Anyone seen The Independent today? Its lead story is all about the possibility of a subsidy CAP being implemented as part of the CAP 'health check". Not sure why they have run it today - FW reported all this in September!

This will be the third time that the EU has proposed a cap, but talking to Philip Clarke our Europe editor it sounds like the UK may be more open to the idea this time around as Brussels is saying the capped money could go into the member states' rural development fund. The UK's rural development allocation has always been tiny, so this might make the idea more appealing.

http://news.independent.co.uk/uk/this_britain/article3143253.ece

Lies, lies, and statistics

How farmers (or the public) perceive the issue of capping depends on the context it is put across. If it is put across as capping the highest recipients of CAP money, but still paying them 45% of the full amount, then there is bound to be a reaction to say that even that might be too much.

I.e.       Lowest tier       100 %

            Tier a                 75 %

            Tier b                 45 %

On the other hand, it the case is put that the lower bands of payments relating to smaller farmers are paid at a higher rate and that higher bands are the basic rate the public would, in my opinion, be more acceptable.

I.e.       Lowest tier       150 %

            Tier a               130 %

            Tier b               100 %

More importantly, will the money ‘saved’ by the EU by introducing tiered payments be used to a) boost the overall basic payment for everyone, b) be used for other rural development (agri-environment) work or c) be lost to Brussels to cut the EU budget.

Yes, a great way to put young farmers like me off expansion. I dont want to see small farmers given advantages. Niche farmers maybe, but giving advantages to small scale commodity producers seems like suicide. It just helps the super markets and food firms screw us on prices.

I would suggest that a "young farmer" could expand a fair way before they got capped at a subsidy of 100,000 euros. I think it's a great idea, as you can probably guess we come in at just under the threshold!

Perhaps the "saving" could be used to pay for the BTv8 vaccine? Or perhaps it could be used to give an increased payment to organic farmers in order to pay for the extra diesel they need for weed control?

Of course, the worrying thing is that the tiers proposed are just a starting point. In two years time will the thresholds be reduced a little more, and a little more, and a little more? 

Congratulations at avoiding the cap, and a potentially embarrasing appearence in the newspapers 'name and shame list'.

E100,000 is only £70,000. I would reckon that is the subsidy on maybe a fairly intensive arable farm of 1000 acres? Farms around here are working on one man on 2000 acres with extra harvest help. If you have rent to pay or a mortgage like I have, a subsidy cap will seriously affect my ability to take on more land. If I were at the limit, would I for example be able to take on another 100 acres when another farmer who is not at the limit would be in a better position to benefit financially?

Changing tiers are a big worry - how can you make long term investments when there is such uncertainty over what is still quite a sizable percentage of farm income? I am not against these people tinkering with SFP etc, but once they have done it they ought leave well alone for a while, not mess around every year.

 Why cap it, just get rid of it.

Subsidies have been a disaster for European agriculture and the European Union.

They have inflated the value of land, reduced farmers entrepreneurial skills and kept rafts of regulators/administrators and ancillary industries in style for too long.

Since the single farm payment system came into being the corner has perhaps been turned and the part of the EU budgetary cake being devoured by us farmers is down to 40%. Great; progress at last!

Here, the individual receiving the largest subsidy cheque is Prince Albert of Monaco! Defend that!

In the last SFP reform negotiations, capping was proposed and only narrowly avoided, largely because it was argued that people would just split businesses up to get round the rules, not sure what has changed in that respect. 

Wouldn't it be better just to scrap large parts of the CAP and use the money to help keep Europe competative in the world economic competition?

Spend it on educating children, cleaning up hospitals, R&D and encouraging entrepreneurs.

Leave the CAP to help less favoured areas, which would otherwise be deserted and to looking after the environment, perhaps call it the CEP, Common Environmental Policy and kiss the CAP bye bye.

My farm would be well under the proposed cap, but in any case, it adds nothing much to the bottom line if you take off the SFP my tax, NI equivalent, extra cost of eligible land, set-aside/cross compliance costs and added margins from all my suppliers that know I get an SFP. 

I'm all for capping, and with the higher cereal and dairy prices and the new energy market, look forward to the end of the CAP altogether.

A bientot,

JC. 

Just out of curiosity and interest to see what people have to say, can I ask the question 'what are the subsidies for?'. It probably seems like a simplistic question but I expect there are quite a number of opinions out there.

Good question Stuart - I'd be interested to hear what others have to say.

As an aside, here at FW over the years, we've had debates about whether we should use the word subsidy and instead stick to 'support' (which is in fact what we tend to do). Personally, I don't like shying away from the word subsidy as to do so suggests that the industry is ashamed of having them and we don't need to be.

