Further cuts in SFPs expected

FURTHER CUTS in farmers‘ single farm payments will almost certainly be required if DEFRA is to meet its obligations under new EU rural development plans, the National Beef Association is warning.

The proposals, issued in Brussels last month, seek to create a “three-axis” approach to rural development from 2007 to 2013.

Funding will be targeted at improving competitiveness in agriculture, encouraging environmentally-friendly land management and diversifying rural areas.

The EU document goes on to suggest that member states should spend a minimum amount of their rural development funds on each of these areas.

At least 25% should go to land management programmes – axis 2 – such as agri-environment schemes and hill farm allowances.

Another 15% is earmarked for improving competitiveness – axis 1 – and 15% for diversification – axis 3 – while 7% should go to the local sustainability LEADER projects.

But, according to the NBA, the government does not have enough money to meet these requirements.

“It has already committed 80% of its rural development programme funds to the development of agri-environment schemes in axis 2,” said chief executive Robert Forster.

To meet the spending commitments on the other axes, DEFRA will have to raise modulation rates well above the 10.5% first envisaged from 2007-2013, he claimed.

Other regions of the UK will face the same dilemma.

“The NBA is unhappy with this development. Farmers need as much single farm payment as possible to convert their businesses into profitable enterprises.

“If they are unable to do so, then they will not be able to contribute as fully as government would like to environmental, economic and social sustainability – the three ambitions of rural development,” Mr Forster argued.

But a DEFRA spokesman said these fears are over-stated.

“At this stage, it is not accurate to say we will have to raise modulation due to a shortfall in funding.

“These are just proposals and we do not know what the final allocation of EU funds among member states will be.”

There would be other variables to consider before future modulation rates would be decided, including the euro:sterling exchange rate and the take-up of the new entry-level environmental scheme.

A consultation launched by DEFRA last week also makes clear that it will be fighting hard for a bigger share of the EU pot than the current 3.5%.

It attacks the idea that past spending should be used to determine future allocations. But it also advocates further EU-wide modulation as “the only acceptable way to increase rural development expenditure for 2007-2013”.