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09:00 - 29 January 2003  
 Anthony Gibson:

'Farmers will continue to get their subsidies (or most of them) without having to produce anything in return'

IT is always difficult to write about reform of the Common Agricultural policy because of the complexities and jargon which surround the wretched thing. But given the potential significance of the European commission's latest proposals, the attempt must be made.

And to avoid paragraph after paragraph of background explanation I hope that readers will excuse me if I assume at least a working knowledge of what is afoot - an understanding that what is meant by "de-coupling" is the separation of farm support from farm production, rather than what one might do to a pair of randy dogs with the aid of a bucket of water!

For de-coupling is indeed at the heart of the matter. Farmers will want to know that this will involve averaging the arable and livestock payments that they received in the three-year period 2000-02, and averaging the arable or forage hectares to which those payments were attached, so as to arrive at a "single income payment" per farm.

That will be the amount which they will be paid each spring, from 2005onwards, provided the farmer continues to farm at least as many hectares as his payment was based upon. From 2006 onwards, payments will be trimmed, especially for the larger farmers, by a gradually increasing percentage, which will go either to fund rural development, or prop up the EU's agricultural budget.

But other than keeping their land in good order, complying with a range of existing legal requirements, and completing just one form a year, farmers will not have to do anything else to qualify for their payments. They will get them even if they do not produce a single animal, or ear of corn.

To understand the logic of this approach, you must first understand that farmers are seen across most of the EU as being essential to the quality of life. They are valued not merely for their role as food producers, but for the part they play in creating and maintaining "le monde rural"- the rural world - by which the EU sets such store.

The issue is not therefore whether they should be supported out of public funds, but how. What the Commission's proposals are designed togo is to break the link between production and support. That will strengthen the EU's negotiating position in the world trade talks, pave the way for enlargement, and mean that market signals to Europe's farmers will no longer be distorted by interference from the subsidy regime.

Of course, you could have done all that by simply abolishing production subsidies, full stop. But that would never have been politically acceptable. So farmers will continue to get their subsidies (or most of them) without having to produce anything in return.

Which immediately raises the issue of the wider implications for the rural economy. If, on beef, sheep and cereals (with milk to follow), the subsidy is the same as - or rather more than - the profit, and you can qualify for the subsidy without rearing the bullock or growing the corn, why bother to farm at all? Why not just keep the land neat and tidy, take a job and pocket the subsidy cheque each spring?

I don't happen to believe that is how most farmers will react, but even if only some do, then the implications for the agricultural supply trade, the food-processing industry and the rural environment will be significant, and probably highly damaging.

The various economic evaluations of the proposals which have been carried out suggest that a fall in output will be more than offset by arise in prices, and if profits rise then so, eventually, should production recover. But we must guard against an initial over-reaction, because even a temporary loss of critical mass in food production could mean a permanent loss of competitiveness.

As for the countryside, even with the link between subsidy and animal, we are already running into problems with the grazing management of important wildlife sites, because of the lack of profits in lowland cattle and sheep farming. The prospect is thus opened up of farmers being rewarded for putting animals on to areas like Dartmoor or the Somerset Levels, rather than being compensated for taking them off.

And what of the aesthetics of the wider countryside? We know what a landscape stripped of livestock looks like, because we saw it in North Devon in the wake of foot and mouth disease, and it made a strange and slightly eerie sight. Is that the shape of things to come? Because it isn't going to do much for rural tourism if it is.

In the end, it will all depend on how farmers respond to the new system. That is almost impossible to call at this stage, partly because of the many uncertainties in the proposals, and partly because, important though it is, the subsidy system is only one factor in what will be a complex economic equation.

Initial reaction has been somewhere between the sceptical and the suspicious. The proposals are so radical, and the French response especially so hostile, that few farmers believe that the Fischler plan will ever materialise in anything like its present shape. And even if it did, the feeling runs, then a system of subsidies without strings would not survive the twin pressures of public opinion and financial stringency for very long.

But we must beware of complacency. If Fischler were to get his way, the new system could be in place in less than 12 months' time. And if that were to happen, then beef calves being sold now will never qualify for the beef special premium, the slaughter premium will have less than a year to run, and anyone buying eligible arable land now will only be abe to claim area payments on it for this season.

So while there is absolutely no certainty, the possibility of the single income payment being in place for January 2004 needs to be factored into every farmer's forward planning.

As for the rest of it - the finer points of modulation, degressivity, the dairy proposals, the farm advisory system and the farm assurance and animal welfare grants - there is much to be done around the negotiating table in taking out unfairness, particularly so far as our larger farmers are concerned.

On balance, the proposals are probably more of an opportunity than a threat, but only if we respond positively and imaginatively to the new situation when it arises. If single income payments really do materialise, they must become a supplement to an efficient, productive and, in every sense, sustainable farming industry in the South West, not a substitute for it.

Anthony Gibson is the regional director of the NFU