EU rural development scheme redirects £1 billion to UK green farming schemes

The UK Government will use the redirection of EU farming subsidies to spend £1 billion pounds on 'green' farming schemes in England over the next seven years. Another £600 million will be spent on modernising and restructuring farming industries and on supporting off-farm rural development.

The Government plans to spend £580 million of the £1 billion earmarked for ‘agri-environment’ schemes on the Countryside Stewardship Scheme, a scheme that pays English farmers to bring about environmental improvements (see related story). £139 million will go towards organic farm conversion; a further £30 million will be allocated for the growing of energy crops; £85 million for woodlands on farms, plus a £22 million increase in the Woodland Grant Scheme.

By 2006/07, total expenditure on rural development will rise to £295 million for England and spending on agri-environment will be double the current level.

“The Government is committed to reforming agricultural supports so they are less distortionary and more closely reflect the public benefits that agriculture provides,” Agricultural Minister Nick Brown told the House of Commons. “We want to offer farmers constructive help to enhance and diversify their businesses in response to changing market circumstances.

Apart from agri-environment schemes, the remainder of the funds will be spent on improving the marketing of agricultural products, environmental land management training for farmers, promoting rural development and assistance for hill farmers.

The Government will fund the schemes through the EU Rural Development Regulation (RDR) – the second pillar of the Common Agricultural Policy. Part of the UK’s RDR funds will come from money already allocated to existing schemes by the Ministry of Agriculture, Fisheries and Food (MAFF), and the rest will come from EU allocations and the redirection, or ‘modulation’, of production subsidies paid to UK farmers under the Common Agricultural Policy (CAP).

“The Rural Development Regulation represents the long term future of public support for farm businesses and the rural economy,” Brown said. “It presents a significant opportunity for improving the rural environment and the countryside landscape. It demonstrates the Government’s commitment to rural communities and will set the agenda for further reform of the CAP in years to come.”

The £1.6 billion for English farming represents a 60% increase in spending over the next 7 years. The devolved administrations of Scotland, Wales and Northern Ireland will set out their own plans.

The increased expenditure will be drawn from four sources of revenue.

  • EU allocations to the RDR. An initial EU allocation of £100 million for the Rural Development Regulation. This figure is set to increase by 30 per cent in 2001. A further increase is possible when the allocations of EU rural development funding are reviewed in 2002, according to Brown.
  • ‘Modulation’ of production subsidies into the RDR. In 2001, 2.5% of the £1.6 billion in production subsidies paid to UK farmers under the CAP will be ‘modulated’, or redirected, into the RDR. This will rise to 3% in 2002, 3.5% in 2003 and 2004 and 4.5% in 2005 and 2006.
  • UK Government funds to match the modulated subsidies. Each pound modulated to the RDR will be matched by an additional pound from the UK Government
  • Existing UK Government funding. MAFF funding already allocated to existing schemes will become part of the Rural Development Regulation. Similar budgets are held in Scotland, Wales and Northern Ireland.

Environmentalists generally welcomed the new RDR allocations. “Christmas has come early for the countryside,” said Baroness Young of Old Scone, Chairman of English Nature. “It is the most important decision on the countryside for 20 years and the biggest cash injection into saving our wildlife ever. For farmers trying desperately to cope with hard times this is a lifeline.”

The Royal Society for the Protection of Birds (RSPB) greeted the move as a way to bring extra cash into the RDR and to cut subsidies. “Compared to the £3.5 billion currently spent on agriculture each year in the UK, the RDR is grossly underfunded. By using modulation, the UK Government can shift money away from environmentally damaging production subsidies into schemes which will produce a range of benefits. The EU argues that these subsidies are needed to ensure not just the production of food but also the maintenance of rural communities and the management of the countryside. Yet the bulk of CAP subsidies have remained focused on production rather than on delivering a range of economic, social and environmental benefits in rural areas. Using modulation to build the RDR is an important signal that the UK is genuine in wanting further reform of the CAP.”

The RSPB has however rejected the idea put forward by George Monbiot in a comment piece in The Guardian that cutting farmers’ subsidies will harm small farmers much more than large farms. Monbiot argues that although large farms need less state help than small ones, the same percentage will be taken from all farmers. In a letter to the same paper, the RSPB’s chief executive Graham Wynne says production subsidies work against small farmers by allocating money on the basis of acreage or herd size. “Shifting subsidies away from production and into ‘green schemes’ to the tune of £230 million each year is a major step towards a much more equitable system for all farmers,” Wynne writes.

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