Farming Subsidies
Colin Heathcote
The recent change in farming subsidies has generated intense feelings. Why should you care? Because the change may affect the pattern of farming in Britain, which could impact upon the food we eat and the landscape we enjoy. Freelance writer Colin Heathcote explores the pros and cons of the Single Farm Payment Scheme.
Farming in Northumberland National Park could alter dramatically because of changes in subsidy payouts under the EU Common Agricultural Policy (CAP).
This prediction has been made by a Rochester farmer who is anxious to spread the word that farming has to get used to being a market-based industry. He foresees a significant cutback in sheep and cattle numbers when the new CAP single payments, which are "totally divorced" from production, arrive.
Traditional Breed Cattle - A disappearing sight?
"We must move away from the culture of subsidies," says 54-year-old Malcolm Corbett whose 500-acre Dyke Head farm is typical of the sheep and cattle farms scattered throughout the National Park. If farmers are to make up the expected subsidy shortfall, they will have to be tougher negotiators in the market place.
In the past, Malcolm, who runs the farm with son David, feels they have been "bloody useless businessmen" in their dealings with the supermarket giants that dominate the meat market.
"Ten years ago I was getting 55 per cent of the final retail price for my lamb; it's now 45 per cent. And in 1995, the supermarkets were paying £2.47 per kilo for beef. Now the figure is £1.95.
"Supermarkets know what subsidies we get and fix the prices accordingly."
Dyke Head, like nearly all 230 farms in the National Park, is classified as being in a less favoured area (LFA) for subsidies. The LFA is subdivided into Moorland, Severely Disadvantaged Areas (SDA) and Disadvantaged Areas (DA). Under the new Single Farm Payment the moorland areas will receive the lowest area-based payment per hectare, followed by the SDAs.
The remaining DA component of the LFA and non LFA (lowland) land are lumped into one category and this receives the highest area payment per hectare. Most of the farms within NNP are within the SDA and moorland parts of the LFA and will therefore receive the lower area payments.
Prior to the recent CAP reforms, sheep and cattle farmers were paid per head of stock. From last year, the subsidy will be paid on a farm area basis in a single payment. In addition, thirty per cent of subsidy will be taken from the farmers under a new 'modulation' policy and diverted to environmental development projects. Such projects could range from improvement to local village halls to agricultural infrastructure improvements in Eastern Europe.
Under the area payment system, the amount paid to English farmers will be based on historical payments – with the historic element decreasing in phases to zero between now and 2012. Scottish and Welsh farmers, with the backing of their respective parliament and assembly, opted to continue to receive subsidies based on historic payments until 2012.
For Malcolm, the anticipated reductions mean that he will, unless there is a radical change in market prices, have to reduce his stock and find other employment to make up his income. Without a realistic increase in prices " I would expect to cut my herd of 60 suckler cows to between 25 and 30 and my 650 ewes to 250".
And if other National Park based farmers took similar action to Malcolm, thousands of sheep and cattle would disappear with the obvious knock-on impact that would have on the area's economy and its landscape.
"Without subsidies being replaced by a substantial increase in farm gate prices, livestock farming in the National Park will be uneconomic," he warns.
Tesco, the biggest of the major supermarkets, agrees there is a problem.
At the recent 'Cultivating The Future Of The Red Meat Industry' conference held in Cullompton, Devon, its category director for meat, fish and poultry, Sean McCurley, acknowledged that the price currently paid to farmers for their beef is unsustainable and that the major supermarkets will have to do something about it.
Referring to the shift in CAP payments he is reported as having said: "The problem is that you can't go from a subsidised industry to a non-subsidised industry without there being very real problems."
Stoker Frater, former Northumberland National Farmers Union chairman and now a national NFU council delegate feels that the UK government does not properly support its farmers in England.
"The very people who need the most support – the LFA farmers – are going to be hit the hardest by the area based single payment systems," he says.
And for Stoker, who farms 2000-plus acres of Duke of Northumberland owned land west of Alnwick, it's clear why farmers are losing out.
