My previous blog on Common Agricultural Policy (CAP) farming subsidies attracted a bit of interest in The Herald today and a number of people have been in touch to ask what can be done to ensure a fair distribution of EU farming subsidies. This question of course is exercising Richard Lochhead as he finalises the details of the subsidy system that will kick in in 2015 and run until 2020. There are a number of competing interests to be squared and his task is unenviable.
I have blogged in the past about “capping the CAP” here, here and here. Capping involves placing a ceiling or cap on the amount of subsidy given to any one farming business. The European Parliament voted that capping be mandatory but the Council of Minsters took the view that it should be left to Member States to decide for themselves and that means, in the UK, that the devolved administrations have complete discretion as to if and how they apply such a measure.
During negotiations of the CAP, the UK and Scottish Governments were opposed to a cap but back in 2011, Richard Lochhead admitted that “the public did not like the idea of very big payments going to individual farm businesses and many of the farmers he had spoken to across Scotland had acknowledged that.”
I argued in February 2013 that existing payments were very unevenly distributed. The graph below shows the total for 2011 (the distribution for 2013 is very similar).
If payments were capped at £100,000 per farm business, then this would, in 2011, have enabled the redistribution of £53.9 million paid to 813 farmers.
On the basis of the 2013 data, over two-thirds of the total direct payments went to 21% of the recipients (3962 farm businesses). A total of 642 farm businesses received payments of over £100,000 and capping the basic payments at this level would recover £66.2 million per year for redistribution.
No farm business needs a subsidy of more than £100,000 or, if it does, it does not deserve to be in business. I would, in fact place the cap much lower – at £50,000. The Scottish Government consultation noted (page 13) that,
If we wish we can decide that there should be a bigger reduction on Basic Payments than the 5% which is required by Europe, including a total cap on the size of future Basic Payments. Reducing the potential size of future payments in this way might also help tackle slipper farming where entitlements to high value SFPs have been transferred and are currently being claimed on rough grazing. Imposing higher levels of degressive reduction or even a total cap on the size of future Basic Payments could be one way to limit the future size of payments to slipper farmers who meet any minimum activity requirement. Without a tool such as this, these claimants could continue to claim a relatively large share of future support until payments become fully area-based. (my emphasis)
Consultees were invited to express a preference for one of four options but none included a total cap of less than €500,000.
Most people understand the concept of a cap and, whilst the the £26,000 per year benefits cap is controversial because it relates to some of the poorest members of society, the same cannot be said, generally speaking, of farmers. There are some poor farmers of course. There are many who work long hours for poor rewards. There may well be some who rely on benefits to feed their family. But this need does not extend to Sheik bin Rashid Al Maktoum, the Earl of Moray or Viscount Cowdray.(1)
There is no justification for paying any farm business, including (as the previous blog noted) large landowners, much more than twice the cap on benefits received by the poorest in society. Furthermore, the current system of subsidies is contributing to a growing concentration of ownership and occupancy of land when the Scottish Government’s land reform policy is to see more diversity and have many more people owning land. Excessive subsidy (indeed any subsidy) also pushes up the price of land. Subsidies, in general are a bad policy but we are stuck with them.
£50,000 a year. What do you think?
(1) See previous blog to download Excel file of 2013 recipients of farm subsidies.