Tuesday, 24 April 2012

The Single Payment Scheme. Who Does it Really Subsidise?

It’s that time of year again, a couple of days spent in the office checking areas, split fields and where we’ve sown what to gain another big fat yearly cheque from the Rural Payments Agency for essentially doing what we do which is to, “Don’t Change and Carry On”. 
I find it difficult to defend the Single Payment Scheme amongst non-farmers as I find the arguments against it pretty compelling. Environmental payments I can stand behind until the Corncrakes come home, but a payment for just being a farmer, ‘fraid not.
Our argument that the payment subsidises cheap food really doesn’t wash, it actually makes food more expensive and will continue to do so unless it is properly targeted in the next reform.
Currently the scheme subsidies the fertiliser industry, it subsidies the agrochemical industry, and it subsidies the sales of overpriced new tractors and combine harvesters. As soon as those devils see an opportunity in our gross margins they leap in with unfathomable price increases and they steal the payment from us. As for land values, don’t get me started. The sad thing is, its us who let them get away with it.
When commodity prices are poor those who would lift the payments from our pockets lie low, but as soon as we start making any kind of profit the real subsidy sharks come and snatch it from working farmers hands, and for the past two years they have been having a bonanza.
Money that should be going into diversification projects that help to wean us from our addiction go to the real agribusinesses that we will never be able to compete with.  The UK farming business model is severely flawed.  
Sure, the NFU slaps the hands of the fertiliser boys occasionally, but they know what you can afford to pay because they’ve had a little look in John Nix or the latest report from your friendly land agent and they can see that everything is rosy. The same goes for the agrochemical industry, they leave us just enough to keep us coming back for more.
The machinery manufacturers have completely carved the whole game up by arranging that none of their dealers can offer a discount out of their area making it impossible to get any meaningful alternative quote. We are completely and utterly stuffed by them and in fact it needs a proper investigation to see how the whole game is cooked up. BBC Watchdog, are you listening?
Given what most of us have spent the money on, it amazes me that these payments in their current form have gone on for so long. You would have thought that since the start of the Single Payment Scheme in 2005 when the whole not-for-production-payment came in, that we would have used the cash to diversify into non-farming areas to replace that payment. It’s job should have been done. It’s not as if they even asked us to go cold turkey like our New Zealand friends, we are in our ninth year of it and there is a new scheme coming along any time soon.
Okay, so will I be claiming my 2012 Single Farm Payment? Yes, because like all junkies I am addicted but I want to be cured. I also want to be protected from those opportunists who seize every means to temp me away from my chance to reinvest and diversify. I need to be protected from myself.
It seems to me that the only way we are going to be able to wean ourselves off this dependency is to only be paid if we actually do something for the money. That means stepping up to the mark to put some gravitas behind that often quoted phrase that we farmers are the "Custodians of the Countryside". Although the threatened "greening" of the proposed CAP changes hardly touch that remit, it is a start. 
It is naive to think that we can continue to be paid in the way we are in these times of austerity without giving some public benefit for the money we receive. 
I see the greening element as a way of not only protecting a payment that the general public can accept as giving some public good for the long term, but also as a way of making us change management practices to get the payment, which may persuade us to use it for the long term success of our businesses rather than giving it away to those who would lift it from our wallets for short term gain. 
For the National Farmers Union website


  1. It's not only the suppliers who can read John Nix and all the other costings guides. The buyers can, and price accordingly which means they are treating the SFP as a contra against the cost of production. Increasingly sophisticated pricing schemes are looking at purchasing on a 'cost plus' basis, ie pitching prices at a level which just makes it worthwhile for the more efficient producers to grow and sell. These can be sold as a benefit to farmers because they claim to recognise the realities of agriculture and should provide a modest margin when input prices are high, but we have also seen the effect with milk for example when price per litre goes down in pretty quick response to reductions in some input costs. In that way, maybe SFP does subsidise the cost of food but to what extent is this offset on the input side?

    What we do certainly seem to be left with is the farmer and consumer both as hostages to the economic vagaries of the support mechanism. In the short term I wonder what the impact on rapid withdrawal of SFP would be on the price and availability of food, farmers, and the structure of the support industries?

    The real challenge here in my view should be to manage the transition away from SFP with minimal casualties amongst all these groups while maintaining a healthy agricultural industry capable of feeding as many of us as possible as healthily as possible.

    1. My view is that the payments should be targeted towards "active" farmers and to be paid into projects that encourage farming businesses to diversify to provide extra income streams. Ideally they should be linked in some way to the farming business so that an easy sell off can not be easily achieved. They should also target environmental work which can be tailored to local specific needs with advice from conservation groups, say FWAG.