"Farmers and farm workers in the UK represent just 0.17 per cent of the electorate. In France, where there is strong government support for farming, the figure is 3.5 per cent."
Stoker and Malcolm agree that the environmental lobby has a more powerful voice in the UK than farming.
"Groups such as the RSPB, English Nature, and the CPRE have been telling Environment Secretary of State Margaret Beckett that there should be more emphasis on wild life and less on farming in the LFAs," said Stoker.
Yet it is those very farmers who help to maintain the National Park landscape and its wildlife, say Stoker and Malcolm. However, both recognise all too clearly that farming in the next few years is going to have to change radically if it is to survive.
Says Stoker: "We need to educate the public into accepting that they need to pay more for home produced food."
Malcolm agrees: " We have to get out of the tramlines of subsidy-controlled farming and be more business like in our dealing with the supermarkets that are currently promoting a cheap food culture."
The simple question that Malcolm, Stoker and farmers throughout the UK will be asking the supermarket chains is: "Do you want our products?".
If the answer is yes, then Tesco's Sir Terry Leahy and his fellow chief executives are going to have to pay the proper price and the British shopper will have to foot the bill.
Tesco and the Farmers
I contacted Tesco regarding it's attitude to dealing with English farmers, asking: "As farming subsidies under the latest CAP reform will be cut for English farmers over the next few years leading to smaller sheep and cattle stocks, will Tesco make up for the loss of grant by paying a more realistic market price for English beef and lamb to properly reflect production costs?"
This is the reply from a company spokesperson:
"We are committed to buying British fresh meat. In order to succeed we work hard to maintain positive relationships with suppliers to meet customer needs. We have a great supply base - and many of our suppliers have grown with us over the years. We achieve competitive prices through innovation and efficiency savings - not by paying suppliers less.
That said, we do understand the issues faced by farmers are complex and we play our part in supporting UK farmers to meet these challenges by working with industry to help it to grow in existing and new markets. We have seen particular growth in premium sectors for lamb and beef - and have been working hard to see how we can increase availability of this British sourced range in stores.
In addition our meat suppliers have recently moved to longer-term contracts on some premium products, which helps give more security along the supply chain. This could provide a blue-print for the whole beef industry and was designed to further demonstrate to farmers that there is a strong future for the British meat industry."
Facts and Figures
Tesco chief executive Sir Terry Leahy came sixth in the recent Radio 4 Today programme 'Who runs Britain' poll of listeners – one place above the prime minister, Tony Blair. And Sir Terry topped GQ magazine's annual list of most powerful people in Britain outside the Government.
British taxpayers spend £3.9bn a year on the Common Agricultural Policy.
Oxfam calculates that, based on average payments per hectare under arable crops and taking into account modulation reductions, the Duke of Westminster, Britain's richest man, gets £896 a day in CAP subsidies, just from cereals. A single mother with two children living on the lowest income bracket in an inner city is entitled to £7 per day in family credit.
"To tackle the Government's cavalier attitude to food production in this country must be everyone's priority." – Carron Craighead, Northumberland NFU chairman.
"Three times as many French farmers receive large subsidies from the EU than those of any other country. In total, France receives almost twice as much direct subsidies for its farmers as any other member state." – The Times, 4th December 2005.
Since last August, more than 730 farmers in the North East have entered agreements under the Entry Level and Organic Entry Level Stewardship scheme. This brings nearly 113,000 hectares of countryside into environmentally friendly management. Nearly half of all farmers in the region are under some sort of environmental agreement, including those that had signed up to the Stewardship scheme that pre-dated the Entry Level Scheme. Nationally, over 30% of English farmland is under some sort of environmental agreement – Defra
Bird populations are considered to be a good indicator of the broad state of wildlife and the countryside because they occupy a wide range of habitats, they tend to be near or at the top of the food chain and considerable long-term data on bird populations have been collected. Figures for all regions show no significant change to species populations overall throughout England's regions, but populations in more northern regions continue to prosper whilst those in southern regions are still in decline. The figures make up one of the Government's regional sustainable development indicators. A full set of statistics is available on the DEFRA website.
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