The switch to an area-based subsidy payment system in Wales will result in financial winners and losers on farms, according to the Welsh government.

A consultation document on how direct payments will be made suggests 48% of farms would gain under a flat-rate basic payment. But the document said 35% would lose at least 10% of their current payment. Only 17% would remain within 10% of what they currently receive under the historic payment model.

Farms that will lose out are those with large historical entitlements, mainly dairy units. They would receive “significantly less” funding under a flat-rate payment, it said.

Although the Welsh government accepted there would be no additional funding and payments would therefore have to be “redistributed”, the transition period has been of great concern.

“The Welsh government has argued for a transition period of up to 10 years and we think that the argument for a long transition period is being listened to,” the consultation document said.

This extended transition would allow Welsh farmers to manage the adjustment to their income because the single farm payment, on average, represents a higher percentage of net farm income than in England. The Welsh government favours a step change of between 10% and 20%.

The impact of capping in Wales is likely to be minimal. Early estimates indicate that when Wales needs to be making area based payments in full, 0.1% of all farms – around 0.1% – would lose out by €1.2m.

Wales’ deputy farming minister, Alun Davies, urged farmers to have their say in the consultation process. “I would encourage all farmers in Wales to engage with this public consultation and I look forward to receiving detailed and constructive contributions, so that we can develop the best proposals and outcomes for those at the sharp end, those farmers who will be most affected by changes to CAP,” he said.

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