AS WE PREPARE for a New Year and, for European agriculture, a new era, some farmers are apparently clinging to the notion that they can continue as before; that single farm payments will simply replace production-based aid, albeit at lower levels, and that there is little need to change beyond a bit more belt-tightening. That is not my conclusion based on pub talk, but that reached by an ADAS survey of 1800 farmers across England and Wales.

Only 25% of those interviewed said they would manage their farms differently under the new regime. Almost 60% admitted they did not appreciate that the future would be radically different.

For the record, decoupling aid from production amounts to the abandonment of policies in force since World War II. It may lead to severe cuts in production, reversing previous plans that accepted the need for strategic reserves, even if that meant surpluses of some commodities. And on farms the priority to produce food to earn aid to supplement market values will no longer apply. The aid will arrive (provided registrations are in order) whether we produce or not.

Market prices will be crucial and if we calculate we cannot make a margin at the likely sale value, there will be no need to grow the crop or keep the animals to qualify for aid.

All of this has been published many times over recent weeks, even though, with days to go before it started, the regulations governing entitlements were not yet clear. But in view of the ADAS survey, I thought it would do no harm to repeat the basics of a momentous CAP Reform.

So, can farmers earn a profit from the market alone in 2005? Readers will have their own rules of thumb on what the price of a given commodity needs to be to leave them a margin. But the fundamentals are that the values of cereals and milk are likely to be down compared with 2003, when growers came close to profitability, and the costs of fertilisers and labour, in particular, will be significantly higher. And that says nothing of the growing expense of complying with regulations to which further restrictions on soil management and water purity have just been added.

The mood in Norfolk (and this is pub talk) is that we may have made a mistake in planting near-normal acreages of winter cereals this year but we won”t do it again unless the price of grain rises by at least 20/t. The reform of the EU”s sugar regime from 2006 is scheduled to destroy the profitability of what has been a useful crop, so beet could disappear from East Anglia soon after that. The British countryside could look very different in five years” time.

If that is the case – will the new regime survive? There are three potential threats, in my view. First, public opinion. When taxpayers discover, as the media will ensure they do, that farmers are receiving what will be portrayed as generous aid for keeping their fields tidy under the terms of cross-compliance and producing little or no food, will they be happy? Headlines will speak of “feather-bedded farmers” and the entire edifice around which the new regime has been built will be at risk as its political authors run for cover.

Second, EU cash may run out. At the beginning of negotiations on the mid term review that turned into a fundamental reform of the CAP, President Chirac of France and Chancellor Schroeder of Germany knocked out a deal between themselves that whatever the outcome the EU would not provide any more cash to fund it.

At the time the EU had 15 member countries. On May 1 this year 10 more joined and most of them, notably Poland, have big farming constituencies matched by big expectations of EU aid. But the Chirac/Schroeder deal stands. So, with such a restricted budget, how will the Commission fulfil its promises to new members while maintaining its reformed policies for old members?

The third threat, which may provide solutions to the first two, is the plan for a Mid Term Review, yes, another one, in 2008. If the problems I have postulated come about, together with others not yet considered, political pressure to change the policies about to begin will be intense.

Indeed, the USA equivalent of CAP Reform, the Freedom to Farm Act, was abandoned long before its seven-year allotted term and the same could happen in Europe. Then, just as we were getting used to the regime that starts tomorrow we would have to worry what would be put in its place.

A challenging thought with which I wish you a Happy New Year.