The Farmers’ Union of Wales has proposed an alternative option for future direct payments to farmers under the post-2013 Common Agricultural Policy which it believes could benefit areas such as Wales.

During the union's autumn conference in Aberystwyth on the future of the CAP and its implications for Welsh farmers, FUW agricultural policy director Nick Fenwick told delegates the alternative measure could significantly reduce the disruption which would accompany the EC’s current proposals, while also benefiting young farmers.

“The current Commission proposal to abolish existing entitlements in December 2013 and create brand new ones based upon the amount of land declared in 2014 is likely to cause major disruptions for the industry in Wales and would be extremely difficult to administer,” said Dr Fenwick.

“It will encourage ‘land banking’, which is likely to artificially raise land and rental prices, and will be extremely detrimental to tenants who do not have secure tenancy agreements, as many landlords may try and secure the land in order to get hold of the new entitlements.”

Dr Fenwick described the unprecedented decision to have a future reference year upon which a fixed allocation of entitlements was based as "extremely dangerous" for regions like Wales.

“While the system may suit some regions, we do not believe it is apt for Wales,” he said.

During the conference, Dr Fenwick described an entitlement system which the FUW believes should be available to administrative regions as an alternative to those proposed by the Commission.

The system would be based upon existing farmers retaining their current payment entitlements and, subject to strict eligibility criteria, being granted a "claim entitlement" in 2014.

“A claim entitlement would allow farmers to claim a flat rate payment which is proportional to the amount of land they declare - there would be no fixed number of entitlements re-created for farmers as is currently proposed,” explained Dr Fenwick.

“During the transition period to flat-rate payments, current farmers would be paid according to the number of entitlements they hold, and a proportion of their original value, plus an amount proportional to the amount of land they declare and the regional flat-rate.

“Over time, the value of historical entitlements would reduce to zero and all those with a claim entitlement would be paid according to how much land they declare.”

Dr Fenwick said the system would be similar to the Tir Mynydd LFA scheme which has operated in Wales for the past decade.  

“Unfortunately, that system is being done away with but it has worked well - farmers have had an overarching entitlement to claim Tir Mynydd based upon strict eligibility criteria and they have then received a payment based upon how much land they declare, with no fixed number of entitlements.”

Dr Fenwick said such a system could also benefit young farmers as those annually fulfilling the new entrant eligibility criteria could be awarded a claim entitlement without ever increasing amounts of modulation being needed to fund a national reserve.

“There would be a need for a national reserve during the transition period, but the amount of monies needed would reduce to zero, so that ultimately those who qualify as young entrants would simply be paid on the basis of the land they declare.

“No system is perfect, and we will not know whether the alternative we propose is the right one for Wales until detailed modelling has been done by the Welsh Government.

“However, the system would certainly mitigate some of the dire consequences of what has been proposed by the Commission.”