DEFRA Secretary Owen Paterson today signalled the UK government’s support for a end to direct European Union subsidy payments to farmers.

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But he conceded that the final separation of support payments from production was unlikely to be achieved in the Common Agricultural Policy (CAP) reforms currently under discussion.

And he insisted that there would remain a strong case for farmers to continue to receive payment for work undertaken to enhance the environment.

Speaking on day one of the Oxford Farming Conference, Mr Paterson said that although more than 90% of EU farm support payments were now “decoupled” from production, there was still “more to do” in respect of the remaining direct payments – known as “Pillar 1” of the CAP.

“In the current negotiations, I know where I would like European agriculture to end up, although we might not get there this time,” he said. “It is clear that in this round, due to run until 2020, Pillar 1 will continue.”

“I would like decisions on which food to produce to be left to the market, so farmers alone decide which crops to grow and which animals to raise according to demand in the food sector,” he added.

“I do, however, believe that there is a role for taxpayer’s money in compensating farmers for the work they do in enhancing the environment and providing public goods for which there is no market mechanism.

“Farming makes a real contribution to our habitats and wildlife. We must be able to continue to develop our agri-environment schemes.”

Mr Paterson also pledged to push for greater simplification in the current round of CAP reforms, alluding to the delays with the Rural Payments Agency in England which followed the last reforms and resulted in penalties totalling more than 550million euros.

Beyond reform of the CAP, Mr Paterson acknowledged that it had been a tough year for farming, with the difficulties of drought conditions at the start of the year, followed by widespread floods, being compounded by pressure on prices, high feed costs and diseases such as bovine TB and Schmallenberg virus.

But he said there was “much to be positive about”, with UK agriculture successfully producing food for 63.5million people and supporting industries worth nearly £90billion to the economy, as well as managing landscapes which underpinned recreation and tourism.

Mr Paterson added, however, that, looking to the future, he believed it was necessary for fresh consideration to be given to the production of genetically modified (GM) crops.

“I fully appreciate the strong feelings on both sides of the debate,” he said. “GM needs to be considered in its proper overall context with a balanced understanding of the risks and benefits.

“We should not, however, be afraid of making the case to the public about the potential benefits of GM beyond the food chain, for example, significantly reducing the use of pesticides and inputs such as diesel.”

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