Farmers warned that they are not immune to eurozone crisis

FARMERS were warned yesterday to drop any thought that they were immune to the effects of the current financial turmoil in Europe.

Speaking in Edinburgh, Richard King, of consultants Andersons, said that, with the common agricultural policy (CAP) still taking 40 per cent of the total European Union budget, it would be impossible for finance ministers to ignore it if they wished to make economies.

The current position is that these ministers will sit down next year to determine how much money will be in the budget. Some members states have already called for reductions to be made while the EU agricultural commissioner Dacian Ciolos is counting on a standstill budget.

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However, King said the longer the current unrest and uncertainty continued, the more he believed politicians would want to cut back on their financial commitments. “This could see 25 to 30 per cent taken out of the CAP,” he said. “The sooner we can get back on an even keel the better it will be for farmers.”

However, it looks as if delays in reforming the CAP will bring early cuts to the single farm payments currently paid to farmers. While the original idea was that the reformed CAP would be ready to implement by January 2014, it is now generally accepted that this will not happen until 2015.

The current CAP runs out in 2013 but, through a quirk of the European budget system, the cash for this has not yet been agreed and so the new budget will come into play in order to pay for both 2013 and 2014 prior to the reform coming in.

“What we shall see is the old system still in place but with the new budget, which I expect will be at least 5 per cent less than is currently the case” King told an audience of agricultural advisers.

With years of negotiations still to go, he said there was little that could be firmly advised to farmer clients at this stage although he did believe that most of the main policies in the current proposals would come through.