Single Farm Payment – a lifeline for farmers or a waste of money?

06.12.12 Single Farm Payment discussion archive

Participants from 8 countries joined in to tweet on the topic of Single Farm Payments. From the UK, the majority of respondents commented that there were noticeable improvements in communication and prompt payments from the RPA compared to recent years, and although cross compliance was seen as a hassle it was generally accepted as par for the course for claiming.

A move back to production based payments was not seen as the way forward, though the incorporation of more environmentally based payments within the SPS system was predicted to become more important.

Without SFP it was accepted that food prices would inevitably rise, and the delay in agreeing the next CAP round has led to feelings of uncertainty amongst claimants and those in farming in general about what the proposals may mean for them.

For the next generation, it was accepted that the dependency culture of farming on subsidy had to be broken in order for sustainable business practices, and that farming without SFP could potentially lead to new opportunities with a more level playing field.

The discussion held on Thursday 6^th December 2012 looked at the topic of “Single Farm Payment – a lifeline for farmers or a waste of money?” and generated a total of 637 tweets on the topic from 77 participants. These included farmers, agri-food businesses, rural advisors, land agents, lawyers, journalists, academics and NFU officeholders.

A full summary of the discussion can be found here:

http://storify.com/AgriChatUK/agrichatuk-single-farm-payments-lifeline-for-farme

Q1 Are RPA & other agencies getting better with customer service and payments? What’s your experience this year?

• Yes they are getting better, and so they should, majority farms little changes, they have less to do, in theory
• Yes at last although dual claims seem to be holding ours up!
• They have indeed but it’s taken 7 yrs & the scheme changes soon so will we go back to sq one again?
• INFO: Bulk of farmers have received their single farm payments http://www.fwi.co.uk/Articles/06/12/2012/136601/Bulk-of-UK-farmers-have-received-farm-payment.htm
• Been doing our SPS online since the trial began, it is very easy to use and this year was a big improvement. Ours is in the bank
• We are seeing better communication, bespoke letters on issues and problems helps
• Betterish ! I think there could be a lot more thought put into how farm data is exchanged with the RPA, investment in systems
• Customer service not good treated as inferior people
• Much better but must confess to seeking out the people who I know will understand query within such organisations
• Completed SPF on-line since we started and it’s worked ok every time. This years is in the bank. Easy with stored data.
• RPA now aiming to turn around business change investigations in 5 working days if all information is there
• Doesn’t really matter to me as we get little but Scots historic system means most has been paid already
• Still waiting for outcome of March 2011 appeal asked for info for last year’s SFP no hope for this year?
• Local bank manager reckons 70% of clients payments made already but he isn’t expecting the rest til May
• 7 month payment window has never helped in this respect, that is most of a farming cycle

Q2 At what point does the cost and hassle of cross compliance make the SFP not worth claiming? Are we there now for some farms?

• Can’t see govt letting SFP fall to that level for majority, too much control, and too many jobs at stake
• Cross compliance is a mirror image of the existing law in many respects. You can’t truly opt out
• It is not just current cross compliance but also what might be added to the obligations
• Joke? Cost of cross compliance minute compared to SPS+pollution rules etc mean legal sanction if do not comply
• One thing is for sure RPA and other agencies will have to go online, its part of .gov’s drive for cost efficiency in the system
• I know of several farmers who have sold entitlements as a result of cross compliance penalties and are farming without them
• Remember most of Cross Compliance is riding on the back of other Legislation…. Hedgerows Act, Weeds Act, EIA Regs etc
• I don’t claim SFP, (form fill 4 those who do) reckon its v.nice not wondering when inspector is goin 2 turn up 2 mess up day
• I would love to be able to “not bother” with sfp,not sure my landlord would agree,rent=sfp too often
• I see many intensive dairy units starting to question what they get for cross compliance
• I expect some big units might have been asking that question, but the weather this year is a reminder of what can happen
• When your closed up with TB its very nice to have some money in the bank! Think it’s worth the paper work!
• We’re small, new and got an inspection. I asked the inspector if we could opt out? Funny, the complexion of the meet changed.
• When you sign up to SPS Inspection comes as part of the package. How it is done is key for us

Q3 There’s a world food shortage. Is it time to switch back to production based payments as some suggest?

