Leaked EU report raises prospects of subsidy capping

Subsidies to farmers in the EU-27 could be capped at as little as €60,000 (£54,000) a farm after 2020 – in a move which increases the chances that similar restriction will be applied in the UK.

The aid capping plans are contained in a leaked document from the European Commission setting out an outline plan for revisions to the CAP from 2021 onwards.

The EU plans to retain direct payments in roughly their current form, but the document advocates “exploring the possibility” of compulsory capping of direct payments, in order to make these supports better targeted.

See also: Our Q&A with government adviser Dieter Helm on the fate of subsidy post-Brexit

“A maximum direct payment amount per beneficiary could be introduced in the range between €60,000-€100,000 [£54,000-£90,000],” the text says.

Under current CAP rules, a “degressivity” threshold applies at a much higher level (€150,000). Above this level, payments in England are reduced by just 5%.

Absolute aid caps are however applied on Basic Payment Scheme entitlements over €150,000 (£135,000) in Northern Ireland, over €300,000 (£270,000) in Wales, and over €500,000 (£450,000) in Scotland.

Rigorous ceilings

The UK will no longer be part of the CAP by 2021, but the indications from Brussels might make it more likely that similar caps could be introduced by the British government after Brexit.

There are already signals that the new UK agricultural policy could involve rigorous ceilings on payments per farm.

“The CAP has channelled hundreds of thousands of pounds of taxpayers’ money to the already wealthy, simply because of the amount of land they have,” Defra Secretary Michael Gove said at the Conservative Party conference earlier this month. “That is plain wrong.”

Mr Gove has also made clear his belief that UK farm support payments should be channelled primarily into delivering environmental benefits.

Britain’s domestic agriculture policy (or policies) will function entirely independently of those in the EU after Brexit.

But any indications from Brussels that stringent aid caps may be applied in the EU might encourage Defra planners to go ahead with similar aid caps in the UK, as it would moderate the risk of an uneven playing field for Britain’s largest farms.

About 4,200 UK farms were in receipt of direct aid payments of €100,000 (£90,000) or more in 2015, according to European Commission figures. This represents just 2.5% of all aid recipients.

The European Commission’s initial proposal for CAP reform is scheduled to be published on 29 November.