British farmers depend on CAP subsidies

British Prime Minister Theresa May's plans to replace European agricultural subsidies after Brexit could lead to 25% of English farmers going bankrupt. This is what agricultural experts say Business Insider. 

dr. Ludivine Petetin, an agricultural law expert at Cardiff University, tells Business Insider that the Department of Agriculture's proposals to replace existing EU subsidies with a system of contributions to farmers for sustainable production and landscape improvements could mean 'up to 1 disappear on the 4' farms.

In the current EU system, farmers receive subsidies based on the amount of land they own, and for many this is a significant part of their income. If Britain leaves the European Union (EU), it will be replaced by a whole new policy that rewards farmers for protecting nature and the environment. Experts think that the total budget for English farmers could go down considerably as a result, and that is cause for concern.

“Reading the proposals, it seems that payments to farmers will go down in the longer term,” said Petetin. “That means farms that are already struggling at this point, despite direct payments from the EU, will not survive.” dr. Alan Matthews, professor emeritus of European agricultural policy at Trinity College Dublin, says Petetin's estimate appears "very accurate".

Common European Agricultural Policy
The intent of the Common European Agricultural Policy (CAP) is to support farmers who are struggling to maintain their incomes due to sharply fluctuating food prices and small profit margins.

Economists have long criticized this policy because it lacks market incentives. The EU pays farmers an annual lump sum for every hectare they own, regardless of what they produce. As a result, many people think the new UK system of incentivizing farmers to produce the right goods is very welcome, but there are concerns about the speed and scale of the changes. Farmers may not have enough time to adapt and diversify their incomes.

In any case, farmers are highly dependent on payments. dr. Alan Greer, a political science and public policy professor at UWE Bristol, explained to a House of Lords committee how far that dependency goes last year: “It is estimated that EU subsidies provide between 50% and 60% of the income of farmers across Britain. In Northern Ireland it is even 87%, in Wales 80% and in Scotland about 75%.”

The May government's plan for a new agricultural policy only affects Enegland, so the impact of Brexit on farmers in Northern Ireland, Wales and Scotland could be much greater.

What now?
The UK Department of Agriculture's proposals to replace European agricultural policy with landscape payments are still in the consultation phase and the exact plans will not become clear until the Treasury Department makes clear what total budget will be made available. Minister Philip Hammond has already announced that the budget will remain the same until 2022, after which an undefined transition period will start.

Agriculture Minister Michael Gove says post-Brexit agricultural policy will reward farmers for “public goods” such as building pastures and making rural areas accessible.

No comment by ministry 
dr. Petetin says it is very important that the ministry communicates its policy plans better with farmers: “I think these changes need to be made clearer to farmers, because many of them don't know right now that this is really going to happen. If you read the consultation proposal, it is quite clear that farmers will only receive payments if they produce durable goods or develop landscape activities.”

According to Petetin, it is important that farmers switch quickly, but the question is whether that will happen: “Due to the miscommunication there is a danger that farmers will not have enough time to adapt to the changes so that their new way of working can be profitable. is when current payments stop.” The UK Department of Agriculture has not responded to a request for comment.

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