Industry Eye: Decision of Euro heavyweights should be welcomed by the industry

These two countries are seen as the 'heavyweights' within the EU and its with welcome relief that they are pushing for a strong continuation of the CAP within the European Commission.

Most importantly they have proposed that the existing two pillar payment model continues and that the Pillar 1 payments (i.e. the single payment scheme monies) remain in existence.

Whilst they are still proposing reform mainly to encourage market driven food production rather than subsidy led, they have stated that the "direct payments provide remuneration for public goods that are not rewarded by the market, cover production costs caused by higher production standards desired by society and they contribute to the income of farmers." For many farmers in the UK, this will be good news and is broadly in line with the policy being promoted by the UK farming unions. There has been much speculation as to the future of the single payment scheme as it has a profound impact on the viability of many rural businesses.

There are a considerable amount of businesses in the Yorkshire region, that rely on the subsidy in order to survive and there is a lot of concern, that if they were removed altogether, there would be considerable hardship within the rural areas, particularly those in less favoured areas.

The European Commission are due to publish their proposals on the CAP in mid November and we await with anticipation, but it is my feeling that the overall 'pot' of money in the EC allocated to the CAP will reduce over a period of time, which in turn will lead to a reduction in the overall rate per hectare that each farmer will receive. Modulation may increase, but the UK has one of the highest levels in Europe and requires match funding, which at present is unlikely to happen.

Whatever the outcome may be, now is a great time to look carefully at the business to understand the risk and potential impact should any major reform take place. Also, if there is to be a change to the system, make sure you plan early for it, don't wait until after the event.

The new coalition Government is starting to make an impact, with Jim Paice living up to expectation by proposing a badger cull plan, scrapping the agricultural wages board and putting an end to the massive spend of levy payers money on the AHDB building at Stoneleigh.

Whilst I entirely agree with having all the boards in one central location such as Stoneleigh, it's a prime example of government contracts getting out of control, something that we regularly see within capital grant projects under environmental stewardship and rural business grants.

Commodity price of wheat, barley and oilseed rape continues to climb. I don't begrudge farmers having to make decisions as to whether or not to sell forward for the 2011 harvest; but I would recommend making sure you consider the cost of production and decide on a marketing strategy based on costs, profit levels and risk involved in storing/ late marketing of the crop.

Louis Fell is a partner at chartered surveyors George F. White who operate throughout Yorkshire. Contact www.georgefwhite.co.uk