Annex D
Submission to the Defra consultation process
on CAP Reform in Northern Ireland from the National Beef Association
Preface
The National Beef Association is a UK based
organisation. Its operations in Northern Ireland are governed
by its Northern Ireland membership through its Northern Ireland
Council and statements on their behalf are made by NBA Northern
Ireland.
Its membership includes 28 affiliated pedigree
breed societies, most of which have branches in Northern Ireland,
as well as commercial breeders and finishers who farm in the Province.
With the exception of observations on the decoupling
of dairy premia, which it thinks should be adopted from 1 January
2005, NBA Northern Ireland will confine its comments on the implementation
of the EU Common Agriculture Policy to issues relating directly
to the beef sector.
Summary
The National Beef Association in Northern Ireland
believes it is essential to make the adoption of CAP reform as
simple as possible for farmers because this will make it easier
for them to adapt to post-reform management conditions and deliver
what is required of them in both market and environmental terms.
It is our firm belief that this simplicity should
embrace full de-coupling—with no unnecessary complications
through failure to jettison all the beef industry's coupled baggage
through any partial retention of coupled schemes.
We also believe that over the first years of
the CAP reform period beef farmers will be better able to develop
and achieve economic and environmental sustainability if they
can retain as such of their Single Farm payment (SFP) as possible.
This means we could not support the immediate
adoption of any national beef envelope schemes because their complications,
which we detail later, would be out of balance with the financial
benefits for businesses at which envelope funding is targeted.
And of course those businesses which would not
receive envelope payments but had nevertheless contributed to
the funds, would be deprived of the portion of SFP they had surrendered
and therefore be less able than they otherwise would have been
to establish profit making businesses by 2013.
Fundamental to the NBA's position on the simplest
possible approach has been its support for historically based
allocation of entitlement.
After close discussion with the Minister and
officials it has accepted the Department's case for the adoption
of the least damaging hybrid option—which is essentially
a package which delivers an average of 80% historical entitlement
allocation and 20% area based over Northern Ireland as a whole.
But could not agree to any higher proportion
of area based allocation over historical at any stage over the
next ten years because it remains certain that the long term position
of calf breeders in the LFA's can be secured through modifications
to the hill support system and new, national modulation, schemes,
match funded by government without resorting to any additional
increase in the proportion of entitlement allocation that is area
based.
This is because its primary objection to any
historical/area based hybrid is that it is more costly and more
complicated than 100% historical allocation, provokes potentially
unhelpful redistribution of SFP between breeder-finishers and
specialist breeders and also results in beef sector money being
lost to dairying and sheep.
On top of this it still considers that any hybrid
allocation will make it more difficult for relatively intensive
finishers, and breeder finishers, with larger, and tighter stocked,
holdings numbers to meet heavy cross compliance conditions—particularly
in respect of dirty water disposal and animal welfare.
Nevertheless, as previously indicated, NBA Northern
Ireland is happy to accept the vertical option two hybrid as outlined
in the secondary consultation paper providing the proportion of
SFP allocated on an area basis does not increase at any time,
or in any way, over the next 10 years and no unforeseen complications
arise which could force the Association to reconsider its position.
For example we have accepted the average 80/20
hybrid on the assumption that the allocation of area based entitlement
on conacre will not prevent the owners of historically based entitlement
from triggering all their entitlement claims—even those
acquired through the ownership of stock occupying conacre during
the 2000-02 base years—and although it is understood there
will be no problem with this we will only be sure after the European
Commission has released its implementation rules.
We also believe that examination of the potential
for Rural Development Funds (RDF) should, like national envelope
schemes, be deferred until any shortcomings in the post-CAP reform
system are exposed and RDF (or envelope) money can be more precisely
targeted.
Should Northern Ireland opt for full decoupling
in the beef sector?
Retention of coupling to production linked subsidy
regimes flies directly in the face of the philosophy that has
driven the CAP reforms—which aim to encourage EU farmers,
including those in Northern Ireland, to establish genuinely profitable
businesses using a decoupled support system before weaning them
off Pillar One subsidy payments completely by 2013.
