Why does the government spend money on farming?
The European Commission has given the government €17.9bn to spend on farming and rural areas in England for the next seven years as part of its Common Agricultural Policy (CAP). Scotland will receive around€4.5bn, and Wales will receive about €2.75bn.
The two main areas where CAP money is spent – referred to as “pillars” - are direct farm payments (pillar one) and the rural development program (pillar two).
What is the CAP money for?
CAP money is used to respond to consumer demands for safe food as well as high standards of animal welfare and environmental protection.
Do all EU members get CAP money from the EU?
Yes – although it is being phased in gradually for new member states. Before 2014 the UK received the fifth largest amount of money behind France, Germany, Spain and Italy.
What is modulation?
Modulation is the movement of CAP money from direct farm payments (pillar 1) to the rural development program (pillar 2). The government can decide to move up to 15% of the CAP money from direct farm payments to the rural development program. The Scottish government recently announced that it intends to move 9.5% of the money, while the German government has gone for 4.5%.
Our government wants to spend more on rural development and less on payments to farmers.
However, the UK already has the lowest allocation of money from the EU budget for the rural development program. David Cameron agreed in February 2013 to a bigger cut in the rural development program for the UK than for any other EU country.
The Treasury is also going to reduce its own contribution to the rural development fund.
How will this affect farmers?
Farmers understand the need to protect and sustain the environment. But they also understand that there is a strong consumer demand to produce more food for a growing domestic population that demands British produce. This is especially true in light of the recent horsemeat scandal.
English farmers are already at a competitive disadvantage to their European counterparts.
Farmers in other countries, with comparable levels of output, will continue to receive much higher levels of support per hectare than English farmers, whose payments are based on a flat rate of land area as opposed to targeted on past activity.
Reducing the amount of money paid to English farmers in direct farm payments would only disadvantage English farmers further.
What is the best amount of money to move from direct farm payments to the rural development program?
The NFU and the House of Commons’ Efra Committee agree that amount of money moved from direct farm payments to the rural development program should remain at the existing level of 9%, to be reviewed in 2017.
If 9% of the money is moved to the rural development program it will cover the cost of the on-going legally binding agri-environment schemes, with an extra £1 billion to fund new activity to protect wildlife and the countryside.
Is it necessary to transfer 15% over?
It is not absolutely necessary to transfer 15% of funds from farm payments to the rural development fund. It is a choice for the government. Some countries are transferring much less than this.
If the UK government uses its powers to reduce the English farm payments envelope by 15%, then the impact would be to move the average payment received by English farmers below all of their main competitors, including France, Germany, Ireland Belgium and the Netherlands.
Will the environment suffer if 15% of money isn’t transferred?
No. Farmers are already doing a substantial amount of work to protect the countryside, including the following measures:
- England currently has more than 200,000 hectares of land voluntarily put aside for wildlife.
- Over 70% of the farmland in England is managed under agri-environment schemes, equating to around six and a half million hectares.
- Greenhouse gas emissions from British farming have been cut by 20% since 1990.
- Farmers have over 6,781 km of fenced watercourses (equivalent to 5 times the distance from Lands’ End to John O’Groats)
- There are over 478,000 ponds in Great Britain, with 70,600 created in the ten years up to 2007.
- Over 100,000 farmers in England complete a Soil Protection Review. The review helps farmers consider soil-related problems such as soil structure and organic matter, erosion, compaction and damage to landscape features.
- Hedgerows have increased by 50,000km to 550,000kms in England since 1990
- The overall bird population across England is relatively stable. Of the specialist farmland birds a number are showing population increases Goldfinch, Stock Dove and Whitethroat. The numbers of Woodpigeon and Jackdaw have more than doubled.
If the government transfers 15% how will they spend the extra money?
The government has not yet decided exactly how it will spend the extra money. The NFU has set out in its 47-page response to government how it thinks the funds could be spent for the benefit of farming and the countryside. The NFU believes the money should be focused on the environment and improving the farming industry's competitiveness.
How would transferring 15% affect English farming and food production?
English farmers are competing in a single market.
In a year of exceptionally poor weather the single farm payment is an important element in the resilience of farming businesses. Other governments see the direct payments partly as a mitigation of the more stringent environmental regulations which apply in Europe and the ever more costly restrictions that constrain our use of plant protection products and other technology.
Higher payment rates allow our competitors to invest in their farming operations and to enhance their competitiveness. Cutting English payments by more than our competitors limits our ability to compete. It will leave English farmers more vulnerable to the volatility we have seen in markets and weather in recent years and make businesses less resilient compared to European competitors. The impact of transferring money from pillar oneto pillar two would be further exacerbated given that other member states have been granted powers to do the reverse and potentially increase the value of direct payments made to farmers.