21 June 2002

Threat of cereal aid cuts from Brussels

BRITAINS largest cereal farmers could face cuts in their future area aid cheques worth £60m, according to initial calculations by the NFU.

The projection is based on leaked reports from Brussels, which suggest the commission is planning to cap individual subsidy payments at k300,000/farm (£192,000) as part of its mid-term review of Agenda 2000.

The NFU estimates this would affect all arable farms claiming on over 800ha (2000 acres).

While official data is hard to come by, there are thought to be some 600 such farms in England farming over 700,000ha (1.73m acres). Around 250,000ha (618,000 acres) would be ineligible for aid, worth some £60m, or 9% of total arable payments, at the full area aid rate of £237/ha.

"This is extremely unwelcome news," says NFU chief economist Derrick Wilkinson. "It comes at a very bad time, especially as it is hitting the larger operations that have a chance of being competitive."

But Michael Hart, of the Small and Family Farms Alliance, says he is conditionally in favour of the cuts. "I would support the idea of cutting subsidies to bigger farmers, providing that money is recycled in farming."

The actual cost to UK agriculture could be much higher as medium-sized farms with arable and livestock enterprises could also breach the k300,000 limit. And some of the largest sheep farms in the Scottish uplands, running over 10,700 ewes, would be penalised.

But Gerald Mason, of the Home-Grown Cereals Authority, insists the figures are highly provisional. "The commission is being very tight with its information. There is much that could change between now and when the policy takes effect. As ever, the devil will be in the detail. In the US Farm Bill, for example, there is a ceiling, but single farms can be broken into three entities."

Full details of farm commissioner Franz Fischlers proposals will be unveiled on July 10 in Brussels.

But further leaks suggest he is also looking at introducing compulsory modulation, taking 3% a year off all direct payments over k5000 (£3200), increasing in equal steps to 20% within seven years. This money would be fed into the rural development budget.

Rumours in Brussels also point to a possible 5% cut in cereals intervention prices without compensation, and a flat rate area aid for beef producers. &#42

Whats the vision? Franz Fischler will outline plans for the future.