NBA Northern Ireland therefore believes that
if the Department of Agriculture takes advantage of the option
for temporary partial decoupling then Northern Ireland farmers
would be given less time to adjust their businesses to decoupling,
and ultimately no general support payments, than other areas of
the UK where full decoupling will be adopted from January 2005.
We are therefore hoping that the Department
will acknowledge the overwhelming need for Northern Ireland's
beef industry to prepare itself for life without mainstream Pillar
One aid payments in little more than 10 years time and accept
that immediate full decoupling, including the complete removal
of SCP, from January 2005 is the most sensible of the available
options.
We are aware of speculation that full decoupling
could provoke an unwelcome, but unspecified, drop in Northern
Ireland's beef cow numbers which could undermine the ability of
the processors in the Province to supply existing customers as
well as develop new markets for higher value beef sold under a
Northern Ireland label or labels.
However one of the most obvious advantages of
full decoupling is the abandonment of the empty heifer rule contained
within the SCP payment, which would immediately increase the proportion
of suckled calves born to the number of cows available to be mated
because if full decoupling was adopted from January 2005 there
would be no direct encouragement for up to 40% of breeding females
not to be put to the bull.
We believe that over 2003 perhaps 20% of the
females making SCP claims are un-bred (compared with 17% over
2003) and the proportion could rise still further over 2004. Clearly
once the empty heifer requirement is removed there is a strong
possibility more cows will be mated and a very good chance that
anticipated cow number reduction provoked by decoupling will at
the very least be countered by an increase in suckled calves born.
Other advantages for the beef sector of full
decoupling include the possibility that a number of new, quota
free, cow herds will be established on marginal dairy farms that
have given up the struggle to survive on poor milk prices—and
the many of these will be breeding/finishing units rather than
breeding-only farms.
If this proves correct Northern Ireland's strategists
will be faced with some redistribution of the beef cow herd with
a possibility of increased numbers in lowland areas and perhaps
less in the LFA where not all specialist breeders may be able
to adjust to the new management conditions—although many
will be aware that herd reductions will raise the weight of fixed
costs and overheads carried by each remaining cow and therefore
tend to hold current cow numbers.
In view of this, and the economic and environmental
advantages of retaining as many beef cows as possible in high
ground areas, NBA Northern Ireland believes that despite its recent
acceptance of the (average) 80/20 historical/area based allocation
of entitlement, additional measures should also be taken to encourage
beef cow presence in the LFAs.
There may be a number of ways this could be
done through the modifications to hill support payments. We do
not favour the use of the national envelope mechanism, or further
extension of the proportion of area based allocation of entitlement,
to support high ground suckled calf production and will explain
our reasons more fully later.
Opportunities to manage farms more flexibility
so production can be aimed more closely at the market also point
to positive beef farmers in Northern Ireland feeling more encouragement
under decoupling to keep up active breeding cow numbers than they
would if they were forced to stick with SCP.
However we do not believe there will be a an
overall lift in cow numbers immediately after 2005 because there
is little room for expansion as a result of Northern Ireland being
stocked almost at maximum levels at present.
More focus on quality calf breeding and a rise
in market prices (a lift of 10% is expected in the ROI) provoked
by lighter beef cattle slaughterings at EU level coupled with
continued lifts in EU consumer demand for beef, may in the end
encourage a rise in cow numbers—especially if additional
environmental support, possibly through Pillar 2 incentives, is
aimed at cow herds in the LFA.
The beef sector of course faces many other temporary
difficulties over the next two years—the main ones being
the re-emergence of older beef onto the market in autumn 2004
and the continuing ban on beef exports.
Hopefully each of these, which are the key to
establishing a confident attitude among beef farmers as they face
up to the management adjustments that will be necessary after
CAP reform adoption in 2005, could be resolved before the end
of autumn next year.
However these short term problems should not
be allowed to obscure the many advantages full decoupling has
over partial decoupling because the rationale behind the CAP reforms
is that decoupling is the only means available to lift beef production
off the dead end spike of coupled support and negative annual
accounts—and exchange it for economically and environmentally
sustainable production systems that have a genuine long term future.
