Voting in Europe yesterday saw MEPs agree to limit cuts on farm payments to farmers whose direct payments exceed €5,000. The vote was in response to the first use of 'financial discipline' measures, triggered by the2013/14 Common Agricultural Policy surpassing its agreed budget; budget cuts have been help primarily responsible for the overspend.

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Some industry groups, including the NFU, had called for cuts implemented under the financial discipline mechanism to be visited upon all CAP claimants equally. The safeguard for smaller farmers was introduced by the European Commission, but some UK MEPs, with the backing of large farm unions, introduced an amendment to the proposals, arguing that all farmers should be made to "share the pain."

Nevertheless, on Wednesday MEPs elected to maintain the €5,000 threshold. Farmers receiving subsidies over this amount will face cuts of around 5 percent t their 2013 direct payments.

The NFU's Senior CAP adviser Gail Soutar said on Tuesday, approximately 80 percent of EU farmers would be exempt from cuts, as a result of the €5,000 threshold.

Union laments CAP reform progress

Meanwhile, the NFU has also lamented the slow progress on CAP reform debates. Talks between negotiators from the EU Council, Commission and Parliament should be nearing completion if they are to meet their self-set target at the end of the month.  

Speaking yesterday at the Cereals event in Lincolnshire, farming minister David Heath said he was "hopeful" that an agreement would be brokered under Ireland's presidency, which ends this month, but admitted he was not confident that this would be the case.

On Wednesday, the NFU said the latest figures released from Brussels show "just how bad a deal the UK Government has secured for the Country's pillar two rural development programmes." The numbers confirm that the UK will be allocated the lowest share of Pillar two funds per hectare of all member states. The country will face serious cuts compared to the current budget amount.

The UK will be allocated €2.293 billion for the 7 year period 2014-2020. This compares to €2.425 billion for the period 2007-2013 – a cut of 5.45 percent.

Though rural development funding will see a significant reduction, the government is likely to bolster spending through 'modulation', the movement of 15 percent of CAP funds from Pillar One (direct payments) into the rural development pot.

Conservation groups have said that modulation will mean EU funding still goes towards projects that taxpayers would find desirable, but NFU President Peter Kendall said at the Cereals Event on Wednesday, "Defra Ministers' persistence in their determination to disadvantage English farmers through maximum voluntary modulation transfers in the next CAP may shore up budgets, but will also greatly exacerbate the difference in payment levels between us and our competitors.

"A Somerset or Shropshire dairy farmer is already disadvantaged to the tune of €235/ ha compared to a Dutch dairy farmer. I just don’t buy Ministers’ arguments that cutting English farmers payments by more than our competitors will leave us in a better position to compete," he said.

Disharmony over EU budget

On Tuesday, the European Parliament's negotiating team announced in a statement that it is "disappointed by the lack of progress" in negotiations on 2014-2020 budget. MEPs on the team said they too "fail to see how an agreement could be reached" before Ireland's EU presidency ends at the end of the current month.