One man’s challenge – another’s opportunity?

Lord Whitty – Junior DEFRA Minister

 “The single Payment Scheme (SPS) is the biggest change in agriculture for over 30 years, and everyone in the agricultural industry will feel the effects in some way.

The SPS simplifies the system by consolidating the 10 existing major payment schemes – and some others – into one. It will considerably reduce the administrative burden for many farmers.

The new system will also ensure that all farmers are meeting the legislative baseline and delivering a higher level of environmental protection. The public wants and expects farmers to play a major role as custodians of the countryside.

I believe 2005 will present a major new opportunity for farmers to reconnect to markets and the consumer.

For some, this new system will be a challenge – for others, it will be little different to the way they usually operate.

It is certainly a key time for business decisions. If payment entitlements are not established in 2005, the boat will have been missed. But everyone will have to reconsider the future of their business to make the most of the new opportunities.”

Peter Melchett – Policy Director Soil Association

“We don’t know what the impact of decoupling and the SFP will be in the organic sector – it will depend in part on how non-organic farming fares financially.

The fact that, according to DEFRA, SFPs will not be paid until May 2006 at the earliest will cause huge cashflow problems for many farmers, but the introduction of the 60/ha organic entry-level scheme in 2005 is very welcome.

In a European context, this means that organic farmers in the UK will at least be able to get on to the playing field, even if a level playing field is still some way off. We hope that local, direct sales will continue to grow at the 16% rate we have seen this year.

The most damaging thing hanging over us is the extent to which competition on price rather than quality continues to dominate organic sales in the multiple retail sector, with the honourable exception of Waitrose.

The organic market continues to grow at 10% overall, so organic farmers in Britain are justified in looking ahead with cautious optimism.”

David Handley – Chairman Farmers for Action

“Most farmers still don’t realise what is going to hit them. A lot of people are painting a rosy picture, but we fear that increasing cross-compliance pressure will be applied in the years ahead.

Neither do we believe that the single farm payment is going to be the saving grace for farmers’ businesses unless we sort out the issue of farmgate prices.

From the very day that the SFP was announced, the FFA has consistently said that this is the most important issue we are facing. The SFP is a declining payment, and unless we get our prices right, the industry faces the prospect of bleeding to death.

We still believe that the British dairy industry can have a tremendous future, but we can’t sit back and wait for other people to sort it out.

There has never been a time with stronger signals for farmers to come together and speak with one voice.”

John Kinnaird – President NFU Scotland

“In many ways, it is a relief to finally reach the turn of the year. During 2004, speculation was rife on the likely impact of decoupling.

Now we will find out how the reform will really impact on Scottish farmers, the countryside and wider economy.

The new regime brings a host of opportunities and challenges and certainly represents a new era for Scottish agriculture. As an industry, we have always embraced change, but we must do so again. Increased market-focus, improved efficiency and a sharper awareness of our own costs will be crucial.

But it is not just farmers who must adapt to the new system. The market must be acutely aware of the price signals it now sends.

The old subsidy system effectively subsidised the rest of the supply chain. Support payments were top-sliced from farmgate prices; but that must now stop.

Decoupling has thrown some negotiating power back into farmers’ hands and we must use it. The negotiating position with processors and retailers is simple; pay us a decent price and we will provide all the quality produce your customers want.”

Mark Hudson – President Country Land & Business Association

“Farmers, growers, indeed all land managers have to be aware that the world is continually changing and be ready to adapt to these changes – a bit like the need to continually adapt to the weather.

The CAP used to insulate farmers somewhat from commodity and currency market changeability. In future it will not.

All rural businesses will therefore have to learn to live with volatility. This requires building in conscious strategies to cushion against this instability.

It so happens that in 2005 the way farmers receive most of their financial support from government is due for a radical shake-up. The key point is that the single farm payment will be a single cash sum into the land management business unconnected with what is produced.

Our message is to assume it will not be there forever and so use it wisely while it lasts to reshape your business to better cope with the fluctuating fortunes we all face.”

Gareth Vaughan – President Farmers Union of Wales

“As the Farmers Union of Wales prepares to celebrate the 50th anniversary of its formation, I am particularly worried about the fate of our dairy industry in 2005 and beyond.

Falling milk prices have already seen thousands of farmers get out of dairying, and the trend seems set to continue until we get a fair price for our produce from the supermarkets and milk processors. Britain is already well below quota, with little immediate prospect of the trend being reversed.

The single farm payment will undoubtedly make a big difference to farming, although the full impact of the changes it will bring is difficult to gauge at this point. The main concern is that some farmers will reduce their livestock numbers dramatically or eventually get out of farming altogether, weakening our industry still further.

The challenge facing us all is to adapt to the new regime, possibly through diversification, to maintain strong links with the consumer and to achieve a premium price for our products.”

Reg Haydon – Chairman Tenant Farmers Association

“2005 will be a watershed year for agriculture due to the immense changes to the CAP introduced from January.

With the new Single Payment Scheme there will be an opportunity to review farm enterprises purely on the basis of their market returns. At the same time as the new arrangements might provide an opportunity for some to seek to give up farming, there will also be increasing opportunities for new entrants.

A significant number of owner occupiers are considering scaling back their operations to give opportunity to new entrants and others to farm their land. Many tenants with land on insecure tenancy agreements will take the opportunity of concentrating their entitlements on more secure land and letting go of land they no longer require on shorter-term agreements.

At the same time smarter landlords, particularly of grassland, should be looking to develop secure arrangements with tenants to farm their land at rents in keeping with market realities so as not to be left with land which is surplus to requirements.”

Tim Bennett – President NFU

“2005 is the most significant year for farmers since we joined the European Community and possibly since the end of World War II.

We will no longer be paid to produce food or, put another way, over time farmers will only produce when it is profitable to do so. So far our customers, despite being told, have been slow to adapt to this new demand-led supply chain, but they must.

As of next year, our relationship with consumers, customers and government will be different. DEFRA must become a sponsor in delivering a world-class food industry which not only maintains our wonderful countryside but also helps us to deliver new opportunities such as green energy.

Whatever happens, the industry will not change on the stroke of midnight; we will see a more gradual transformation over the next few years.

As we usher in this new era, I remain confident that farming has a profitable future.”

Sir Donald Curry – Chairman Sustainable Farming and Food Implementation Group (DEFRA)

“In 2005 we will embark on a new era for British farming. The policy will be based on sustainability where farmers no longer farm for subsidy.

Not only will farmers need to be much more focused on the market and capturing more added value wherever possible; they will also need to engage in positive environmental management by participating in the new stewardship schemes.

Although challenging, these changes will present farmers with many new opportunities. Businesses need to be more diverse and less reliant on commodity production.

This is the foundation on which the industry must build its future, and 2005 will be the watershed year.”