I expect no-one knows. I'm sure they had some reason for them when introduced. The problem is that once you introduce something, then lots of factors adjust to them. That makes taking them away quickly difficult.

I would be happy to farm without them - certinaly less paperwork. The problem is that when you make business decisions you factor everything in. So get rid of them, and ask the question "what replaces my now reduced income?" if it is increased prices, wait for the backlash as inflation (and interest rates to counter it) rises, consumers grumble. If it is falling land prices, then anyone with a farm mortgage is hurt badly, or anyone who bought at a high price. Tennant incomes also fall. Certinaly this is all in the short term, but I dont see any of these short term issues affecting afluent landowners - I presume the Duke of Westminster has cleared his AMC debts. I also dont expect the Queen to be rushing around Buckingham Palace fitting energy savung bulbs to recoup her reduced subsidy.

I expect today many farmers SFP subsidy pays the interest on our inflated land prices, or inflated rents, or the wifes new 4x4.

 Stuart,

It's to ensure that the French Farmers voted for Jacques Chirac, can buy shiny new tractors, live off 30 cows and aspire to working the 35 hour week! 

Thankfully he has gone and 10 new countries have changed the balance of power in the EU, hurrah! 

A bientot,

 JC.

To quote the EU, the ‘main aim of the single payment is to guarantee farmers more stable incomes’. My own interpretation is that it is compensation claimable by farmers in exchange for them complying with EU & UK standards covering public, animal and plant health, environmental and animal welfare.

Without the single payment, how many farmers would have survived with prices for wheat, milk, etc, at rock bottom prices for so many years up to now. Sure input prices, rents, possibly land prices would be lower and some might say that this is market forces, and that the uncompetitive producers would go under. But what impact would this have on the environment, rural communities, etc? The CAP is not just to support farmers and farming it is also to support rural infrastructure.

It is worth bearing in mind that the present CAP system is a transitional system to the new world or lower or nil payments. With any transition there will be winners and losers, but under the post 2012 system, there is likely to be a flat rate for everyone. Chances are that 50% will come in from the RPA and then go back to the Inland Revenue as tax, NI, etc.

And to those that think that CAP payments are supporting land prices, certainly in this part of the world, do you think an annual payment of around £ 70/acre makes much odds against a capital value of £ 3,500/acre, (it’s 2 %, which doesn’t make much of an investment case for a purchase, when you could earn 6.5 % in the building society - even Northern Rock!). What is supporting land prices is lack of supply and more importantly, the tax benefits.

Ok, rant over. Have a good weekend everyone

Isabel, a couple of interesting threads on the go here. One concerning the future of subsidies (which we know we can do nothing about) and one on saving the planet (windfarms) which is something we know that as farmers that given the chance we know we could resolve!

I think it's fair to say that the bigger farms will employ at least their fair share of farm staff. So it's the farm workers who will be capped.

Occassionally wondered whether the headage payment should actually be paid on the headage of farm staff and nothing else. Then I wondered how the Italians would monitor it!

Payments based on farm staff has been considered before and dismissed - because as you say, how do you prescribe for, and police, a situation where you have, (rightly or wrongly) Mother, Daughter, Grandma, Grandpa, etc. all on the books.

this used to be the case with the old slurry waste grants for stores, it was based on labour units

I suspect that in some locations ancestors would also qualify. rReminds me of an old Not-the-Nine-O'Clock-News sketch concerning at what point is a person considered deceased.

If capping were on the basis of the size of your claim, and you were a large scale agribusiness, what would be stopping you splitting the business into many smaller companies each below the cap?

You have to be able to prove they really are separate businesses. It can't just be a paper exercise - sharing machinery and labour etc is a problem.

On a similar theme, i have been told by an employee of the nfu that 70% of the cap budget is spent on admin

I was also told that 80% of the payments go to 20% of the farmers

If the above is true 20% of 30% of the original cap budget, ie 6% is all that is left to pay out to the remaining 80% of the farmers

It's not just the subsidies that need capping, it's the beaurocrats that run them! 

 One thing is for sure, if it is introduced DEFRA will try to impose it rigorously to the nth degree of difficulty for the farmer as usual.

Here our DDA has already a system in place of GAECs which is basically a group of farmers who pool resources into a farming company. It's  the only way to get much bigger, for example if an individual buys more land with milk quota, half is taken for the national reserve, if a farmer joins or creates a GAEC they keep it all.

If the SFP is capped, you can be sure that the limit per person will be multiplied by the number of partners here. The bigger farms already have six or eight members so could carry on getting substantial sums, they call it "transparence".

Whilst I would be happy to see a good shake up, over the years I have seen so many half measures and climb downs that I'll only believe it when I see it.

Bon courage,

JC. 

