Industry Eye: Future of Single Farm Payment looks likely to involve keeping entitlements but with some restructuring

We are a little closer to knowing the answer, following what is said to be the "semi-official" leaking of a European Commission discussion paper onto the internet, in the run up to the expected publication of a formal paper, taking place on

November 17.

What are the options?

The first is dubbed "enhanced status quo", which, essentially, means business as usual.

The second involves keeping the system of area-based transferable entitlements, but with a restructure to emphasise a basic payment to all, plus a "green" payment and a Less Favoured Area payment.

Option Three is the radical one – abolish all direct payments and phase out subsidy.

The Commission appears to favour Option Two, which strikes a balance between those states campaigning for the status quo and those (including the UK) wanting wholesale reform.

The detail provided on Option Two is brief,

but several key points emerge.

While basic support to all will remain, capping of payments to large farmers and a minimum payment to small farmers is proposed, though no hint of thresholds is given.

Cross compliance reforms are suggested, replacing the current state-led GAECs (requirements for Good Agricultural and Environmental Conditions) with EU-wide requirements.

Since UK cross compliance is among the most stringent in the EU, it is thought UK farmers might not see a great deal of change, but one possibility is that of a pseudo-ELS where commitments are annual and paid on an income-foregone principle.

Finally, territorial payments for areas with natural constraints will replace the current Pillar II payments.

In England, this would mean Severely Disadvantaged Area support shifting back to Pillar I instead of coming

under Pillar II UELS-type schemes.

Perhaps, disappointingly, there is no clear answer to the key question of whether payments will be reduced across the board.

A broad hint is delivered by reference to the need to achieve a more equitable distribution of payments across member states.

Since UK average payments are middle of the road when compared with those of other states, UK regions may see little change.

To summarise, it is clear that the Commission does not favour total abolition of market support, but that it does require a fair distribution of payments across member states. It is also clear that environmental requirements are here to stay, probably calculated on an income-foregone basis.

We await, with interest, the formal publication on November 17.

n Simon Britton, director of Savills of York. His contact details are: 01904 617824 and email [email protected]

CW 6/11/10