Farming Accountants


2013 reform of the Common Agricultural Policy

Concerning itself with preserving the future of farming and farmers in Europe as well as the conservation of rural landscapes and countryside, the Common Agriculture Policy (CAP) plays a significant role in achievement and development of global food security. In place for over 50 years, the CAP today is arguably facing some of its toughest challenges. What with a growing, truly global and harshly competitive marketplace as well as a particularly tough economic climate, when it comes to keeping farmers happy, the CAP has its work cut out for it.

Against an increasingly unstable farming backdrop, the consensus seems to be that the power of the CAP appears to be diminishing. This was particularly evident during the farming crisis of 2009, during which time, the authorities appeared to no longer have the muscle to withstand the extreme pressures farmers faced, and some say, stood by to watch farmers incomes fall significantly. Add to this, the competitive disadvantage that EU farmers have over cheaper imports and you begin to see just how tough things have become. Because EU farmers, adhere to strict safety and sustainability criteria and now find themselves competing against farmers who don’t, the playing field is no longer level.

For these and many other reasons, the CAP, which has amongst its aims, the preservation of rural heritage, the provision of a reasonable standard of living for farmers and the assurance of quality food at fair prices for consumers, appears set for significant reform from the end of 2013. The report published recently by the European Commission (EC) announced the welcome news that administrative burdens are to be reduced, but many suspect from what has been said, that a real reduction in support payments is highly likely. With the new scheme due to start on 1st January 2014 the main issues facing farmers appear to be surrounding who will receive payments, the level of payments and what those payments might be for. With a huge number of farmers relying on payments made under the CAP to boost their falling incomes, it’s understandable that any threat to CAP payments gives rise to heated debate within the farming community.

Under the proposed changes, small and medium sized farmers are tipped, along with young, green and active farmers to be the ones set to gain.

Whilst the published aim of the new proposals is to support farmers’ income in a fairer, more targeted and simpler way, there is some skepticism over what the outcome might be. The report speaks about focus being placed on the support of ‘active farmers’ and the proposed capping of certain payments. This focus on active farmers is intended to reduce the number of payments being made to landowners’ whose activity is not directly farming or land management related. The capping proposal, on the other hand, is intended to prevent higher payments being paid to large landowners who may not be in need of as much income support as small or medium sized farming businesses.

Furthermore, there is also some suggestion that a flat rate will be introduced for ‘small farmers’. The new proposals are also intended to reward farmers who are focused on environmental performance improvement. Portrayed as an incentive to become more “green”, there is likely to be direct, basic support payments for farmers, predicted to be made for such things as: ecological set-aside, green cover on arable land, preservation of grassland and crop rotation. This green focus, as well as a commitment to fight climate change, will set more innovative farmers up for a share of a fund that is likely to be set aside specifically for ‘green’ efforts. Whilst arguably, some of the most vulnerable farmers will welcome these changes, there is likely to be a host of landowners who will lose out. There is no doubt that some sectors of the farming community are likely to embrace this change, there is no doubt that this shift in focus is likely to cause unrest in the community at large.

Add to these fundamental changes, the likelihood that aid is expected to available for farmers under the age of forty during the first five years of their project (to help the younger generation); additional support is expected for farmers in areas with ‘natural handicaps’ and a greater focus being placed on research and innovation, and you can see why so many farmers are getting nervous. So, is the reform of the CAP a real solution to the real problems facing farmers across the board today, or is it just another way of reducing the support to an already struggling and important economic sector?

Posted in: Common Agricultural Policy, Farmers

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