Agriculture, Forestry and Food

A way forward for direct payments to farmers in Wales?

06 July 2015

Article by Nia Seaton, National Assembly for Wales Research Service

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Tejvan Pettinger Licensed under Creative Commons

On 7 July the Deputy Minister for Farming and Food is expected to announce the results of the recent consultation on Proposals for the Basic Payment Scheme for farmers in Wales. The Welsh Government’s original plans for the design of a new Basic Payment Scheme were thrown into disarray when they lost a legal challenge about the fairness of its outcomes for upland farmers in December 2014. The announcement should outline the Welsh Government’s preferred option for a new design.

You can read more about the legal challenge in our previous blog post on the subject.

What were the new options the consultation considered?

The consultation was opened on 31 March and closed on the 23 June 2015.  The consultation identified seven policy goals that the Welsh Government were seeking to achieve through the design of a new system. These were:

  • Meeting the regulatory requirements of the CAP legislation;
  • Paying farmers as soon as possible within the 2015 payment window;
  • Moving all claimants to a common payment rate by 2019;
  • Providing the maximum amount of time possible for farmers to adjust to the changed system;
  • Minimising financial disruption to the farming industry;
  • Allowing new entrants to the farming industry to claim payments; and
  • Acknowledging that different types of farm may need different levels of payment.

Goals one and two were identified as being the most important.

On this basis, the consultation listed four possible core options (Options A-D) and three ‘add-on’ options (Options E-G). The add-on options were additional measures that when combined with options A-D, it was suggested would help mitigate some of the potentially negative impacts of the core options. The consultation looked at all possible combinations of these options and assessed them in a comparative table against the seven policy goals.

None of the options could deliver against all seven goals but the Welsh Government outlined its three preferred options.  It said that these three options offered the most realistic prospect of delivering policy goals one and two and as many as possible of the other seven.

Facts and Figures about the CAP in Wales

  • Wales will receive €322 million per annum in direct payment support to farmers by 2019.
  • This equates to 8.9 % of the UK’s share of €25.1 billion over the 2014-2020 period.
  • Wales will receive an additional €355 million in support for its rural development plan for the 2014-2020 period.
  • 16,958 farmers have submitted an application to receive direct payment and other CAP support by 9 June 2015.
  • It has previously been estimated by the Welsh Government that 80-90% of some Welsh farmers’ incomes come from direct payment support under the CAP.

Source: Welsh Government – various

 Why does the outcome of the consultation matter?

Regardless of the option chosen, the move to the new payment system will lead to significant change for the farming industry in Wales. This is because the way the basic payment scheme system operates determines which farmers will get the most support. Moving from the previous historic model of distributing direct payments to a new option, regardless of its design, will mean that some farmers will receive significantly less support than they did previously and other farmers will gain. Given the current levels of volatility in world markets, farming unions have argued that providing certainty to farmers about how much financial support they can expect to receive over the next seven years has never been more important.

In response to the Environment and Sustainability Committee’s call for stakeholders to identify their key priorities for the farming industry for the next 12 months, both NFU Cymru and the Farmers’ Union of Wales (FUW) identified administration of the CAP and direct payments to farms as their key priority. You can read about their other priorities and those of other stakeholders on the Committee’s webpages.

View this post in Welsh

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