Good riddance to the basic payment scheme

A farming colleague wanted to chew the fat after my last article – explaining to me how the subsidy system since 1991 had saved his farm from oblivion. 

He produced detailed information telling me how much money he had received – including from agri-environment schemes.

When you see 30 years of subsidies laid before you in black and white, it certainly opens your eyes to the amount of support farmers receive. And my friend seemed genuinely alarmed that payments are stopping.

At his age, he may well take Defra’s offer of a lump sum in lieu of all remaining payments and enjoy hs retirement. But I did suggest that perhaps the system has not been the gravy train many people suggest.

It may seem easy cash to some but I don’t believe I have made any money from subsidies at all. Rather than helping farmers, I firmly believe that the current system has held the industry back in the longer term.

False bottom

It has created a false bottom in the rental and land markets – and given a false impression of market levels and public perception of the farming world. If left alone, rental values would have found their own level.

Perhaps the system has allowed some farmers to continue when they really should have packed up years ago. Or at least they should have passed on the farm to the next generation who might have had more get-up-and-go and business knowledge.

This might all sound ungrateful. It’s not meant to be. Like many others, I have received my annual payments thankfully. But at what cost? As mentioned, subsidies have underpinned the rents paid by thousands of farmers – me included.

Higher  rents

For many years, when my landlords requested a rent review, the £100/acre subsidy always underpinned the rental value. Without it, I may have rented land at a much lower price. Instead, I have almost certainly paid a premium in the form of a higher rent.

Without support, I may have been able to expand the farm – both in terms of land purchased and contract or rental agreements undertaken. Rather than being able to do so, I found myself priced out of the market.

There have always been willing farmers ready to pay excessive rents on the back of a secure subsidy system. You only have to look back to the 1990s to see how land prices increased shortly after the current system was introduced.

Before then, land was worth about £1000/acre – and still struggled to find many willing buyers. Once the fear of the subsidy system had been forgotten, land prices underwent a steady increase – creating a wealth of opportunity for land agents.

I carried on filling in my own claim forms and annual applications without too much hassle. But many farmers asked their land agent to fill in the paperwork for them out of fear of making a costly mistake and being penalised for their mistakes.

Unfortunately for us farmers, the agents closed that loophole rather quickly – so any loss lay entirely with the farmer not their representative. And such stories are not uncommon given the complexities of the system.

Horror stories

Every farmer has a horror story to tell about the Rural Payments Agency and their mapping problems. And its no surprise that it is farmers who have been left at a disadvantage in most cases.

So I say good riddance to the current system. Yes, it will create challenges for many growers and livestock producers. But it will also create opportunities for those who properly want to get on in agriculture.

Subsidies create hungry land agents after easy money, higher rents and extra costs all around. Large commercial landlords have reaped the benefits at the expense of working tenant farmers. Sorting out the wheat from the chaff is long overdue.