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Professor Allan Buckwell - Country Land & Business Association

A primer in Beckett's Progressive Hybrid



Wednesday 11 February 2004

(read in full)

The CAP, Decoupling and the progressive hybrid...

Feb 24 2004 ~ "The CLA has welcomed decoupling as a brave step forward which will lead to a better policy more in tune with what society wants from the countryside."

Feb 16 ~ An emailer writes ".. to correct the impression given by Uhlig in the Telegraph that the single farm payment(SFP) will be "linked entirely to land ownership". It isn't. I am a landowner and wish it were so.

The SFP will be given to the person actively farming at the point of review. (Big problem for those who weren't - 'farms in transition'as the jargon has it). Countries and regions within EU have been given considerable discretion as to how they implement the SFP. They can choose between an Individaul Historic Claim (IHC) based on the average of all payments they received in 2000, 2001, 2002 adjusted for FMD or any other 'anomalies' (Ha!) or a Regionally Averaged Payment (RAP) which spreads it all out -or some hybrid of the two. Wales has chosen IHC, England RAP. In neither case is the entitlement to claim based on land ownership. The entitlement is the property of the individual to whom it is initially granted. Therefore a market in 'entitlement' is going to develop as sure as water runs downhill. (cf milk quota). This will be interesting but probably not beneficial. I do apologise if all this is teaching my grandmother how to suck eggs but now that media has woken up to CAP reform I am alternatety appalled and amused by the guff that I read and hear. If you want to talk to someone who is really clued up I suggest Prof Allan Buckwell of the CLA who not only understands as much of it as anyone can but has the ability to explain it in 'non euro babble'. Try

Government delivers another blow to beef and dairy farmers in England

?The Government is hammering the last nails in the coffins of the most efficient beef and dairy farmers with its decision today to opt for a ?progressive hybrid? of single farm payments,? warns Mark Hudson, President of the Country Land and Business Association. 
?The CLA welcomes decoupling as a brave step forward, more in tune with what society wants from the countryside. From an early stage we saw the sense in including a regionalised payment system from the outset, as Margaret Beckett has proposed. The CLA has long argued for a long-term rural policy and we are delighted that Government has listened. But equally, we have warned that crops and animals must be treated differently, which the Government's option fails to do.
?DEFRA has not sufficiently justified this solution, and has yet to sell it to the European Commission. Their decision may create the conditions for a chaotic market in entitlement swaps over the next two years. Entitlements are tradable without land, but the opportunity to trade will tail off rapidly under this hybrid, stimulating an early frenzy of subsidy chasing.
?The Government has also missed an opportunity to do justice to the most dynamic parts of the industry, farms in transition, and to the nation's vegetable producers. Worst of all, despite clear warnings from an independent study of the dairy sector, this decision is going to dramatically reduce support for the largest and most efficient dairy and beef farmers.
?The ?progressive hybrid? will unfairly share dairy farmers' compensation across all land, and this will be the last straw for dairy farmers already reeling from European dairy reforms. Today's decision will profoundly damage the ability of English dairy and beef farmers to compete fairly with their neighbours in Wales, Scotland, Ireland, France and the Netherlands.
?However, we welcome the full eight year adjustment period offered, and it is right to avoid undue redistribution with the severely disadvantaged areas. It is also right to drop the crude national envelope, which was a poorly conceived mechanism that has been overtaken by today's decision. Nevertheless, there remain a very large number of issues to be dealt with, as the implementing regulations are published.?
The ?Mid Term Review? of the Common Agricultural Policy has produced a hugely significant change in agricultural policy, including full decoupling of direct payments, reform of the milk sector, introduction of meaningful cross compliance across all eligible farmland, significant transfers from production support to wider environmental and rural development, strengthening pillar 2 by both unilateral UK modulation (fund switching, as recommended by Curry) plus new Europe-wide modulation, and an Entry Level Stewardship scheme
While the CLA regards this as a significant achievement, we have argued for a hybrid that delivers the wider benefits of RAP on arable land, where reform has progressed since 1982, and farmers are better placed to deal with it, but which retains 90% of the existing (so far largely unreformed) livestock payments on a historic basis was the right approach.
The complexity of DEFRA's decision to take transitional steps to a full RAP brings with it significant additional complications in transitional arrangements for payment transfer, set-aside, and treatment of negative list crops. We are deeply concerned that growers of unsupported crops in particular may be badly affected, as they will either face restrictions on output or unfair competition from arable farmers, or perhaps both. At the same time, we regard the size of the arable RAP element in the early years as insufficient to dissuade those who may have lost out owing to changes in their farm business from applying to the National Reserve.
DEFRA's decision will add unacceptably to the difficulties faced by livestock farmers. Wales and Scotland have announced a system that recognises the particular needs of the livestock sector. We fear that in seeking to avoid underperforming in delivery of public goods, DEFRA has undervalued the very large investments that have been made by livestock farmers in quota and fixed equipment, much of it backed by bank lending.
DEFRA has failed to make available any analysis of the huge redistribution that is brought about by the new dynamic policy. A recent study on the future of UK dairy farming by Profs David Colman and David Harvey shows that the industry as a whole may contract from the current 24,896 producers to 17,000 by 2015, and maybe further if dairy farmers act rationally in respect to decoupled farm support, under RAP rather than a historic decision. Effectively, the Secretary of State has announced the long drawn out redundancy of nearly 8000 dairy farmers and an unknown number of beef producers.
We fear that there will be very large and unwarranted increases in payments to low intensity farmers. Whilst we welcome better support for the uplands, it should be recognised that this will come at the cost of many suckler cow, beef and dairy enterprises, who may find themselves driven out of business as a result.
Regrettably, the increase in price that would (under normal market circumstances) accompany a sharp reduction in English milk and beef production is unlikely to be available to English farmers as their competitors in Scotland and Wales will enjoy the support of historic payments, as will many others in the single European Market, and are therefore less likely to reduce production.
We anticipate real difficulties in the letting market. A dynamic changing pattern of support is very difficult to factor into tenancy agreements, where the law precludes frequent rent reviews. There is likely to be a short term scramble for land in the period up to the implementation of the reform, as farmers compete for the land necessary to establish their Entitlements.
12th February 2004
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Professor Allan Buckwell