• No, use SFP as an environment payment to buy non market benefit. Market for farm profit
• Wouldn’t going back to production based payments be going backwards!
• Research shown production based payments going has not changed 60% farmers- farming to business not subsidy?
• No. When that was done before it created a numbers game which reduced quality.
• I wouldn’t want to see a production based link for SPS. We need to return a profit from the market.
• It’s the public’s money, has to be used for what they want!
• This may be a bit out there but why not scrap SFP’s cut the cost of SFP from public tax and get paid the right amount for the product on the first place that way people who own land but down farm cant scrounge off the government or am I mad!
• SFP is really important for farmers. In UK direct payments are 30% of income. http://ec.europa.eu/agriculture/cap-post-2013/graphs/graph4_en.pdf
• Trying to fix the SFP system is just trying to cure a symptom. Need 2 fix the imbalance of power between prodn and retailers.
• How about production based payments integrated with environmentally based payments? Any production needs to be sustainable
• Production payments will create short term food increase. Cost of production will increase quickly also.
• If farming is profitable without SFP, more businesslike, then environmental payments will be even more important

Q4 Could UK farms be competitive against our European neighbours if SFP’s were scrapped?

• If no SPS, would land values/rents drop? Many businesses borrowed against value. If no SPS, still have regs.
• Only if rest of EU followed suit & regulations were also equal let’s not even mention NVZ rules!
• Only if the market is deregulated also. Won’t happen here due to ecological lobby.
• If you can get WTO to agree, then it could be an option.
• If you get lost in the quagmire of bureaucratic EU lingo on the CAP, this glossary is really handy http://ec.europa.eu/agriculture/glossary/index_en.htm
• And then there are UK unilateral welfare regulations. Level playing field?
• What is SFP actually for? Compensation for lost profit? Environmental maintenance payment? Need this defined
• So long as land occupancy is key to payment of SFP, the value will be in the land
• UK farms can be competitive with Europe, but food prices need to rise. Food is too cheap for what we go through to grow it
• SFPs are needed because people no longer value food for what it costs to produce? If they did, no subsidy needed?
• Pillar 2 funding should cover Enviromental schemes. SPS = market stabilisation – ?
• Cutting unnecessary red tape needs to happen too, to get to similar place to E Europe

Q5 Direct subsidy to farmers in New Zealand was phased out in 1984. What can we learn when we look at their industry now?

• NZ now far more competitive and innovative. Best global marketers of their produce. Most focused on profit
• When NZ subsidies were withdrawn (overnight) in NZ, there was huge industry pain! R U prepared 4 that pain? What is the risk?
• INFO: In NZ, farmers don’t want subsidies and are better off without them according to Federated Farmers http://www.huffingtonpost.com/mark-ross/farm-subsidies-new-zealand_b_1680259.html
• The circumstances there are too different from ours to copy them. The government will not grant other freedoms needed
• I don’t think the industry or the public are prepared for the pain of SPS withdraw
• I believe NZ Bank interest rates went up too when Farm Payments were withdrawn?
• Met farmer in NZ, explained subsidy removal was part of wider economic reform. He had a farm to pay for at above 20% interest
• It was very painful at the time but has created robust business that make decisions based on profit
• Farmer marched/rioted on parliament, mortgagee sales, communities crashed. Then we rebuilt in a real world.
• The answer is a resounding yes if the UK farms concentrate on comparative advantage
• Could argue that SFP stifles innovation. NZ had some tough times but is world leading exporter of dairy produce
• We could be profitable without sfp,but food prices would rise, not popular ,or likely to lead to a govt being reelected
• NZ’s location means huge logistical challenges to get produce to markets, yet we export 95% plus

Q6 Does the historic approach to SFP give competitive advantages to Scottish/Welsh farmers over English farmers?

