INDUSTRY LEADERS have told farmers to prepare for a watershed year as sweeping CAP reforms take effect in 2005.

But some are already warning that the CAP budget will not stand the financial strain put on it by the reform’s environmental and rural development schemes.

Emphasis on the environment and rural development is forecast to increase beyond 2012 when the next set of reforms will be put in place.

“But it may be well before 2012 that we get the crunch,” said NFU policy director Martin Haworth.

“Already in a few years” time there will be a lot of pressure on the system,” he added, citing a number of internal CAP reviews and the prospect of a World Trade Organisation agreement next year as contributing factors.

“The budget may run out as soon as 2007 or 2008. The new member states” payments will gradually be increasing, and it is very likely that the agreed ceiling will be hit.”

Mr Haworth said that although there is a mechanism in place under which payments will be cut when the ceiling is met, there is a possibility that such an event would trigger a review of the whole system.

“Maybe everyone will be happy with cutting the payments, but maybe people will say there’s a need for a new look at the reforms,” he added. He pointed out that even though many people would like to see modulation and the environmental emphasis of the CAP continuing, it is by no means clear that the budget will allow it.

More pressure

The pressure on the CAP budget is not likely to decrease by 2012, because by then the EU may have even more member states. This has led to a search for alternatives to the current CAP reform.

Proposals to take decoupling one step further have already been mooted. Alan Swinbank, director of the Centre for Agricultural Strategy at the University of Reading, Berks, has made a case for a bond scheme that would break the link between support and the land.

“It would be a compensation scheme, under which payments would be detached from the land completely and so give farmers freedom either to farm or to get out of agriculture altogether,” Prof Swinbank told farmers weekly.

While admitting the idea was radical, he said it was credible. Meanwhile, industry leaders have told FW 2005 will be a watershed year.

David Handley, Farmers For Action chairman, warned that most farmers were ill-prepared for the forthcoming changes. Both he and Farmers Union of Wales president Gareth Vaughan expressed concern over the fate of the dairy industry. But not all forecasts were warnings. NFU president Tim Bennett said he was confident of a profitable future.