We can say with confidence that the overwhelming
majority of beef farmers are looking forward to managing their
business under a fully decoupled support regime.
If not, which partial decoupling option(s) should
be chosen and why?
No answer needed.
Should NI decouple the dairy premium in 2005 rather
than 2007?
If decoupling within Northern Ireland was synchronised
on a cross-sector basis it would make it easier for agriculture
to adjust to the management freedoms offered by the Single Farm
Payment.
We believe a number of businesses will be better
able to consider their options for long term survival if the fullest
possible range of choices is available to them. This would be
impossible if dairy decoupling was delayed.
We would like to encourage the Department of
Agriculture to introduce dairy decoupling in 2005 so more businesses
are offered more choice about their best pre-2013 management options.
We are of course hoping that some dairy farmers
will take advantage of full decoupling to move into beef production.
Are there environmental or marketing issues which
could usefully be addressed by making use of the national envelope
provision?
A wide range of national envelope options funded
through the retention of up to 10% of direct payments from each
sector can be used to encourage land management that is important
for the protection and enhancement of the environment or to improve
the quality and marketing of farm products.
NBA Northern Ireland notes however that retained
funds can only be used within the sector from which they were
taken and so our current view is that it would be a mistake to
immediately introduce these in the beef sector—although
we are aware that many organisations with environmental specialities
think otherwise.
Our reasons for this are similar to those we
will advance in the section on historical or area-based entitlement
payments where we will re-emphasise our conviction that if the
proportion allocated to the area based distribution of entitlement
exceeds 20% then 100% historical distribution is the only other
possible choice.
We believe the beef sector faces a uniquely
difficult period over 2005-06 when the problems of adjusting to
decoupled subsidy will be compounded by the return of older beef
onto the market and likely delays in re-opening export markets
and that these difficulties will be aggravated if the SFP is reduced
to fund national envelope projects.
Indeed we are certain that beef farmers, particularly
suckled calf breeders, will be less likely to reduce their cattle
numbers to levels that could threaten landscape and habitat protection
in key areas if they are able to use their SFP to adapt their
businesses to post-CAP conditions.
We also think that the requirement they maintain
their farms in good agricultural and environmental condition under
cross-compliance offers the Northern Ireland taxpayer a firm baseline
guarantee that grassland on beef farms will be well managed as
long as the SFP is sufficient to allow this—which it may
not be if some of it is retained to fund envelope schemes.
In contrast we are extremely interested in how
match funded national modulation could develop.
We note the Department wishes to take views
on this under a separate consultation but would nevertheless observe
that we see match funded, national, modulation as a means of reinforcing
a sound environmental base to beef production—especially
if it is incorporated into hill support where it could encourage
more mixed stocking on higher land and help to counter the reduction
in suckled calf income faced by breeders after anticipated BSP
and SP are no longer included in the calf's purchase price.
We are also aware that up to 10.5% of the SFP
would have to be directed into national modulation in Northern
Ireland to secure EU and UK match funding in the first year.
We do not object to this because match funding
will swell the budgetary pot and in the vast majority of cases
SFP deductions for modulated schemes will be returned to beef
farmers through different channels leading to a situation in which,
even if there is little overall net gain, there will be only a
minority who will be significant net losers.
However up to 3% of SFP will be deducted to
fund the national reserve and if a further 10% is retained to
fund national envelopes aimed at encouraging good farm practice,
rural enterprise marketing, preventing land abandonment and reinforcing
clean water regulation then the overall capability of the beef
farmer to maintain his land in good agricultural and environmental
condition will be weakened because direct SFP payments may only
be 73.5% of the maximum if modulation is included—and could
be even less in later years as modulation deductions increase.
We therefore believe that because projects,
or schemes, constructed using envelope funding will have a narrower
base than modulation they will produce a much wider range of net
losers and more beef farmers than we would like would have to
manage their businesses with significantly less income than they
received under the coupled subsidy system and will therefore find
it more difficult to embrace the freedoms offered them under decoupling
and develop enterprises that will be profitable in the long term
as well as deliver improved ecological management.
