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May 6 2004 ~ CAP payment methods. Theresa May says: "The Government had months to prepare for these reforms. It was after all, their choice over how the reforms should be implemented. It is astounding that there is still such uncertainty amongst Ministers about a system they themselves chose. However, the uncertainty is completely unacceptable for farmers. They need to know what the future holds for them, so that they can plan for the future. Choosing what crops to sow or what animals to buy is not something that can be done overnight. "What is clear is that no-one has any faith in the rural payments agency to be able to cope with the changes. Farmers face the prospect of a long wait for their money unless decisive action is taken." (From a Conservative Party press release

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.