Modulating HLCAs would save money report

07 April 1998

Modulating HLCAs would save money — report

By Boyd Champness

MODULATING the hill and livestock compensatory allowance (HLCA) scheme could protect small-to-medium hill farmers, while saving the Government millions, according to a survey released today.

If the Government was to set an upper limit of say £5,500 for the scheme, it would cut expenditure by almost 25% but only affect the top 10% of claimants, the report said.

The bulk of HLCAs currently go to large farms because the payments are distributed according to stocking densities. The top 10% of recipients (large farmers) take nearly 50% of the total paid out, while the bottom 70% receive only 20% of the money available.

Also, large hill farmers dont need HLCA payments as much as smaller hill farmers. For example, for medium farms, HLCAs provided 22% of net income in 1995-96, while for large farms the figure was 14%.

Whats more, only 9% of large farmers would “give up” farming if HLCAs were taken away, while 17% of medium farmers and 28% of small farmers would leave the industry if the payments ceased.

The survey into HLCAs was conducted by Drew Associates Ltd on behalf of MAFF. It looks into what would happen if the HLCAs were removed or restructured, and which group of farmers currently benefit most out of the scheme.

Contrary to popular belief, the loss of small-to-medium hill farmers would not have that much of an impact on the environment or population densities.

Removing the scheme would have little impact on very small part-time farmers who mainly run their farms as “hobbies”, the report argues.

Similarly, large farms would carry on much as before because HLCAs, although significant, do not form the crucial element of their net farm income. Larger hill farmers rely more heavily on other subsidies.

“For small and medium farms, however, their continued importance is clear. The withdrawal of HLCAs would undoubtedly accelerate the decline in the numbers of these farms. They would probably be absorbed by larger ones without a significant fall in output,” the report said.

“The environmental impact was hard to judge, but probably would also not be significant. As for its effect on population in the hills, again we reckoned there would not be a major fall-out, since there is at present a net immigration.”

The total population in the hills is rising, therefore reducing the relative importance of agriculture, the report says.

All these findings dont bode well for the National Farmers Union, which argues that hill farming is essential for the survival of upland communities and the upkeep of the environment.

The report also found that the scheme was subsidising some farmers who are not suffering from extreme natural hardships. In fact, less than one in 30 met all the criteria suggested. At the other extreme, one in 15 met none of the criteria.

The report recommended that overgrazing rules should be strengthened, that MAFF redefine the definition of extreme natural hardships, that the method of calculating payments should be reviewed.

Dr Jack Cunningham, agriculture minister, said: “The Government will consult the industry fully before making any changes to the Hill Livestock Compensatory Allowances Scheme in the light of this report and of the outcome of the Agenda 2000 discussions.”

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