As we indicated earlier our reservations are
compounded by the fact that funding for envelope projects can
only be assembled from the sector at which it will be directed.
Essentially this demands that a sector that
will have difficulty adjusting to CAP reform, and we are certain
some upland and lowland beef farms—especially those that
pay labour—will face difficulties, will have to contribute
to its own repair.
In these circumstances we believe it would be
counterproductive, both in terms of the environment and of the
sustainability of the rural economy, to ask the beef sector to
immediately give up SFP to national envelopes and a much better
idea to allow beef farmers to keep as much direct control as possible
over their SFP so they can more easily make immediate adjustments
to post-CAP reform conditions.
If envelope funding could be assembled from
a wider base because preventing grassland deterioration was seen
as a national, rather than a beef sector, problem we might be
able to reconsider this—especially if re-examination was
conducted after there had been time to assess the reaction to
reformed CAP management systems and the areas where help may be
needed through national envelope projects are more easily identified.
We are aware that representatives of environmental
organisations would like to construct envelope schemes in anticipation
of likely problems.
However we think these will be fewer if farmers
are able to receive as much SFP as possible and be allowed to
demonstrate, because they know their land and its capabilities
better than anyone else, that in their hands it will deliver a
much better national return than if it was used to fund a relatively
narrow range of highly focused envelope schemes instead.
Indeed we believe that many of the cross-compliance
requirements, notably clean water and habitat protection, could
be further emphasised within a national envelope system and lead
to unnecessary duplication.
With this in mind NBA Northern Ireland would
prefer carefully thought-out cross compliance measures, which
should give adequate initial cover on a range of issues, to be
formulated. A quick review of these could be conducted over 2006-07.
Should gaps in the cross-compliance framework
emerge on a regional or land type basis then it is possible that
these could be filled by well-targeted national envelope initiatives,
but we would urge the Department of Agriculture to suspend its
ambitions for national envelopes in the beef sector until the
effectiveness of cross-compliance measures can be assessed.
We are also anxious to avoid the re-coupling
of farm management to a new range of non-headage based management
incentives.
It seems to us that the very welcome freedoms
offered to farmers to manage their businesses under the decoupled
system are in danger of being either obstructed or dissipated
by the construction of an alternative range of inducements which
could, if we are all not careful, result in farmers seeking to
increase their incomes by seeking financial security by falling
in with, or re-coupling to, new, non-headage-based subsidies (if
we can use that term loosely) instead of using the greater flexibility
decoupling offers to prepare their farms for the 2013 target date
when even decoupled subsidy is expected to be withdrawn.
We view re-coupling as a very real threat to
the broad aims that lie behind the CAP reforms because we do not
underestimate the likelihood that many farmers will re-shape their
businesses to draw as much centrally funded income as possible
(even though it will no longer be production based) instead of
re-constructing them so they reach 2013 in a position to enjoy
long term profitability while at the same time delivering the
public goods required of them in terms of agricultural and environmental
sustainability.
There may of course need to be some short-term
encouragements that help farmers take the right direction. However
the touch and the incentive must be kept light otherwise the principal
aims of CAP decoupling will be obscured and obstructed.
We are also getting strong messages from our
Northern Ireland members that they believe national envelope projects,
either constructed singularly so one aimed at a glaringly obvious
area effected some repair or a range of much smaller projects
targeted at a myriad of small objectives, would not just result
in lower SFP for the majority but would also impose unwelcome
inspection and audit procedures.
Should the national envelope be applied to any
specific sector?
The National Beef Association in Northern Ireland
would not like to see any beef envelope projects adopted until
at least 2007—and even then only if there was a glaringly
obvious case for them. (please see above).
How large should the national envelope be (subject
to the maximum of 10% of the sectoral budgetary ceiling)?
(Please see preceding item)
What methods should Northern Ireland use to establish
entitlements under the SPS? Should use be made of the provision
for the modification of the system according to pre-established
steps to progress from one model to another over a set time frame?
Despite its acceptance of the Department's proposal
to introduce a vertical hybrid in which only an average of 20%
of entitlement is allocated through the area based route NBA Northern
Ireland remains fundamentally apprehensive about the core principle
of the area based approach and will object if average area based
allocation is ever more than 20%.
