Slipper Farmer Investigation Underlines Urgent Need For CAP Reform

Alyn Smith MEP, Scottish full member of the European Parliament's Agriculture and Rural Development Committee, has welcomed recent investigations on the worrying extent of "leakage" to non-farmers of the Single Farm Payment, and the transfer of entitlements to non-productive land, as powerful evidence of the need for strong reform of the Common Agricultural Policy, to reward genuinely active food production and public goods such as landscape management. While the practice of farmers reducing their acreage and then transferring the payment entitlements to non-productive speculators has long been known, recent reports have revealed that the total amount lost to farming in Scotland could amount to £50-100m a year, out of a total Scottish Single Farm Payment total of £483m in 2010. Furthermore, a report last year from the European Court of Auditors showed a dramatic trend in speculators taking advantage of "naked acres", with almost all of the additional land declared for SFP purposes in Scotland since 2007 (58,000 ha) being rough grazing land, despite the decline in sheep numbers. Concerns also remain about the distribution of direct payments, with the latest European figures showing that, as before, around 80% of the value of direct payments goes to the top 20% of European farmers. Alyn said: "I've been a long term critic of the way that the current CAP has been structured, and as someone who has consistently argued that CAP support should be primarily about food production, and ensuring Europe's ability to feed itself, these reports make for dispiriting reading. They do, however, confirm what I already suspected: that this system is well due for the reform it is undergoing currently. "Let's be clear - slipper farmers, or anyone else claiming funds while not producing food, should be under no misapprehensions - you've had a good run, it ends soon. I will not support any phase outs, any transitions, any soft landing. If you're claiming funds from a system set up to encourage food production while not producing, you're part of the problem. "To be clear, there are two different things going on here, and it's important to distinguish between them for the purposes of reform. "First, there is a definite problem in the lack of an adequate definition of "active farmer" in order to limit the payments to those who are genuinely producing food. Unfortunately the European regulations were written with the World Trade Organisation in mind, and an almost paranoid fear that if direct payments were linked in any way to food production they would be declared non-green box. Hence the minimum requirement to "maintain the land in good agricultural and environmental condition", which as we have seen, can cover all manner of non-farming sins. This is going to be fixed in the upcoming CAP reform - the new draft regulation defines "active farmer" in such a way as to allow Scotland to set up minimum activity requirements for agricultural areas, and failure to meet these would result in no direct payments being awarded. I'm sure that, with these mandated powers, the Scottish Government and the industry will be able to come up with a solution to meet Scottish conditions. In addition, I don't think that we should allow an unjustified fear of the WTO to restrict our ability to support food production in Europe - the United States still has counter-cyclical payments, which are more trade distorting than anything Europe has. "Second, the inherent problems have been exacerbated by the shoddy way in which the then Scottish Executive set up the Scottish system of SFP in 2005. The creation of a historical based system may seemed to have made sense in limiting redistribution of payments, but it merely opened the door for farmers to cut back on production while continuing to collect payments - the infamous "slipper farmers". Furthermore, the creators opted for a system of entitlement trading with minimum restrictions, and thus maximum opportunities for non-farming speculators to enter the market, buy entitlements without reference to land, and then transfer them to non-productive land and collect public funds for minimal service. It did not have to be this way. Other countries, such as Italy, clawed back part of the value of traded entitlements (not related to land), thus limiting the trade and the resultant abuses. Deregulated entitlement trading failed Scotland in the same way as deregulated financial markets failed the world economy. "That's why, in the upcoming reform, I'll be pushing for strong regulations on this trade, with entitlement trading, where possible, linked to the land on which the entitlement is activated. Also, we need a dynamic area based payment system where the entitlements paid out reflects year on year the actual land farmed. "Finally, in a time of restricted budgets and where tough decisions must be made about best value in public spending, the case for an upper ceiling, a cap, on individual payments grows stronger. This is an integral part of the campaign to stop payments leaking out of the sector. The more we see the abuse that has taken place, the more my view has hardened. The feedback I have received has also served to strengthen my thoughts on this. We need to learn from the mistakes open to abuse in the current system and ensure we do not repeat them. "Food security should always come first, and the CAP must fully support our goal. If it does not, public support will disappear. It is in the interests of the whole industry that we use the opportunity of the reform process to sort out these problems."