JUNE 4, 2010: More than half of UK farmers would struggle to stay in business if direct support payments under the CAP were removed, a new study has found.

The Defra-funded study, carried out by researchers at the LEI research institute, ranked the UK as one of the worst affected EU countries should direct payments such as the Single Farm Payment be scrapped.

The report raises serious questions over Defra’s strategy in CAP reform negotiations after the Department has pushed to have direct support phased out in the 2013 reforms.

That now appears at odds with the needs of the industry as UK farmers would be hit harder than their European colleagues.

Tom Hind, head of international and economic affairs at the NFU, said while the report was purely hypothetical, it demonstrated just how reliant British farmers are on CAP support.

He said it seemed ‘strange’ that Defra would publish a report highlighting the devastating effects of removing direct subsidies while at the same time lobbying the EU to phase them out.

The LEI report looked at the impact of removing pillar one subsidies from the CAP, leaving farmers reliant only on pillar two – payments such as Rural Development funding, environmental stewardship and Less Favoured Area Support.

However, its findings do not account for any additional funds being pumped into pillar two once direct support is removed.

Defra said the report would inform future discussion on the CAP but said it was determined to stick to its stance and push for the withdrawal of direct subsidies.

A Defra spokesperson said: “Direct payments are not a good way of ensuring the long term viability of the farming sector, which will only come through improved competitiveness. 

“Defra is clear that the best way of ensuring the long term viability of the farming sector is by driving up competitiveness, not through direct payments, so the CAP needs to be completely refocused.”

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