Javid’s £3 billion can only go so far. And after that?
ell, did the entire farming industry breathe a sigh of relief last week when Chancellor Sajid Javid chose a traditionally quiet news day to confirm that almost £3 billion of domestic funds would be set aside to replace EU funding for farm payments in 2020?
Did the sector sleep happier in its bed, buoyed by the sort of certainty that left it feeling that God’s in his heaven and all’s right with the world?
Well, that certainly seemed to be the impression that the timing of the announcement and the headlines it captured was meant to give.
Perhaps we shouldn’t be too ingracious, though, for even the estimated £450 million that will be making its way north of the Border is not an insubstantial sum.
The fact is, however, that it remains only a shortterm commitment which covers only part of the equation.
For while it was good of Mr Javid to proclaim that his assurance would allow farmers to “plan for the future, sow their crops and care for their livestock with confidence”, a oneyear promise doesn’t cover the long-term approach required by an industry which has to plan years, if not decades, ahead.
And while the prospect of another year of payments might give a bit of reassurance for the next 12 months, without any accompanying commitment that the sector will be given fair treatment in the upcoming trade deals, it instils little confidence.
You could say it’s a bit like offering you a cushion but not telling you how high you’re going to be dropped from.
So without a clear commitment that domestic producers will not be unfairly undermined by imports from overseas produced to standards that would be illegal here, such a promise gives little reassurance.
But what have we been promised in the announcement?
While there was some breakdown of the figures, the term “almost £3 billion” was a tad vague and smacked of the “Save up to 50 per cent” widely used in the January sales.
The search for any certainty on individual payment levels soon becomes mired in the mists of complications if any attempt is made to calculate what to expect in the coming year.
For the Pillar 1 direct payments are to be made across two years – and while 95 per cent looks to be available for 2020, we’ve only ever received either 90 or 95 per cent of our dues up front anyway. So, all else being equal, we could be looking at receiving around 85 per cent of what we’re owed in the coming year.
But things are hazier – and possibly much more complicated – for Pillar 2 payments, with funding only promised until it runs out.
The biggest effect could be seen in support for hill farmers who rely on less favoured area support scheme (LFASS) payments which come out of the Pillar 2 budget. If the money runs out they’re in trouble – but even if it doesn’t they still face major uncertainties.
For it’s unclear how much they are likely to receive. With EU rules stipulating that the support payable through this system must fall by 20 per cent for 2019 (paid in 2020), it’s due to fall by 60 per cent for 2020 claims (although this is an improvement as it was originally destined to fall by 80 per cent). But will EU rules still apply?
Over the last two years the Scottish Government has offered a loan scheme covering around 95 per cent of this payment to give farmers access to their dues in late winter and early spring when feed bills run high, with the balance being made before the end of June.
To further complicate matters, th elf ass scheme has always been jointly funded by the EU and the Scottish Government – so what proportion of this funding will be forthcoming from the UK Government remains unclear.
So in spring 2021 hill farmers might – or might not – get 95 per cent of 40 per cent of an unknown sum, possibly jointly funded by UK and Scottish Governments – provided the Pillar 2 money hasn’t run out!
However, this year’s decisionto raid the one-off convergence award to make a special top-up to LFA payments (set to be made in March) could be repeated. But that too is subject to many ifs and buts...
Confused? You certainly should be.
“The term ‘almost £3 billion’ was a tad vague and smacked of the ‘Save up to 50 per cent’ widely used in the January sales”