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Farmers in Wales expecting cut in payments Farmers in Wales handed new payment system
(about 9 hours later)
Farmers face "radical change" over the financial support they receive to help them produce food, warns a minister. Farmers will fall into one of three new payment strands as part of a radical change to the financial support they receive to help them produce food.
Payments which come from the EU's Common Agricultural Policy (CAP) are due to fall and farmers are predicting tough times ahead.Payments which come from the EU's Common Agricultural Policy (CAP) are due to fall and farmers are predicting tough times ahead.
Natural Resources Minister Alun Davies who is to reveal the payments said subsidies "tend not to lead to innovation and lead to efficiency". Natural Resources Minister Alun Davies revealed payment details on Tuesday.
Farming unions say incomes will fall and prices of meat could go up. But unions described the announcement as a "major hit" for many farmers.
Mr Davies is expected to re-affirm what he said at the end of last year that it would be the first step in "real term decline of direct support for farmers" as he pushes for more self sufficiency in the industry. Outlining the plans for the three-tier payments, Mr Davies said farmers will receive £16.50 per hectare for moorland over 400 metres above sea level.
Wales has about 16,000 farmers and CAP is used by the Welsh government to fund activities which support farmers, the countryside and rural communities. Exceptional circumstances
The main focus of CAP is to help farmers produce food at affordable prices but farmers fear the changes could push up the price of food. Farmers with severely disadvantaged land will get £166 per hectare (2.47 acres) and almost £200 per hectare will be paid for low lands.
Mr Davies told BBC Radio Wales: "What I am going to be announcing today is a restructure of agricultural support in Wales, probably the most radical change we have seen for decades, and we are going to be announcing a series of investments to make agriculture more efficient and profitable in the future. There will be a transition period for the new payment scheme over five years until 2019.
"What we are seeking to do is to invest in businesses, in business growth and agriculture... and also want to make agriculture more sustainable." "My decisions are aimed at placing the Welsh farming industry in the best possible position to face the future with confidence," said Mr Davies.
"They will result in an industry that can make the most of new opportunities, increase productivity, and is better placed to cope with exceptional circumstances, such as the harsh weather experienced last spring.
"The new arrangements will also lead to a fairer and more transparent distribution of funding, with a move away from historic payments, and will help ensure we use and safeguard our natural resources more effectively."
'Every tool'
Last year it was announced that direct farm payments for Wales would be around €2,245m (£1,870m) over 2014-2020, with €355m (£296m) allocated for rural development schemes.Last year it was announced that direct farm payments for Wales would be around €2,245m (£1,870m) over 2014-2020, with €355m (£296m) allocated for rural development schemes.
But the budgets for both are being reduced by 12.6% and 5.5% respectively after allowing for expected inflation.But the budgets for both are being reduced by 12.6% and 5.5% respectively after allowing for expected inflation.
And there are also plans to use 15% of money for rural development projects rather than direct payment to farmers.And there are also plans to use 15% of money for rural development projects rather than direct payment to farmers.
Mr Davies held a consultation on how the direct farm payments would be implemented in Wales and his decision is being announced on Tuesday afternoon. The Farmers' Union of Wales called on the Welsh government to use "every tool in the box" to minimise the impact for farmers who will lose out.
'Resilient business' President Emyr Jones said: "While we have repeatedly expressed concerns about the amount of preparatory work done to investigate payment systems which would reduce the impact of a new payment system, it has to be accepted that whatever system was implemented would have led to large numbers of businesses losing significant sums."
Brian Walters, vice president of the Farmers' Union of Wales, added: "If the political will across Europe is to cut the budget then that will be it, but it is putting us on a disadvantage if he [Mr Davies] is cutting us more than the other European countries and even UK countries."
Peter Midmoor, Professor of Economics at the School of Management and Business at Aberystwyth University, said the minister may decide to offer a uniform payment rather than differentiate between lowland and hill farmers.
"If there is a uniform payment it would mean a massive transfer of resources away from the lowland farmers who have very high costs and need a lot of support towards the upland farmers who will get a huge windfall gain," he said.
"Farming is a very resilient business. There are lots of entrepreneurial people who say 'okay, well this is the situation, how do we adapt our businesses?'
"It may mean that the price of food rises a little bit, it may mean that some farmers decide it's time to retire but, overall, I don't expect very many changes to occur very soon.
"Changes do occur in farming but it's a slow thing and this is just one factor among quite a range."