Farm subsidies trimmed

10 December 1999

Farm subsidies trimmed

to fund rural initiatives

By Isabel Davies

FARM subsidies in England will be cut by up to 4.5% as part of a radical bid to raise £1.6bn over a seven year period for agri-environmental schemes and rural development initiatives.

The government will "modulate" payments to all farmers by a flat rate reduction in all direct payments to all farmers, farm minister Nick Brown announced on Tuesday. The cut in payments will start at 2.5% in 2001. It will rise to 3% in 2002, 3.5% in 2004 and 2005, and 4.5% in 2005 and 2006.

Scottish, Welsh and Northern Ireland farmers will be consulted before modulation proposals are agreed, but the devolved administrations are expected to follow Englands lead.

The cuts will be matched £ for £ by money from the Treasury, further boosting the cash available for green schemes, Mr Brown told MPs in the House of Commons. Earlier, he said the matched funding would make "everyone a winner", but conceded that farmers with general cropping could be the exception.

The move would raise more than £1.6 billion over seven years – a 60% increase on current resources. This would allow a dramatic expansion in the agri-environmental programme. Although ambitious, the agreement was a good deal for farmers as it was right in itself, but also the way forward for the Common Agricultural Policy, said Mr Brown.

Total money available for rural development measures in England will rise from £136 million a year now to £295 million by 2006/7. Initiatives earmarked to benefit from the subsidy switch include the Countryside Stewardship Scheme and the Organic Farming Scheme.

Funding for the Countryside Stewardship Scheme in England will rise from £29 million this year to £128 million by 2006/7. The budget for farmers wishing to convert to organic production will rise to £23 million by 2003.

But there will be no early retirement scheme and no new entrant scheme for young farmers. Mr Brown revealed the rest of the money will be targeted at new processing and marketing grants, farm diversification, woodland and farmer training schemes.

Environmental bodies welcomed the decision but NFU president Ben Gill said farmers were being penalised for the UKs disappointing allocation of European funds for rural development.

"At a time when farm incomes are under critical pressure, we are extremely concerned at these plans to take the money in this way out of farmers pockets from 2001 onwards," he said.

Welsh farmers leaders said they were vehemently against any kind of cut that went across the board. Bob Parry, president of the Farmers Union of Wales, said even a 2.5% cut would wipe off any profit from the bottom line of many Welsh producers.

Announcing a consultation north of the border, Scottish farm minister Ross Finnie admitted there were problems in asking farmers to recycle their payments. But the money could tackle areas of most concern if it was used in the right way, he added.

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