One of the supporting arguments put forward
by the Department for the area based method of decoupled subsidy
payment is that cross-compliance measures are likely to be more
effective if all farmed land is covered by the Single Farm Payment
(SFP).
Another is that the area based approach removes
the uncertainties over recent land transfer that would accompany
the historic approach, which concentrates on occupation over the
2000-02 base years, because entitlement would be shared among
all land occupiers in May 2005.
And if it is accepted that there is likely to
be public criticism of the wide range of Single Farm Payments
under the historic system then area based allocation may be less
likely to be the target of unhelpful comment.
Specifically in Northern Ireland there is also
a view that area based allocation will ease some of the income
difficulties that may be faced by breeders who have in the past
sold unpunched suckler calves but will receive less direct income
under a decoupled support system because the purchase price will
no longer include anticipated Beef Special Premium and Slaughter
Premium receipts.
Nevertheless NBA Northern Ireland, despite the
compromise it has accepted, instinctively supports the historic
approach because it avoids the additional de-stabilisation across
the beef sector (on top of decoupling) which would be triggered
by the re-distribution of funds among primary producers by area-based
entitlement allocation.
The NBA is therefore extremely pleased that
the adoption of simple, area based allocation, is no longer being
considered by the Department because if entitlement was allocated
against an all-sector area average, even if it was subdivided
between grassland and arable specialists, or between LFA and non-LFA,
it would still result in significantly reduced income for the
majority of beef farmers and almost certainly trigger a greater
level of de-stocking than would be the case with historical allocation—which
would make it more difficult to maintain landscape and habitat
protection because the important contribution cattle make to this
would be diminished.
It would also make it harder for forward thinking
beef businesses to bring their production systems closer to the
market, embrace sound agricultural and environmental practice,
and ultimately achieve profitability—all of which lie behind
the European Commission's decision to introduce decoupled subsidies
in the first instance.
We also believe majority payment by the historical
route, by this we mean no less than an average of 80% as outlined
under Vertical Hybrid Option 2, is necessary to protect the economic
sustainability of Northern Ireland agriculture as a whole.
This is because the overwhelming message coming
to us from farmers of all types (not just beef) is that they welcome
full decoupling because of its simplicity.
They also think they will be best able to deliver
the economic and environmental developments required of them if
they are able to retain as much of their SFP as possible and as
little as possible is siphoned off for re-coupled measures such
as national envelopes—although we are aware of an interest
in national modulation schemes which are match funded.
As we outlined earlier the majority view is
that full decoupling (with no re-coupling) will give them the
best chance of modifying their business so they reach 2013 in
the sustainable economic and environmental condition the European
Commission would wish them to.
And the majority also feel that any area based
approach above and beyond the 20% limit we continue to underline
will severely compromise the industry's capacity to meet the Commission's
challenge because it will undermine the ability of committed and
well disciplined businesses built in anticipation of a particular
level of income to modify their development, become more efficient,
deliver the necessary environmental and other public goods, move
closer to the market and still be profitable.
Our own view is that area based allocation above
and beyond the 20% flagged up by the Department in its last consultation
paper is unnecessary because each farm business, including those
lightly stocked and extensively managed LFA (mainly) sheep farms
which would see positive income changes if the hybrid was adopted,
reacted to the coupled subsidy system by establishing an income
level that assured its short term survival.
While those managing farms outside the coupled
payment system, would also have established income levels which
make additional decoupled subsidy income unnecessary for their
continued existence.
Our argument therefore is that there is no need
to heap additional income on the so-called area payment winners
because they do not need it.
And that it would indeed be destructive if farms
that were already in a position to adapt to the new CAP conditions
were given additional area based entitlement, beyond the 20% agreed,
at the expense of farms that had also established a survival level
of income and were suddenly deprived of a significant percentage
of it.
Our other general objection to hybrid allocation
includes concerns that a hybrid mix in which a percentage of historic
payments is transferred into the area based system on an annual
incremental basis would fundamentally undermine the simplicity
of the new fully decoupled (non-recoupled) CAP strategy because
annual redistribution changes would have to be anticipated by
those who would lose income and this would interfere profoundly
with their ability to steer a straight line plan between 2005
and 2013 and develop their farms to meet the many targets expected
of them as a result of CAP reform.
