CAP reform threatens farmers who manufacture food

By Rick Pendrous

- Last updated on GMT

Related tags Money European union

Farmers who earn the bulk of their income from non agricultural sources, such as food manufacturing, could fall victim to new CAP reforms. Photograph courtesy of www.Istock.com/Amy Riley
Farmers who earn the bulk of their income from non agricultural sources, such as food manufacturing, could fall victim to new CAP reforms. Photograph courtesy of www.Istock.com/Amy Riley
The requirement for “active farmers” under the latest proposals to reform to the Common Agricultural Policy (CAP) could hit those who derive most of their income from activities other than farming, such as food manufacture, an expert has warned

This element of the CAP reform is designed to stop farmers who convert their land to uses such as golf courses from benefiting from CAP subsidies, said Chris Horseman, editorial director of the Informa Agra, a division of Informa Business Information.

However, it might also catch farmers who, for example, had heavily diversified into food processing, Horseman added. He was speaking at a meeting of the food, drink and agriculture group of the Chartered Institute of Marketing in London on Wednesday [February 22].

“There is controversy on active farmers,”​ said Horseman. “This is pure politics.”

The European Commission is proposing that if direct aid payments are less than 5% of the total monies received from non-agricultural payments, then those making the claims are not considered to be active farmers and will not be allowed to receive them, he said.

Accidental recipients

 

“This is intended to prevent these golf courses and utility companies and various other accidental recipients of CAP money from being able to do so,”​ he said.

“But it is a concern because what happens if, for example, you make most of your money from an on-farm business? Supposing you produce meat pies or something and you generate most of your revenue from a food manufacturing business. Does that make you not an active farmer on this definition?”

 

While an “extreme scenario”,​ he said this situation could theoretically arise.

The CAP reforms will come into effect in 2014, but no final decisions will be made before spring 2013, said Horseman. “Will it make European farming more competitive? I don’t think so,” ​he remarked. ”I think it is more likely to slow down structural change rather than enhance it.”

 

Reshuffle of resources

Although unlikely to reduce the €55–56bn a year cost to the EU (41-42% of its total budget), as many in the UK would like to see, the reforms are designed to create more ”equitability”​ by changing the way subsidies are distributed, said Horseman. “It’s a bit of a reshuffle of resources.”

Under consideration are three proposals involving a new direct aid payment scheme, a market support scheme and revised rural development regulations.

The plans include a greater focus on environmental protection and enhancement, with funds directed at smaller farms and younger farmers and those operating in areas that are more difficult to farm, said Horseman.

Payments to larger-scale producers will also be capped.

He described plans to simplify the CAP as “a pipe dream”.“The proposals are complicated and bureaucratic,”​ he argued, pointing out that the UK view on the reforms were “a wasted opportunity”​ to reduce subsidies for production and concentrate on promoting good land stewardship.

But, the UK was only one voice among 27 and unlikely to get its position adopted by the rest, he added.

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