Originally from: Farmtalking
                        
from The Scotsman – http://www.business.scotsman.com/agriculture.cfm?id=1275962003

CAP reforms 'a licensing system'

By Fordyce Maxwell – Rural Affairs Editor

QUALIFYING rules for single farm payments will effectively be a licensing system for farmers, it was suggested yesterday.

But in spite of that, a new-look European common agricultural policy from 2005 is being welcomed by farmers "ready and willing" to change, said Professor Bill McKelvey.

The chief executive and principal of SAC, formerly the Scottish Agricultural College, told its full-house Outlook conference in Edinburgh that some opportunities had been missed in recent years.

These included an Agricultural Holdings (Scotland) Act that was too restrictive to give young tenant farmers a chance and public resistance to genetically modified crops, "leaving logic and science behind in a sea of emotion", that had left UK science and farmers trailing on the world stage.

Farmers must also be smarter in dealing with animal welfare, use new composite, robust breeds of sheep and cattle to produce what consumers want and take responsibility for eradicating several animal diseases.

They must also accept that cross-compliance, the environmental and good husbandry rules that farmers will have to meet to qualify for the annual single payment that will replace the existing conglomerate of subsidies, is licensing.

But the opportunities of a CAP where subsidies are separated from production – decoupling – are potentially enormous, he said, for a Scottish farming industry where up to 90 per cent of businesses are now following systems that lose money and average farm subsidies comprise 256 per cent of net farm income.

SAC believes that the conclusion of the consultation process, due to end in January, should be full decoupling with use of a national envelope to smooth the changeover and getting maximum pound-for-pound Treasury funds for modulation.

If that happens, SAC estimates that the number of holdings in Scotland might drop slightly, but average size increase. Cropping area is likely to drop 25 per cent, and improved grassland increase by 10 per cent. Beef cattle numbers will drop 5 per cent, dairy cattle drop more than 20 per cent, breeding ewes drop 10 per cent and pigs 5 per cent.

Change at the top will be even more dramatic, McKelvey said: "At present, 20 per cent of Scotland’s farms produce 80 per cent of output. After decoupling, it could be 10 per cent producing that."

Change will be market- and knowledge-driven, with benchmarking and an increasing number of monitor farms vital: "In the challenge to be in the top 25 per cent, farmers want to see what their peers are doing, not listen to advice from ivory towers."

He did not include SAC, a hands-on organisation, in the ivory-tower category. It would have a vital part to play in a national strategy for advice organised by the Executive.

Allan Wilson, deputy minister for environment and rural development, told the conference that CAP changes would have a vital role in keeping jobs in rural areas and recognising and rewarding "the multifunctional role of farming".

Support and payment was not for doing nothing – a possible criticism of the single farm payment and freedom to farm from January 2005 – but for delivering benefits to the wider society.

Modulation, the slicing of a percentage of farm subsidy for general rural development, would be important – 10 per cent is being suggested, matched pound for pound by the Treasury.

But neither he, nor anyone else, could guarantee that match funding would continue indefinitely.