Chief Economist at the CLA

The common agricultural policy has been an unmitigated disaster, riddled with inefficiencies and corruption

From John Humphrys' article in the Sunday Times November 9 2003 (see warmwell link)

"..will lead to accusations that DEFRA caved in to the farming lobby..."

Beckett finds fertile ground for criticism

By John Mason

Published: November 15 2003 4:00

Margaret Beckett, the environment secretary, may have some explaining to do. She has always insisted that Britain is a leader in Europe over farm reform and that her department no longer kow-tows to large farmers. But if, as expected, she backs wealthy farmers in the dispute over distributing £2bn in European Union subsidies, any reputation the Department for Environment, Food and Rural Affairs enjoys under its banner of sustainable development could take a battering.

Graham Ward, a lettuce grower and chairman of the National Farmers' Union's horticultural board, put it bluntly. "If Mrs Beckett believes in sustainable development, she will have to explain why she is basing a policy for the future so much on the past. "This would go completely against what reform of the common agricultural policy (CAP) is all about. It is like promising you will find a new name for your dog Fido and then calling him Fido 2," he said.

The issue facing the department is politically tricky and technically tortuous. Reforms to the policy agreed this year introduced the principle of "decoupling" under which farmers are paid much the same subsidies as before but without any link to production. The aims are to make farmers more market-oriented and to phase out the subsidies.

But no one knows what the new subsidies are supposed to achieve and the uncertainty has split farmers. Should they be backward-looking and help farmers stay in business during a period of profound change? If so, they should be paid to the same farmers as now. Or should they reflect the EU's agenda to move away from food production towards promoting environmental protection and rural leisure? If so, they should be spread more equally.

The confusion has proved acutely divisive. The union's overall policy - although members such as Mr Ward oppose it - has been to call for "historic" payments. Although backing overall CAP reform, it warned that flat-rate payments would be too radical a change and would cause huge financial pain in the cereal, dairy and livestock sectors.

Farmers who do not get subsidies now, such as fruit, vegetable, pig and poultry producers, argue the essence of CAP reform means the money should be spread - and they should get their share. If not, they will be left at a unfair disadvantage compared to their subsidised neighbours when decoupling comes in and farmers can grow what they want.

