Farm subsidies. Last of the summer whine?

Farmers face a new regime: subsidy for land, not crops

THE rain-battered harvest is nearly in - the last one, for most British farmers, that will bring them subsidies dependent on just what they produce or how much of it. From next January 1st, no more “arable area payments”, “suckler cow premium” or “beef national envelope”: today's swarm of schemes will be swept into a “single farm payment”. The shift will bring British farming closer to the market. In time, it may change the face of Britain too.

Subsidy will continue, and at much like recent levels - £2.8 billion last year. But thanks to European Union (EU) reform decisions a year ago, which Britain, unlike some countries, chose to put into effect as soon as possible, the money will no longer be linked to particular products, output levels, or even farming at all. Instead, it will be based solely on land area. British farmers, contrary to myth, are already highly market-oriented. From 2005 they will have to be entirely so.

That's a big change from the days when the EU guaranteed high prices for every tonne of almost anything but fruit and vegetables. That system has been eroding since 1984, but the new single payment breaks the last link (with odd exceptions such as sugar beet) between subsidy and output. It will start with the past: the farm's total average subsidy, per hectare, under all schemes, in 2000-02 (or, for dairy farmers, the annual value of their milk quotas in 2005). But by 2012 all English farms will get a standard flat rate: £210-230 or so per hectare in lowland areas.

Despite this gentle transition there will still be winners and losers (big ones, potentially, in Wales and Scotland, which will therefore stick to each farm's “historic” levels). Horticultural land, now unsubsidised, will in time get the full flat rate. English dairy farmers, already hurt by low prices, stand to lose. So do intensive grain-growers, who have done well out of subsidies; and the beef barons, using little land but lots of bought-in feed. Less intensive farmers will gain, especially in the hills.

Some questions remain unanswered. What about rich hobby farmers who have a few decorative fields around their mansions? Or “horseyculture”, the (now unsubsidised) pastures used for family ponies? There is still much confusion about landlord and tenant, especially for land recently or soon to be let: who will get how much? And no one knows how the new market in tradable subsidy entitlements will work, or the effect on land prices.

But one broad result is clear. Subsidy linked to the environment has already shot up: it was nearly £280m last year, against £45m ten years before. Now the new farm payment itself will depend on farmers' compliance (self-declared, admittedly) with EU environmental, health and other rules. Many farmers plan to earn an extra £30 a hectare by joining a basic environmental scheme, for example leaving the edges of fields unploughed, to help bugs and the birds that feed on them.

Change could go much further. Some farmers will simply let land lie fallow, maybe even the whole farm: to get subsidy, all they will have to do is to keep the land in “good agricultural and environmental condition”. That's not cost-free, but it is easier than the hassle of ever-changing weather, prices and tastes.

UK farmers, like their other European counterparts, face a new regime from 2005: subsidy for land, not crops.

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