The potential loss of millions of pounds in direct subsidy payments for farmers yesterday galvanised farming leaders across Europe to call for any move of support cash towards environmental and rural objectives to be financially matched by national governments.
The trigger has been the leeway currently allowed in the forthcoming common agricultural policy (CAP) proposals which could allow transfers of up to 15 per cent from direct support (pillar one) to rural development (pillar two) without any obligation on member states to match fund.
Currently, any shift in support into pillar two requires the government of that country to match fund the transferred cash but that condition has been ditched in the CAP negotiations underway in Brussels just now.
In Scottish terms that could see more than £60 million annually transferred from single farm payments received by farmers with the cash going into the Scottish Rural Development Programme with its wide remit ranging from food promotion, rural business development and forestry to crofting.
One of the signatories to yesterday’s plea to governments was NFU Scotland president Nigel Miller who said that co-financing was a fundamental part of existing rural development policy and that pillar two had always been accompanied by national co-financing.
He claimed this match funding condition ensured that only projects that the member states themselves viewed as important enough to co-finance would be introduced.
“Making it mandatory for national governments to co-finance will reduce the movement of funds from pillar one to pillar two – and thereby also reduce the competitive distortion that could be created between member states,” he said.
“If member states are obliged to co-finance the rural developments projects, they are much more likely to ensure that the EU funds – along with the national contribution – are properly managed.”
Another to support the case was English NFU president Peter Kendall who was in Brussels yesterday to meet with advisers to Agriculture Commissioner Dacian Cioloş.
After the meeting Kendall said: “The free transfer of money from pillar one to pillar two, which would be at the member state’s discretion, would result in grossly unfair competition between farmers across Europe.
He feared the UK, with a government opposed to direct support, would move the 15 per cent maximum allowed from pillar one to pillar two.
Kendall also highlighted another potential imbalance in the current proposals where 25 per cent of the money going into environmental support could be transferred in the opposite direction towards direct subsidies.
This was unlikely to happen in the UK where apart from the political opposition to subsidies, the country has traditionally had very low environmental budgets when compared to countries such as France.
“Farmers that have seen livestock buried under snow cannot afford to lose 15 per cent of their support,” said Kendall. “Moreover they cannot be asked to compete with produce from farmers on the continent who will have retained that money.”