In recommending historic payments, the civil servants advising Mrs Beckett accepted the union's argument that a flat-rate policy would be too disruptive. Their recommendation, if adopted, would leave Britain apparently lagging behind in Europe.

Germany, Denmark and Finland are considering hybrid systems, with Germany saying this would be only a staging post towards a full flat-rate system.

Mrs Beckett might find that embarrassing. But her position could be undermined most by Sir Don Curry, the man she chose to implement farm reform.

The immediate introduction of a flat-rate system would cause "terrible pain" to many farmers, he said, but ministers had to commit to it in the long-term. "With this policy, you could not justify to taxpayers making historic payments to farmers in the long-term.

Rich UK farmers set to win in CAP 'failure'

by John Mason, Food and Rural Affairs Correspondent Published: November 14 2003 21:57 | Last Updated: November 14 2003 21:57

Britain's richest farmers are set to keep the lion's share of the country's £2bn-a-year farm subsidies, in a setback for the reform of agriculture promised by the government earlier this year.

The likely move will lead to accusations that the Department of the Environment, Food and Rural Affairs has caved in to the farming lobby and watered down its commitment that subsidies paid under the European Union's common agricultural policy should shift from rewarding overproduction to promoting environmental protection and rural amenities instead.

Phil Rothwell, head of countryside policy at the RSPB, an environmental group involved in implementing Britain's farming strategy, said: "This will be a big dent to Defra's reputation. It is bowing to pressure from the National Farmers' Union."

Defra was created in 2001, after criticism that the old Ministry of Agriculture was too close to the farming lobby. "Ministers talked a good game when they negotiated the CAP reform deal this summer, saying it would be a better deal for taxpayers and farmers. They took several steps forwards with the rhetoric, but are now taking three steps back in practice," Mr Rothwell said.

Although ministers have yet to make a final decision, top civil servants are recommending the subsidies should be paid on a "historic" basis - to the farmers who collect them today according to how much they have produced in the past - rather than be spread among all farmers on a "flat rate" per acre, regardless of what the land produces.

The officials accepted the argument of the NFU that a flat-rate system would be too disruptive for the industry, because many farmers would see their payments slashed.

But the alternative could undermine the government's own farming strategy. Sir Don Curry, the expert charged by the government with carrying through the modernisation of the farming industry, said the move could not be justified in the long term.

"Continuing historic payments for ever and a day would be a real problem. You could not justify it to taxpayers when we are trying to move farming away from production subsidies and more towards a 'public goods' agenda of environmental protection," he said.

The issue has proved the most divisive in recent farming history and Defra admits it is seen as the most important decision to be taken over the CAP reform.

Although Britain has been pressing hard for reform, the retention of historic payments would align it with EU countries that usually resist change. Ireland, France and Portugal have all opted to pay their farmers on a historic basis.

Under proposals likely to be accepted by Margaret Beckett, the environment secretary, those who continue to farm without subsidies, such as fruit or pig producers, would face increased competition from cereal and livestock farmers who have switched crops, but continue to collect their historic subsidies.

Defra said on Friday ministers were still considering the options. However, they are expected to play down the importance of the subsidies, and argue that other parts of the reform deal - such as breaking links between payments and production and specific environmental measures - will have more impact.

New farm payment scheme 'ambitious and forward-looking' - Beckett
... eight years, is intended to break the link between subsidy and overproduction, which
has long been the major criticism of the common agricultural policy (CAP). ... - 22k - Cached - Similar pages

payments? CAP REFORM ? HAVE YOUR SAY! Defra Ministers and ... - 16k - Cached - Similar pages

A Tale of Two Reforms ? CFP & CAP
A Tale of Two Reforms ? CFP & CAP. Part I. An Analysis of the 2002 Review
of the Common Fisheries Policy-. The death of British fishing. Richard North. ... - 101k - Cached - Similar pages

Country Land & Business Association
... tel: 020 7235 0511 NEWS RELEASE. 2 October 2003. Why are
we fighting amongst us? Government using CAP reform to divide and rule. ... - 6k - Cached - Similar pages

A Better CAP - a report from the Family Farmers Association
A Better CAP - a report from the Family Farmers Association. A BETTER CAP. ... It
is low farm gate prices, not the CAP, which have fuelled intensification. ... - 78k - Cached - Similar pages

The common agricultural policy has been an unmitigated disaster, riddled with inefficiencies and corruption

From John Humphrys' article in the Sunday Times November 9 2003 (see warmwell link)

"..will lead to accusations that DEFRA caved in to the farming lobby..."

