UFU responds to review of UK CAP convergence funding allocation

Tuesday, 23 April, 2019

The Ulster Farmers’ Union says the independent panel tasked with reviewing the allocation of the remainder of the UK’s extra CAP convergence funding must consider the needs of each region but in particular overall regional budgets and payments per business. UFU president, Ivor Ferguson said, “Northern Ireland’s farming industry is largely based around small, family-run, farm businesses and we also have more intensive livestock production systems. Both of these are reflected in the historic allocation based on the productivity of the UK regions.”

The purpose of CAP Pillar 1 funds is to support agricultural sector incomes. Mr Ferguson says given this there is a strong correlation between the funds allocated to regions and their share of UK agricultural output. “We believe the best indicator to measure fairness is agricultural output. This indicator is widely used to measure the importance of agriculture within each country and its importance relative to the UK as a whole,” he said.

The current allocation formula for sharing CAP receipts within the UK is based on historical agricultural activity and not on the basis that more productive land receives a higher rate of payment than less-favoured land. However, Scotland continues to pursue additional convergence funding on the basis that the average direct payment per hectare in Scotland is below the UK average.

Mr Ferguson said, “What needs to be borne in mind is the reason for the average payment being lower in Scotland. Upwards of one million hectares in Scotland is unproductive land with little, and in some areas no, agricultural activity undertaken. In fact, Scotland’s own agricultural policy is focussed on implementing measures to prevent or severely limit the amount of direct support that can be spent on this unproductive land. Farm businesses in Scotland also on average receive much more support per business than farms here in Northern Ireland.”

A move from historically based regional allocations based on output for the convergence funding could only be justified if the current allocations are unfair.  The UFU says the current allocations are fair, particularly when comparisons are made with the share of agricultural output. In fact, Scotland already benefits more than any other country within the UK when their share of the CAP Pillar 1 Budget is compared to output from the supported sectors.

Mr Ferguson said, “We are in a time of unprecedented uncertainty for farming businesses across the UK as a result of Brexit. It is crucial that Government, wherever possible, provides as much stability, continuity and certainty as possible. Creating a separate allocation formula for this remaining convergence funding is unnecessary and unwanted and would cause instability for farming businesses at this time. Government should be doing everything within its power to minimise disruption for farming business.  With no additional funding available, any changes to the allocation formula will create winners and losers within farming businesses across the UK.”

No matter how the UK exits the EU, Northern Ireland’s agriculture industry is very much exposed.  “Our industry has deeply integrated supply chains with the Republic of Ireland (ROI). Any reduction in direct support for agriculture in Northern Ireland will generate widespread concern, particularly if farmers in ROI continue to benefit from robust support from the EU. The UFU sees no justification to amend the allocation method used for this convergence money and it should, therefore, continue on a historical basis for 2020 and 2021,” said the UFU president.