We sincerely hope that the Department of Agriculture
will soon be able to declare that there will be no such incremental
transfer in Northern Ireland and that the proportion of area based
allocation will be permanently frozen at 20%—and we are
looking forward to its confirmation of this.
The argument advanced by some Northern Ireland
interests which highlight their expectation that public criticism
of future subsidy support is likely to be greater if historical
allocation is preferred to area based are somewhat soft and selective—which
we are pleased to note has been accepted by the Department.
It is true that awkward journalists could entertain
some of their readers if they concentrated on the high levels
of entitlement allocated to individual feeder-finishers with particularly
large business compared with entitlement levels received on other
farms or in other sectors.
However stories could be made equally entertaining
if journalists concentrated on the largest (in hectarage terms)
farms receiving big area based payments and made capital of the
fact the land was thinly stocked, possibly used mainly for rough
shooting, but still generated an enormous entitlement sum on a
per holding basis compared with much smaller farms which were
more likely to be intensively stocked.
The NBA's basic argument is that whatever system
is chosen those who wish to be malicious will choose the worst
example they can find and use it to embarrass the industry.
Under the historic system this would be an intensive
beef farm with a great deal of concrete and under the area based
an extensive sheep farm with an unusually large area of very rough
ground. Either way the industry will be attacked and a defence
against this targeting will be impossible to organise.
Other anti-historic arguments put forward in
this area concentrate on the possibility that tax payers will
identify the entitlement differences between various farms, find
them unacceptable and attach them—and that the industry
will be unable to defend itself.
This argument completely overlooks the fact
that different farms will find it easier (or harder) to meet cross-compliance
conditions and that the greatest cost burden on meeting cross-compliance,
particularly the clean water regulations governing slurry storage
and distribution and silage effluent, will be on relatively intensive
farms carrying the most stock.
The costs are therefore much more likely to
be faced by finishers with their sheds and concrete than LFA breeders
with much more extensive land areas and runs completely counter
to the argument in favour of area allocation which centres on
transferring entitlement from finishers to breeders selling once
punched calves most likely to be farming in the LFA's.
Other examples of the most intensive farms carrying
the greatest regulatory cost burden also spring to mind. Meeting
animal welfare requirements will be most costly on farms with
large numbers of animals managed in intensive systems is one—and
there are others.
In these circumstance NBA Northern Ireland believes
that many of the arguments used to support the case for adoption
of area based allocation are contradictory—particularly
as the income problems faced by unpunched calf breeders can also
be addressed without turning the beef sector inside out in an
effort to find a complex solution based on entitlement reallocation
greater than the 80/20 option contained in vertical hybrid proposal
2.
NBA Northern Ireland feels LFA farmers who keep
suckler cows will be able to choose from a number of options which
will help them counter income reductions if they receive lower
prices for newly weaned calves after decoupled subsidy payments
are introduced in January 2005 and the 80/20 hybrid allocation
is also used.
Naturally we would like as many farms as possible
which sold calves without claiming BSP to maintain cow numbers
but believe there are no straightforward ways, including hybrid
systems of allocating entitlement, of making sure that income
from calf sales is maintained.
The worst case scenario is that freshly weaned
male calves could make around £150 less in the ring and those
with just one BSP claim about £85 but a national beef envelope
is no answer because even if it focussed exclusively on hill farms
it could not come up with anything near that level of cash—and
would impose potentially difficult management conditions and inspections
too.
Fortunately it is by no means certain that finishers
will adjust steer calf values back as much as this and there is
also a good chance of a general rise in prime cattle prices when
the advancing decline in EU beef production takes effect and the
export market for UK cattle is fully open.
In the ROI there are forecasts of a 10% rise
in calf values within three years and our own estimates are not
dissimilar.
