65bn with an increased transfer rate of 15% from 2018.

Nearly £3.1bn will be spent on the environment over the life of the new programme.

This will rise to nearly £3.2bn – the amount spend in the current programme – if the transfer rate rises to 15% in the past two years.

DEFRA investment

With a 12% transfer, DEFRA plan to invest £177m through a Growth Programme, about £140m on farming and forestry competitiveness, and about £140m in the Leader project.

In addition, DEFRA has decided to equalise direct payments rates for the uplands and lowlands.

It said it recognised farmers in the uplands face particular challenges and play an important role looking after the distinctive landscape of the English uplands

Equalisation will result in only a modest decrease in the lowland rate, said DEFRA, with a decision on the moorland rate due “in the first half of 2014”.

In terms of reduced payments for larger farms, DEFRA said it will apply the minimum 5% level of reductions on basic payments more than €150,000 – with no option to offset salary costs.

When it comes to “greening” measures, DEFRA said it will adhere to standard EU measures requiring farmers to undertake environmental activities in return for subsidies.

“This approach will balance the environmental benefit with our pledge not to impose unnecessary burdens on farmers,” said DEFRA’s consultation response.

DEFRA added it will not introduce a national certification scheme because any additional potential benefits would be out weighed by the complexity of doing so.

The EU requirement to control permanent grassland will be applied at a national level.

Decisions over further designations of environmentally sensitive grassland will be taken following further discussion with stakeholders.

Similarly, further discussions will be held with stakeholders on any options which should be included in the Ecological Focus Areas.

“At 12% there will be additional funds available and we will play our full part in determining how these might best be spent.”
Meurig Raymond, NFU deputy president

DEFRA said it believes the deal “represents the best balance between using rural development money to deliver public goods and meet our obligations”.

The deal will help farmers become more productive and competitive, while enabling them to make a smooth transition to the new direct payment budget, it argues.

Farm leaders have welcomed the 12% decision. But wildlife groups say it is a missed opportunity to do more for the environment.

NFU deputy president Meurig Raymond said: “This issue has falsely been presented as a fight between farming and the environment. It is not.

“Even at 9% transfer, the NFU has demonstrated that we could continue to meet all our on-going commitments to agri-environment programmes and have a surplus to spend on other measures.

“At 12% there will be additional funds available and we will play our full part in determining how these might best be spent.”

But RSPB chief executive Mike Clarke said DEFRA’s proposals had been watered down following “considerable last-minute pressure” placed on the government by the NFU

“The government has made its own job of meeting its environmental commitments harder, and must re-assert its determination to ensure that a large proportion of this public money is directed towards public benefits: a healthy and vibrant countryside, rich in wildlife, to which we all have access.”

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