March 27 2004 ~ "Northumberland farmer Malcolm Corbett has challenged Secretary of State Margaret Beckett to rethink the plans which could prove damaging to many livestock producers.

March 7 2004 ~ " If Mrs Beckett wants to be remembered for destroying some of the most famous stretches of England's countryside, she is going about it in the right way."

March 6 ~ ".. potential for the destabilisation of the whole livestock industry, grassland environment and rural economy..."

Threat to suckler herd ? NBA Feb 25 2004

By Jennifer Mackenzie, The Journal At least a quarter of the English suckler herd are at risk in SDAs, warns the National Beef Association.

England will lose almost all of the 175,0000-195,000 suckler cows running in its Severely Disadvantaged Areas (SDAs) unless Defra can restore the support losses that will be inflicted on fringe SDA farms by its area based CAP reform package, the National Beef Association has warned.

It says that between 3,500 and 4,000 farms on the edges of the English SDAs will lose 55-75pc of their current support payments because they are on the wrong side of the outdated SDA line.

Hardest hit will be vast tracts of the Cheviot foothills, North Pennines, Peak District, and sections of the North Yorkshire Moors National Park, farms on the slopes of Exmoor and Dartmoor in the West Country and pockets of land on the Herefordshire and Shropshire borders with Wales.

"We are talking about severe economic and environmental damage in these regions unless Defra acknowledges it has made a grave mistake and can restore the payment levels for this type of holding," explained Association chief executive, Robert Forster.

According to the NBA almost every farm on the SDA fringes currently receives between £250-£400 per hectare in support payments but faces a wind down to just £75 per hectare within eight years compared with around £220 per hectare for farms in the non-SDA payment zone.

"These holdings carry about 25pc-28pc of England's 696,000 suckler cows and it will be impossible to keep them unless the huge reduction in their Single Farm payment (SFP) is changed," said Mr Forster.

"If it is not, their only way out is to cut back on labour and concentrate on a one-man flock of sheep.

"Environmentalists are already shivering at the thought because they know just how much mixed cattle and sheep grazing has encouraged indispensable habitat variation for important insects, birds and mammals."

The NBA finds it hard to understand the contradiction between Defra's long standing recognition of the environmental contribution made by beef cows and the inevitable results of its decision to use the archaic SDA line, which was introduced in 1975, as the demarcation between its flat rate payment zones.

It has asked for an urgent meeting with Defra Secretary of State, Margaret Beckett, and written to the European Commission pointing out the uncompetitive position forced on fringe SDA farms by the re-distribution of such a high proportion of their historic entitlement.

"We are hoping a solution can be found," said Mr Forster. "We are told that on Exmoor alone the future of 600 mixed livestock farms is threatened and the Exmoor National Park could lose up to £4.8 million a year in SFP revenue if support for these holdings falls to just £75 per hectare

"This economic destruction is replicated right across the North of England as well as parts of the Welsh Marches too and severe damage to birdlife in all these areas as a result of habitat decline is inevitable too.We are amazed that Defra's advisers did not point out that the level of farm improvement on the edges of the SDA over the past 29 years."

He added that Defra was forcing unacceptable income reductions on such farms.

Feb 16 - 20 ~ Hill and tenant farmers attack Beckett's claims

Feb 16 - 20 ~ CLA "crops and animals must be treated differently, which the Government's option fails to do. ..... this will be the last straw for dairy farmers already reeling from European dairy reforms"

Western Morning News


02 March 2004

Moorland farmers across the Westcountry have joined forces to fight reforms to the Common Agricultural Policy (CAP) under which they fear they will lose up to two thirds of their current income.

Specialist beef farmers in the Exmoor area have warned that the changes will cost them more than ?4 million a year, forcing many out of business.

And the newly-formed South West Moorland Farming Alliance is promising "to not rest until this serious act of misjudgement is corrected".

The alliance is made-up of farmers from across the region and senior industry figures from the National Sheep Association and the National Beef Association (NBA)

NBA South West Chairman Bill Harper said: "The new system of payments will threaten the very existence of moorland fringe farmers.

