Farmers need to look far ahead as 2011 gets under way
Date of Article
Jan 04 2011

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Farmers making plans at the start of 2011 need to be looking at least five years ahead.

That’s the stark warning from Winchester-based Chris D’Olley, head of Carter Jonas’ Rural Professional Services team.

“Farmers need to concentrate on the four ‘e’ topics,” he advises, “if they want to continue running their businesses in the best way possible in the run-up to major reform of the Common Agricultural Policy (CAP) in 2013 – and beyond.

“The first two are fairly obvious. The first, efficiency, should be attainable with sound management. The second, environment, will have increasing relevance in the revisions. The third may be less obvious – educating the public over how changes may affect the farm gate price of food items as subsidies possibly switch from supporting commodity production to concentrate more on paying for environmental improvements.

“The fourth ‘e’ is that achieving the first three, especially education, is not always easy. The reform of CAP is a bus that’s coming along whether farmers like it or not and it’s one they can’t afford to miss. At the same time, there’s a need to make sure they don’t get the blame if food producers’ prices appear to rise.”

At present, CAP subsidies help farmers get a level price for their produce however if this switches to another area of farming, such as environmental protection, then farmers will have to claw back the lost income in other ways, explains Mr. D’Olley.

“Subsidies are a way of churning money that derives from taxation, passes through the bureaucratic machine in Brussels, and then arrives at the farm gate each year, for many farmers just in time for Christmas and representing the profit for the year for a good number of them.

“The risk is that as the subsidies which indirectly support food prices are removed, the tax that paid for them won’t be handed back to consumers to spend on the food of their choice but will instead be used for other things. Farmers, many already making a loss if it were not for the current subsidies, will need to recoup the lost income by raising farm gate prices if they are able to, and risk being blamed for a problem not of their making,” added Mr. D’Olley.

At present, CAP payments rely on a formula concentrating on the area of land farmed, making it more beneficial to large arable units than small, intensive livestock farmers, particularly those producing beef or lamb.

It’s also likely that payments after 2013 will stay with the farmer-producer. Payments for larger land holdings could be capped, potentially limiting the income potential from subsidies for larger land-based farming businesses, while there could also be emphasis on payments for green cover, crop rotation, ecological set aside, and permanent pasture.

“Having looked at the proposals, there seems to be no lessening of the CAP complexity that confuses consumers so farmers as a whole may have to engage in explaining the reforms to the public and trying to ensure pressure is applied through their MEPs to get the best deal.

“One problem is that many people have little idea who their MEP is, so maybe the initial preparation should be to ensure that people in all communities are aware of the issues and who it is that needs to be aware of their views,” concludes Mr. D’Olley.