As always it seems to come back to the bureaucracy involved. Is it just that it seems so much worse now. Do we have any members who can throw light on what it was like pre-1973 and how easy/difficult it was in the post-war years? I suspect that food rationing andmemories of it may have led to the reality that paper does not make very good eating, well unless you are a goat.

Out of interest I have been watching our local RPA going through its first year. Our first stupidity is that our local office is 100 metres away and they try to force us larger entities to go to the county office 60km away. Thankfully our local chief has more sense and she tries to do as much locally as possible and then to transfer the documents to HQ! Apart from IACS and the main support payments all else is handled locally so for the bigger units (over 50 hectares) we get a dual control system which is stupid. I asked the other day about the number of farmers she has locally and it is about 2,500 in an area about the size of 40 km by 40 km. It is one of the lowest densities of farmers in the country! She has about 30% of the counties subsidies but I suspect only about 10% of the farmers. I have a lot of respect for her efforts as she has come from this from working in a village mayors office. I also suspect that she has a team of about six here plus someone in each of about 15 commune mayor's offices. If we have people like her across the country there would have a chance to implement the CAP but I doubt if that is the case. When I hear what is happening with the RPA in the UK for it to work here where we have something like a third of the EU's farmers will take a small miracle.

Here's the letters in response to The Independent piece (including one from our own Philip Clarke!)

http://comment.independent.co.uk/letters/article3152361.ece

Forget capping it....................get rid of it!

 Painful, but if this industry is to evolve and change to the needs of world farming this outdated form of subsidy has to end. I think we maybe at the stage British Leyland were in the eighties, desperate for money but with few commercial ideas of how to extract themselves from the mess they were in.

 Lets get on with it and stop tinkering while the good young entrepreneurs of this industry go to New Zealand and Canada to thrive, leaving us to stagnate further into decline

70000 pounds works out to $147700.  That is the subsidy on 1000 acres arable?  In my area to qualify for that much direct payment on a working farm you would need about a 10000 acre base this year.  I only bring this up because it is the US farmers that always draw the wrath of the WTO for our subsidies.  The vast majority of the land I own and rent is pasture, not eligible for a subsidy at all.  It looks to me like our subsidies don't amount to much in light of those in Europe.

Several years ago an organization called the environmental working group got a hold of the farm payment data for the entire nation and put it on their website, in other words you could type in my name and it would show you to the nickel what subsidy I got and for what.  The "townies" as you say had a field day with this, finding out what each and every person in the community was being paid.  I have to admit I browsed it pretty heavily myself.  Like in the UK with the Queen and Prince Charles, there are some high profile non farmers getting a pretty hefty check.  My understanding of why subsidies were introduced in the first place in the USA were to stave off the massive farm foreclosures of the 1930s.  I think they have stayed around as a way for the government to regulate food supply, and know how much of what is being grown, no one will ever admit very loudly that food security is part of national security. 

I like the idea of payment limits, and of sorting non farmers out of the mix.  I feel that once you get to a certain size of farm that is big enough.  I don't know what that size is, but say if you have 5000 acres, anything over that you should be able to handle without help from the taxpayers.  The stated idea of our subsidies has been to keep the family farm alive.  Most farms in our area are family farms, but they get bigger and bigger.  As farmers we always want to expand, but in order for each of us to expand means someone else must go out of business or get smaller.  When do we cease being "family farms" and turn into regular businesses? I am a taxpayer as well as a farmer, and I don't want my tax dollars going to wealthy non farm investors or some mega corporation farming 10000 acres.  If that makes me a Communist or Socialist, naive or whatever else you can label me, I guess I am guilty as charged.

    Why do we have subsidies? In a nut shell:  State control and jobs for the boys.

      The original reasons for the subsidies are clearly outlined in section 39 of the Treaty of Rome 1957, (I think I have that right). These were pretty good reasons and I think the system worked well at that time. Before that we had our own National agricultural subsidies like; Hill cow payments; lime subsidy; Cereal deficiency payments and Capital grant schemes. All were pretty well targeted and worked well, I think. Since then things have changed a lot as we all know.

       In my opinion, the system's biggest success ( "for some") as the years went bye has been the huge increase in State control and employment for the civil service. Where else is their such a huge and accurate set of statistics drawn from so many in such a huge industry as our Farming in Europe? And so easily controlled by manipulation of finance and conditional instructions. The farmers have had little or nothing to do with the way these subsidies have been allocated but have sometimes been used as pawns in the political game. The subsidy system is a tool used to keep the hubs of bureaucracy turning. For that reason, they may change or be redistributed but they will not disappear over-night. 

        With regard to capping; we have been down this road in a previous thread. I feel that as long as they are related to the business's output ( or inputs ) I see no reason for capping.