"If no changes are made, the massive redistribution of income will mean many farmers will no longer be able to afford to keep cattle and will have to sell their stock or find another job."

Under the CAP reforms - announced by Rural Affairs Secretary Margaret Beckett two weeks ago - all major farm subsidies will be replaced by a single farm payment from January 2005.

The new system is a move towards more "area-based" payments, in which all farmers will be paid a rate per hectare rather than receiving payment according to how much they produce.

The problems have been caused by the way the Government has calculated the payment for moor farmers - classified as Severely Disadvantaged Areas (SDAs).

In its calculations the Government has grouped Exmoor, Bodmin and Dartmoor under one umbrella and given the entire area an average - based on previous subsidy payments - of around ?60 per hectare.

But farmers on the fringes of the moors say their average should be much higher, because their land is able to support more agriculture than extreme moorland. Farmers claim the figures are distorted, and the figure should have been around ?200.

Farmers on the Isles of Scilly, which was designated as a severely disadvantaged area because of its distance from markets, could also lose out.

Ron Cappcorr, who helps run his son Andrew's 240-acre beef and sheep farm - all lying on SDA land - near South Molton, said the reforms signalled the end of his family's long history in farming.

He said: "This will absolutely devastate us. We still don't know why the Government has done this.

"Our land is not unproductive - there is far worse on extreme hilltops which we are being grouped in with."

Peter Randall, a beef farmer near Launceston said: "Many farmers, particularly those with very large herds, will be severely hit. This decision has surprised a lot of people and any moves to have the situation rectified will garner huge support."

The alliance has agreed to lobby the Department for Environment, Food and Rural Affairs (Defra). It is arranging further meetings with National Parks, the Duchy of Cornwall, the National Trust, RSPB, English Nature and the Country Landowner's Association.

Officials are also planning a direct appeal to Franz Fischlercorr, EU Agricultural Commissioner, and to Lord Whitty, Minister for Farming, Food and Sustainable Energy.


02 March 2004

Secretary is wrong to claim Exmoor farmers will benefit from new system, MPs say

A Westcountry MP has called on the Rural Affairs Secretary Margaret Beckett to withdraw claims that controversial reforms of the Common Agricultural Policy would benefit the region's moorland farmers.

Adrian Flook, Conservative MP for Taunton, has written to Mrs Beckett calling on her to "correct" claims that the Government's chosen system for implementing CAP reforms would benefit hill farmers.

Unveiling the reforms in the Commons earlier this month, Mrs Beckett acknowledged that some beef and dairy farmers would lose out, but insisted that Westcountry hill farmers would gain.

"I understand the concern about the impact on the South West," she said. "But it is not disadvantageous to everyone - people on Exmoor, Dartmoor and Bodmin Moor will benefit, for example."

However, Mr Flook said it was "manifestly not the case" that those on Exmoor would benefit from the system of CAP reforms proposed.

He added: "There is a real concern about the impact on Exmoor and Mrs Beckett needs to correct her comments and explain how she is planning to tackle the issue.

"These proposals would give farmers in severely disadvantaged areas just £65 per hectare, compared to £220 a hectare everywhere else. The assumption seems to be that they do not need as much help, but the truth is that it is more expensive to look after the Exmoor landscape. Another £100 per hectare is probably needed to get it to a break-even level."

Mrs Beckett said the difference in payment rates was justified because large parts of upland areas were not intensively farmed. She said that paying farmers at the same rate would lead to large landowners in these areas receiving unjustifiable windfall payments.

Nick Harvey, Lib-Dem MP for North Devon, said it was essential that Mrs Beckett was persuaded to change her mind.

Mr Harvey, who has also written to Mrs Beckett, said: "If there is some good news for highland farmers that no-one has spotted then it would be helpful for Mrs Beckett to identify it for us.

"The fact that highland farmers will receive only one-third of the money per hectare given to other farmers seems totally illogical. Their land is more environmentally sensitive and it's much harder to carve out a living in highland areas. So why are they getting less money?"

Mr Harvey said he was also concerned that different systems for implementing CAP reforms in Scotland, Wales and Europe could leave Westcountry farmers at a disadvantage.