ENGLISH MILK producers stand to lose out on £500-600m in direct support, unless DEFRA changes its plans on subsidy payments, according to a top barrister.

Paul Stanley says the dairy premium and additional payment agreed by EU farm ministers in 2003 must be paid to dairy farmers according to EU law.

The two subsidy payments were agreed as part of the CAP reform to compensate farmers for cuts to the butter and skimmed milk powder intervention prices.

But DEFRA is planning to include the money under the umbrella of the single farm payment as a historical subsidy, which will be gradually phased out in England and replaced by the flat-rate area payment.

Charles Holt of the Farm Consultancy Group commissioned the barrister and is leading the campaign to challenge DEFRA.

“As the reform stands, dairy farmers in England  will lose about 6p/litre in total over the next seven years,” he said.

“For a dairy farmer producing 1 million litres/year, this is a loss of £60,000 compared with his Scottish, Welsh and Northern Irish neighbours.”

He has promised to launch a “full legal challenge” in the European Court of Justice if DEFRA does not respond to the accusations satisfactorily.

A spokeswoman for DEFRA said: “We are aware of the issue and have now received Counsel‘s opinion from the solicitors involved.

“Once we have had the opportunity to study that in detail we will respond to it formally.”

The NFU‘s position is more difficult, as more money for milk producers means less money in the area payment for other farmers.

Dairy advisor Tom Hind said he was waiting to see more of the legal detail of the challenge before he threw his weight behind it.

But he said: “We are very sympathetic because we do feel English dairy farmers have been put at a disadvantage compared to their competitors in the rest of the UK and the EU.”