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Farming Comment: Tenant Farmers’ Association chief executive George Dunn calls for a cap on CAP payments

06:00 01 September 2013

George Dunn, chief executive of the Tanant Farmers Association

George Dunn, chief executive of the Tanant Farmers Association

Archant

By all accounts June 26, 2013 was not any more remarkable for the vast majority of people than any other day this year.

However, for farmers across the European Union, and perhaps beyond, it had major significance, being the day upon which the institutions of the EU reached a political agreement on the future of the Common Agricultural Policy (CAP).

In fact it was almost 10 years to the day from the last political agreement which ushered in full decoupling, the Single Payment Scheme (SPS), entitlements and of course DEFRA’s inability to produce a workable payment scheme that the Rural Payments Agency could deliver.

Whilst important, the political agreement merely sets the foundation upon which a raft of regulatory building has yet to be placed. Some of this will emanate from the EU and, having gone on its usual annual August break, the EU machine will now be gearing up to provide its share of the paperwork later this autumn. However, much will also depend upon the discretion of individual member states and, since the UK has devolved government, in England this means DEFRA.

One area which will definitely be in the hands of DEFRA to decide is whether or not to place a limit on the amount that an individual claimant can receive from the SPS. The European Commission had hoped that it would be possible to introduce a European-wide limit on payments at 300,000 euros (£255,000). However it would seem that the Council of Agricultural Ministers has managed to remove the mandatory element of this limit and allow individual member states to make their own decisions.

To date, DEFRA has been resolutely opposed to the introduction of any form of limit on payments. This does seem odd from a number of perspectives, not least the culture within DEFRA which is to be pretty scathing of direct payments and more disposed to schemes under the second pillar of the CAP such as Environmental Stewardship. I and the TFA argue, however, that direct payments continue to provide a vital function within agriculture but see no reason why individuals should expect to be able to claim an unlimited amount.

Where any limit should be set is a matter for debate, but the limit proposed by the European Commission does not seem unreasonable.

The argument often used by those who oppose such limits is to say that the English farm structure is characterised by predominantly larger farms than in the rest of Europe and therefore any limit on payments based on farm size would impact disproportionately on British agriculture.

However, in a recent answer given to a Parliamentary question in the House of Commons, DEFRA confirmed that only 174 claimants in England are in receipt of payments in excess of the 300,000 euro limit proposed. That represents just 0.01% of claimants. At the other end of the spectrum, over 80% of claimants receive less than 25,000 euros (£21,250).

The principal benefit of applying a limit on direct payments is the ability to use the money saved to bolster the budget for agri-environment and rural development spending which, following the UK’s weak negotiations in Brussels, has seen a reduction.

The savings from applying a limit on those 174 claimants would be at least £70million which would also have the benefit of feeding through to lower levels of modulation for all direct payment recipients by as much has four percentage points. Surely, DEFRA, it is time to think this one through again?

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