Business Outlook 2012: Agricultural policy developments

The most prominent policy issue for farmers over the coming two years will be CAP reform.

With budgets tight, it is becoming more important to justify to European taxpayers the large sums being paid through the CAP, says Caroline Ingamells of Andersons.

“It currently accounts for about 40% of the overall EU Budget. Proposals for the 2014-2020 budget would only see this fall slightly, to nearer 36%, seemingly a good outcome for the EU farmers.”

However, this is based on overall EU spending increasing, she says. Considering the financial crisis, the budget may be revised lower, almost certainly further reducing farm support.

The main points of the draft proposals announced in November are:

• A set of new direct aid schemes will replace the existing Single Payment Scheme

• Existing entitlements will be replaced by Basic Payment Scheme entitlements

• The historic payment method will be phased out over five years

• 30% of direct payments will be conditional on producers undertaking greening measures

• Direct aid payments to larger claimants would be capped with reductions starting at €150,000 and no payment would be made above €300,000

• Exempting greening element and allowing for salaried labour will limit effects of capping

All devolved regions will have to draw up new Rural Development Programmes for implementation after 2013, so there is scope for profound changes, says Ms Ingamells. There will be an increasing focus on schemes to combat climate change and to increase the competitiveness of farming.

Andersons’ Outlook

* Commentary for this article is based on Andersons’ Outlook 2012. Copies can be obtained free of charge by calling 01664 503200 or it can be downloaded from the Andersons website see ‘Publications’.

* The Andersons Centre will be running its popular series of spring seminars on the prospects for UK agriculture in more depth at locations around the UK in spring 2012. These briefings are aimed at farm business managers as well as professionals working with companies in the agricultural sector. Detailed overviews of each of the main sectors of UK agriculture will be covered as well as comprehensive discussion of the latest agricultural policy developments. For details go to The Andersons Centre.

See further Business Outlooks for 2012 below:

• Round-up

• Dairy

• Beef

• Sheep

• Pigs

• Poultry

• Combinable crops

• Field vegetables

• Sugar Beet

• Potatoes