Should this prove to be the case the rise in
sales income will still fall short of making up the reduction
in unpunched calf prices triggered by the removal of BSP but additional
support for LFA suckler herds could still arrive in the form of
environmental Pillar 2 funding that will pay farmers who graze
cattle on abandoned land, mix more cattle in with sheep and graze
cattle in specific locations at a particular time of year.
This could be encouraged by the Department itself
if it modified hill support payments so more aid was directed
towards the hill cow herd and also introduced specific land management
contracts for hill farms that can put cows on particularly important
areas of ground—and in our view would be a better overall
solution than introducing a vertical hybrid with a higher proportion
of area based allocation than the (average) 20% area mix put forward
in Vertical Option 2.
LFA farmers themselves could also use decoupled
support arrangements to widen their management range and introduce
new systems that will either generate more income or save money.
If their farm will allow it some could reduce
cow numbers and finish calves while others could move from breeding
calves for the slaughter market to producing specialist replacement
heifers for the breeding herd—especially as heifers will
no longer be hit with a subsidy penalty.
We would also expect some farms where cows can
be wintered cheaply to change breed and move the herd to higher
ground while others could reduce their wintering commitment but
summer other farmers' cattle on a contract basis.
All of these rearrangements would fit neatly
with the concept that full decoupling introduces more opportunity
for management flexibility and allows LFA farms to develop new
economically and environmentally sustainable husbandry systems
without undermining the fundamental simplicity of an entitlement
allocation route that is 80% historic.
It must therefore be clear that nothing in the
Department's detailed list of substitute solutions to the pure
historic option has persuaded the NBA that officials will be able
to identify a better hybrid system than the average 80/20 compromise
contained in vertical option 2 and with this in mind we suggest
that if it cannot be adopted the only other alternative is an
undiluted historic payment.
We would also like to re-emphasise a point we
made in the summary section in which we underlined our concern
that a hitherto unforeseen interpretation within the European
Commission's yet to be published implementation rules could force
a reconsideration of the desirability of the 80/20 vertical option
2 hybrid—although we of course hope it will not.
The biggest concern we have in this area at
present is that a formal statement of interpretation could lead
to problems with the triggering of all historic entitlement allocated
to farmers who earned coupled subsidy from stock occupying conacre
or other rented ground.
Should the Northern Ireland Rural Development
Regulation Plan be amended to transfer funds from existing schemes
to new ones making use of the options which have been added to
the EU Rural Development Regulation, or would this be best left
for consideration as part of the 2007-13 programming period?
The range of options open to the Department
of Agriculture and the industry over the management of the post-CAP
reform programme is bewildering and the NBA believes, as already
outlined, that the most effective policy will be to keep the system
as simple as possible so that the new management flexibilities,
and the capacity these generate to secure long term agricultural
and environmental sustainability, are not obscured.
The other limiting factor is funding and there
are also indications within the Department that additional money
to promote and encourage higher animal welfare standards through
the Rural Development Regulation (RDR), which is the option within
the RDR framework that excites beef farmers most, is unlikely
to be available.
It also appears clear that apart from self-funding
furnished by top-slicing SFP the only additional funding (new
money) likely to be available will be through match funded national
modulation—possibly used to fund an entry-level agri-environment
scheme.
This persuades NBA Northern Ireland that that
the creation of a sustainable and environmentally satisfying agricultural
structure in the Province is most likely to be achieved over the
10 years between 2005 and 2015 through the national modulation
measures and effective cross-compliance—each of which will
be the subject of future consultation exercises.
As previously underlined we believe that beef
farmers will be in a better position to raise the quality credentials
of their product, quickly meet new legislative requirements, raise
standard management practice and assist in integrated rural development
strategies if they are in control of as much of their SFP resource
as possible and the broad management direction they take is moulded
only by cross-compliance conditions and well placed modulation
initiatives.
We expect in years to come that the Department
will assess and review the effectiveness of the early programmes
it has decided to undertake so our response to the second question
in this section is to repeat our belief that the best course of
action for 2005 and 2006 is to set up a simple development system
based on modulation and cross-compliance and then modify, or rectify
its shortfalls (if any) when it is possible to take a more reflective
and considered assessment of its effectiveness.
National Beef Association
January 2004
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