• Depends what you were claiming in the base period. It has kept land prices high as there is no incentive to retire.
• CAP payments should be common (i.e. the same value) across the EU single market
• As 2019-2020 comes closer the move to flat has to happen across board realistically then it could bite in hist areas
• Certainly difficult to see what justifies them being so different e.g. between Greece and England or Latvia
• Not really as it is historic. More expanding and new farmers produce with no subsidy retained
• Fairness across EU key, single market, Nationalised CAP does not give that
• I see the welsh now claim they need another 10 years to get to where we are… Surprised? How can new entrants get parity?
• Stifled the market, supports laziness idiocy and waste. Historic payment is a disaster. Old men cling on too long
• We already have parts of UK and EU effectively one CAP Reform behind others…

Q7a The EU budget is far from agreed and CAP proposals suggest shake up for direct payments. What does this mean for your farm?

• Hasn’t it been shown that the consumer would benefit more from the removal of farming subsidies?
• Uncertainty
• We are seeing uncertainty, business frightened to make decisions, we do need clear messages to come out to assist
• For us it’s the issue over greening. We are in ELS/HLS and current proposals threaten these. Greening to P2.
• More greening, more bureaucracy, more confusion
• We’d have to give up farming altogether if had to give up sub
• When we get new payment I joked about a Range Rover but I will buy out dead neighbours and expand. More land
• INFO: Across the water in the US level of direct payments to farmers is changing too – take a look http://www.reuters.com/article/2012/12/04/usa-agriculture-farm-bill-idUSL1E8N3GAY20121204
• Many would struggle in the interim period between subsidy ending and price increases
• Will payment be balanced against requirements? Work/material costs more than ELS/HLS schemes allow for
• A big cut in sfp would be hard to cope with, unless the payoff was enhanced envt payments that we could work with, not ideal

Q7b What would any withdrawal/drastic reduction in SFP have on rented land market? Should my landlord be nervous?!

• INFO: Take a scan at this – ‘How can direct payments be justified after 2013 by Prof Stefan Tangermann http://www.reformthecap.eu/blog/how-can-direct-payments-be-justified-after-2013
• Already causing some estates in Scotland to keep land back from letting until details of post 2014 (now 2015!) established.
• There would only be a small dip in main lowland areas, as competition between FBT tenants is strong
• Only if the paying customer is not prepared to pay the true cost of prodn for the food that is produced by their tenant
• Yes yes yes! Over 65% of my Sfp claim goes directly to landlords on top of a fair rent
• Three things have to happen rent down, inputs down, prices up. Figures will not stack for bank
• Lairds should be nervous in Scotland not just of the CAP change active farmer rule but land reform too.
• CAP has to scrap subsidies over ten years. Allow businesses time to restructure and opportunity for new entrants
• High rents, driven up by subsidy, encouraging institutional investors into land again and driving up land values and costs

Q8 Final thoughts – are single farm payments a help or a hindrance for the next generation in farming?

• Already diversified to ensure farm can provide for 3 generations and succession
• SFP and tax credits keeps many farms, particularly upland units, viable. Without this more opportunity for new entrants.
• I think the next generation are very aware that a business should not be financially reliant on subsidies
• If there was a clear path to SP reduction it shouldn’t affect next gen. The issue is with the uncertainty
• An irrelevance unless you are purchasing land
• We desperately need new entrants, but where are they?, sps is a block to mainstream commodity farming,they have to specialize
• A hindrance as they keep rents and land prices artificially high.
• Dependency culture not sustainable. Need short term support and large scale reconnection of people with value of food
• Complicated bent hindrance, scrap them before start passing wrong skills on to next gen
• Agree, keeps many old boys in industry (a pension) and it (among other things) limits opportunity
• Is this another generation further removed from real markets, real production and real costs? What is the risk of this?
• We should make a profit from farming, not sub chasing. But those subs are worth money and brave not to use them.
• We have an imperfect market place and also the market does not provide for many things farmers do, which all benefit from
• Hindrance, administration nightmare, move to free market with new entrant support
• I farm in own small way without SFP and make profit. Those who can do it now will be industry leaders 2morrow
• Regulation and certification is a financial burden on new entrants not allowed peer education!
• In theory it could be an opportunity. Landlord takes SFP as rent, New Entrant get land FOC. Good long term relationship?
• Any land available for rent here would command 2 to 3 times sfp! Keeping new entrants without a lottery win, out

Simon Haley, Reading Agricultural Consultants and Alan Spedding, 11 December 2012