Three in four UK farmers to see subsidy cuts

12 February 1999

Three in four UK farmers to see subsidy cuts

By Isabel Davies

FARMERS receiving more than about £3500 in EU farm subsidies will face cuts of 3% a year in their payments if the latest EU Commission plan to reduce CAP spending is adopted by farm ministers.

The new proposal, tabled in Brussels this week, could replace the commissions original plan of introducing payment ceilings to limit the total subsidy income individual farmers could receive.

The commission has now suggested that farmers who receive direct payments totalling more than Euro5000 a year (£3500) should be subject to aid cuts of 3% a year, implemented in stages according to sector. Farmers below that threshold would be exempt from any reductions in aid payments.

Arable cuts would be applied from 2002, with reductions in beef payments from 2004 and the milk sector tackled from 2005.

While the commission says that about 70% of EU producers will not suffer any aid cuts if the plan is adopted, the UK, with its larger farm size, could see as many as 75% of its farmers affected.

The commission estimates that, by 2006, savings generated would exceed Euro2.5 billion (£1.75bn). A quarter of that could then be redirected to rural development measures under Agenda 2000, it says.

Most member states have signalled their support for the proposals which emerged after the last high level group meeting on Monday, where the UK and French delegations presented papers outlining their approach to the degressivity concept.

In line with previous requests for payments to be time-limited and degressive, the UK paper called for 4% cuts, with no exemptions for smaller farmers – a position supported by the NFU.

A majority of the EUs 15 countries have agreed to discuss the proposals further. Any alternative to the payment ceiling option has widespread appeal.

Martin Howarth, head of international affairs and economics at the NFU, said: “Whilst a first reaction to the proposal is not favourable, the alternatives are much worse.”

Union policy director, Ian Gardiner, added that the NFU welcomed the fact that a side effect of the proposal was to remove the need to impose payment ceilings on farmers receiving more than Euro100,000/year. He argued that there would be less impact on the industry “by spreading the pain more widely”.

But a spokesman for the Farmers Union of Wales expressed concern that the proposal appeared to affect many more farmers.

“We are not in favour of this change and would much prefer to stick to the original proposals,” the spokesman said.

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