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WMN opinion: Switching farm subsidies could be very risky policy

By Western Morning News  |  Posted: December 03, 2013

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British farmers are facing cuts to the overall subsidy budget from Europe. So MPs from the influential Environment, Food and Rural Affairs Committee (Efra) are right to warn that additional transfers of those funds that remain away from direct grants based on acreage towards environmental and rural development projects could damage some farm businesses.

Yet that is what Ministers at the Department for the Environment Food and Rural Affairs are proposing, aiming to shift 15% of the overall budget from Europe into non-food production initiatives, like building dry stone walls and creating habitats for wildlife. As the chairman of the Efra Committee, Anne McIntosh, points out, when farm incomes are falling, switching grant payments away from straight acreage payments will make some farm businesses more vulnerable to shocks – whether that's from higher input costs, poor weather or other unexpected events.

In principle, farmers and their representatives look forward to the day when they can farm free of direct subsidy and run profitable businesses giving the market what it wants and needs. Yet that day is not here yet and in the meantime farm businesses need support, not least to invest in the infrastructure that will help them become more efficient and meet the growing global demand for food.

At the moment 9% of the farm subsidy cash Britain receives from the EU goes on environmental and rural development schemes – so called Pillar Two, in eurospeak. If that were to rise to 15%, as is being touted at Defra, the consequences for farm incomes could be significant. The Efra committee is, in this instance at least, fulfilling an important function, standing up for farmers who, many believe, have already been let down once thanks to a smaller than expected EU settlement and could be undermined once again by their own Government.

Camborne and Redruth MP George Eustice, Parliamentary Under Secretary of State at Defra following the Cabinet re-shuffle recently, tells Farmers' Guardian this week that he is 'minded' to switch the entire 15% of subsidy across to environmental and community projects, suggesting that will "achieve more." That is not the view of many farmers, and it certainly worries many MPs. Ministers need to explain their thinking to keep farmers onside.

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