Grant shake-up to cover fall in direct subsidies
Grant shake-up to cover fall in direct subsidies
By James Garner
LIVESTOCK producers will lose income from day one under new rural development legislation on modulation announced by MAFF last week, and should be prepared to claim agri-environment grants to make up the difference.
Proposals, which if agreed by Brussels will come into force from 2001, will reduce direct subsidy payments paid under the CAP regime on a flat rate basis. This reduction will start at 2.5% in 2001, rising by 0.5% a year to a top rate of 4.5% in 2006 (News, Dec 10).
The same proposals also include HCLA reform and its planned transformation from headage to area based payments.
Funds raised under payment modulation will remain within country boundaries, with discretion over how this is spent. The Treasury is to match this money, boosting cash available for agri-environment schemes.
What is clear so far is that there should be more money in total available for producers, despite the early retirement scheme being shelved, says NFU livestock head Steven Rossides.
But he is worried about whether producers will apply for this additional money. It will be targeted at schemes such as Countryside Stewardship, Woodland Grant Scheme, the Rural Enterprise Scheme and Processing and Marketing grants.
"In net terms there will be more money to go into farming, but you will need to apply for agri-environment schemes to claw-back money lost from direct payments.
"My concern is that more traditional beef and sheep farmers will not consider these schemes for extra cash as some are prescriptive and not the most user-friendly."
In the past these schemes have been highly competitive because of a lack of funding, says NFU countryside and forestry policy adviser Andrew Clark.
"Before this announcement you had a 50-50 chance of securing an agreement and good farms have had applications refused because theres not enough money." Successful applications are those which score highly in areas such as ecology, landscape, archaeology and public access, he says.
Increased public access and certain prescriptive policies may be unattractive at first, says Mr Clarke. "But most entrants have been keen on the access side because you can define where it is, and state conditions of use such as dogs being on a lead."
Within stewardship, payments are calculated on a basis of three factors; an element of profit foregone, a management payment and an incentive payment.
"If under the scheme you had to out-winter stock, then MAFF would calculate how much this costs and include this in the payment, along with a management payment and an incentive. In theory you should be better off."
But there are other options, says Mr Rossides. In traditional sheep and beef areas, he advises thinking not only about reducing costs and options such as collaborative marketing, but also about diversification.
Strutt and Parkers head of farming, Christopher Monk, believes the new money is encouraging. His advice is to look at the various schemes on offer and work out which suits your farm.
For those considering organic conversion there is a welcome cash boost. Extra funds will go into organic conversion grants from 2001. The Soil Associations agricultural director, Simon Brenman, says this works out at an additional £20m a year for seven years.
"This should just meet current demand in England, and should ensure organic farming reaches 14% of agricultural production by 2010."
The extra funding is good for livestock producers, he says, as most extensive grass based systems with a small proportion of arable for animal feed lend themselves to organic production.
However, he is concerned that there is no budget for the Organic Farming Scheme next year, meaning producers may postpone conversion until 2001 payments kick in. "We are lobbying hard to have this funding gap filled." *
MODULATION
• Cut in all direct subsidy payments.
• Agri-environment scheme funding.
• Organic Farming Scheme funding.