EU regulatory reforms could herald steep falls in farm income, an increase in intensive farming and land abandonment.
An EU Commission study has alarmed the agricultural community with the findings of its report into the impact of likely reforms to EU agricultural policy in the coming decade.
Anyone considering buying a farm will be concerned at the prospect of cuts to direct payments made to farmers under the Common Agricultural Policy (CAP), a controversial system of EU subsidises and programmes to European farmers.
Political will
With deficits having ballooned across the continent since the financial crisis and the CAP still drawing criticism for subsidising inefficient European farms at the expense of struggling third-world producers, there is growing political will in Brussels to clip the wings of a programme that accounts for 48% of the EU budget.
The report considers various scenarios, ranging from small cuts to direct payments made to farmers to ceasing them altogether. The most extreme scenario, says the report, will lead to a 30% decline in profits in arable farms and a 60% fall for livestock farms.
The financial pressures faced by many farmers in Europe last year have made people realise budget cuts are not advisable
Martin Haworth, National Farmers Union policy director
The reduction in direct payments, rather than any fall in sales, would account for the profit fall, it adds. Land values and those of other assets would also fall.
The EU Commission believes a move to cut direct payments would see the area of land in use for farming contract. "Reducing first pillar payments leads, on the one hand, to intensification in the use of land in the core production areas to earn a decent living and, on the other hand, to land abandonment in marginal production areas," says the report.
EU farmers' group COPA agreed with the reports conclusion that, "as many valuable habitats depend on appropriate levels of land management", this would have serious environmental ramifications. Secretary general Pekka Pesonen forecast that "in the less competitive regions, land abandonment would be accompanied by environmental decline. A strong CAP, which maintains direct payments to farmers, is vital in the future."
Policy director at the National Farmers Union Martin Haworth believes that criticism of the CAP is misguided.
"Two years ago there was a lot of pressure for budget cuts and a radical CAP reform, as people were saying agriculture was an industry of the past and the emphasis should be on supporting industries of the future," he explains. "But the situation has changed dramatically.
"While the total EU budget is under pressure because of budget deficits in many member states, agriculture is now seen as an asset for Europe. The financial pressures faced by many farmers in Europe last year have also made people realise budget cuts are not advisable."
But head of agriculture at the Royal Society for the Protection of Birds Gareth Morgan is adamant that the present system needs an urgent overhaul. "The single farm payment systematically fails to target support to those who need it most. What we need is a system of payments that reward farmers for delivering public goods and to get this, fundamental reform is needed."
