Wales is to have a three-tier direct payment system based largely on productivity, with lowland farmers getting the top rate of €240/ha.
In what is seen as the most sweeping change to the Welsh farming industry in decades, the Welsh government announced on 14 January its framework for how direct payments would be implemented from 1 January 2015.
Although the industry had favoured a four-payment rate model, farm minister Alun Davies has opted for a three-tier system.
The exact payment rates won’t be known until after farmers have submitted their claims in 2015 but they are likely to be €20/ha for moorland, €200/ha for severely disadvantaged areas and €240/ha for disadvantaged areas and lowlands. A cap will be put on large payments with a system of progressive deductions up to €300,000.
The minister will allow farmers five years to adjust to the new payment system from the current historic payment model. By 2019 payments will be wholly based on the area of land farmed.
Last year it was announced that direct farm payments for Wales would be about €2,245m (£1,870m) over 2014-2020, with €355m (£296m) allocated for rural development schemes.
But the budgets for both are being reduced by 12.6% and 5.5% respectively after allowing for expected inflation and, with the Welsh government opting for a maximum modulation rate, a further 15% will be redirected from direct payments to Pillar 2.
“My decisions are aimed at placing the Welsh farming industry in the best possible position to face the future with confidence.”
Alun Davies, Welsh farm minister
Today’s announcement also sets out the Welsh government’s intention to adopt the European Commission’s greening proposals based on the maintenance of permanent grassland, crop diversification and ecological focus areas.
In Alun Davies’ view, the changes to Pillar 1 are designed to promote competitiveness, help farm businesses cope with unexpected setbacks and respond to new market opportunities, and strengthen Wales’ natural resources.
“My decisions are aimed at placing the Welsh farming industry in the best possible position to face the future with confidence. They will result in an industry that can make the most of new opportunities, increase productivity, and is better placed to cope with exceptional circumstances, such as the harsh weather experienced last spring.
“The new arrangements will also lead to a fairer and more transparent distribution of funding, with a move away from historic payments, and will help ensure we use and safeguard our natural resources more effectively.”
But NFU Cymru said shunning a four-payment rate system will lead to a greater redistribution of payments than the industry had hoped for.
“Whilst today’s announcement sets out the broad framework for direct payments for the next seven years there is still much detail to sort out and work to be done to ensure that the various elements of the new scheme, including provisions relating to young entrants and the national reserve, are fully in place ahead of the new scheme coming into operation in just over 11 months’ time,” said NFU Cymru president, Ed Bailey.
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