22 December 2000

One-off IACSexit

MAFF should offer growers a one-off payment to opt out of the system of annual IACS cheques, according to a leading agricultural economist.

"Headage and area payments force farmers to carry on doing the same thing year on year," says David Harvey, head of agricultural economics at Newcastle University.

They stifle the industry and make UK farmers reluctant to adapt to market forces, he believes.

As an alternative, MAFF could accept tenders to opt out of the scheme. Growers would suggest a one-off payment level at which they would be prepared to forego their rights to EU agricultural support.

Some might accept the equivalent of five years IACS payments, others six, seven or eight, he reasons. MAFF could then decide what it was prepared to pay. "It could even make counter offers."

Such a scheme would provide lump sums to set up alternative enterprises. For small and medium sized UK farms those should be aimed at adding value to produce or developing new ventures, Prof Harvey believes.

The system would free up more land for highly efficient large-scale growers to rent or farm on some other agreement and become truly world-competitive at producing commodities. Some such UK-based growers are already farming in more than one country and continent, a trend which is set to increase, he adds.

David Harvey advocates revamping IACS to tempt growers to diversify and free up land for others.

Goodbye AAPS?

Arable area aid is certain to decrease or even disappear in the long run, says Prof Harvey. Eastern European integration into the EU, political pressure to shift payments to regional and rural development, and the end of "green box" protection from the Uruguay round of world trade talks on Jan 1 2004, will all put the system under tremendous pressure.

"If you think your future lies in appealing to government to bail you out then think again," he warns.

But he has good news on grain markets. "The prices will recover. The only question is when, not if. With 80m more mouths to feed each year one thing is certain. We are not going to have an oversupply of food. If you take control of your marketing and own business strategy there is bound to be a future for you."