DEFRA could be fined by the EU Commission for alleged “non-compliance” over the administration of agri-environment schemes in England.
The non-compliance centres on the process for verifying payments and means the department may have to make changes to the way it pays farmers.
The ruling follows an audit of payment administration by the commission which concluded that DEFRA should impose a single, annual deadline for applications of 15 May.
It also said that the department should only pay farmers at set times of the year rather than the rolling basis.
That would mean large scale revision of environment schemes which are paid throughout the year when the agreement with the individual farmer comes to an end.
DEFRA warned that any change “may impact on when applications for new or renewed stewardship agreements could be accepted and on start dates for these agreements”.
NFU President Peter Kendall said: “To find ourselves in this situation is astonishing, given that these schemes have been in operation for several years and were approved by the commission.
“The farming industry places its trust in DEFRA to administer agri-environment schemes in England and, more importantly, to ensure that they stay within the rules for delivery.
“This situation could seriously compromise the cashflow of many farmers and growers who rely on regular agri-environment payments when planning for their business.
DEFRA has indicated to us that it thinks its process for conducting cross-checks is robust.
If this is the case, we would expect DEFRA to mount challenge against the commission’s interpretation, Mr Kendall said.
“I am also acutely aware that the timing of this announcement could not come at a worse time given the start of the new Uplands strand of ELS on 1 July and the importance of ELS renewals for the success of the Campaign for the Farmed Environment.
“If the CFE fails, the importance of these schemes to farmers and growers must not be under-estimated or diminished.”
CLA president William Worsley added: “It is ludicrous that significant amounts of money will be spent to make the schemes compliant in this way at a time when government departments must cut costs.”
The CLA called for a full and early consultation with DEFRA, Natural England and key industry stakeholders to discuss options.
“It is essential that steps are taken to mitigate the chaotic effects these changes could have on the industry and to ensure rural businesses have enough time to adapt.”
The CLA recommended that farmers and land managers should continue to enter schemes and renew their agreements to secure a vital income stream and provide the industry with a mechanism to address key environmental challenges.