Responding to the launch of the Defra consultation on the futureCAP, NFU President Peter Kendall said: Over the past two years thefuture CAP debate has dragged on at the European level, but theannouncement is a critical step forward in how that policy will be applied herein England.
We have consulted widely with NFU members over the past year tohear directly how they want to see the new policy implemented. It is clear thatnobody is happy with this round of CAP reform. There are unnecessarycomplications and financial pain ahead but its in everyones interest to tryto find workable solutions to those issues.
On the back of a horrific farming year in 2012, confirmation thatfarm business income is down 32 per cent underlines the importance of the CAPto farm businesses. Many elements of todays consultation will directly impacton farm businesses and their bottom line in the future.
We will study the consultation and accompanying impact assessmentclosely, but I am sure that a key element of concerns for my members will bethe comments that transferring the maximum amount of money from pillar 1 topillar 2 is the right thing to do. I have repeatedly stated that Englishfarmers are already significantly disadvantaged in comparison with their nearneighbours in the EU. I will hold the Government to its word that they will onlymodulate the maximum 15 per cent if it can demonstrate it would deliverworthwhile and valuable outcomes for farming and society.
We know that new schemes take time to design and make operationaland we therefore believe that it would be much more appropriate to make use ofthe flexibility available to government to implement a two staged approach tofuture modulation rates, if additional funds are required.
Based on our own internal calculation we believe that Governmentcould afford to levy modulation at no more than nine per cent initially andthen this would continue to finance half of the Entry Level Scheme (ELS) andmaintain everything else at currently levels in the RDPE. We know that 66 percent of the existing ELS agreements are expiring in the next two years, thoseremaining will be affected by the greening rules coming into effect fromJanuary 1 2015 and that the scheme has now closed to new applicants.
In the meantime farmers continue to see nine per cent modulationtaken off their Single Farm Payments, but we also know that the nextagri-environmental scheme will not be operation until January 1 2016 withpayments not being made until autumn of 2016 at the earliest.
Government will be simply creating a war chest of modulatedfunds, which could disappear out of the farming industry if it modulates at 15per cent from next year.
By taking advantage of a potential staged approach to modulationrates, the Government can pragmatically assess how much of the old ELS measureshave been retained by greening and also evaluate the longer term demands of thenew agri-environment schemes. Only when this assessment has been made should weconsider whether higher modulation rates are desirable.
For the majority of farmers, todays confirmation that Defra willfollow the broad EU approach as opposed to introducing a more demanding form ofgreening through a national certification scheme will be very good news.However it is disappointing that Defra looks like it will close the door ongiving flexibility to farmers troubled by the requirement to grow threedifferent crops on arable land. The NFU is not ready to give up on that yet. Ihave requested an urgent meeting with the European Commission to discuss whatalternatives there could be and hope we can find solutions before the end ofthis consultation.
Elsewhere in todays announcement, I am very pleased that Defrahas listened to the NFU on how to deal with payment entitlements. Rather thanmaintaining uncertainty among farmers the Secretary of State has todayannounced that he will roll on the existing payment entitlements which isdirectly in line with what NFU members have been calling for.