The history of European farm subsidies is one of change and rumours of change to the Common Agricultural Policy. The Single Payment Scheme took effect on 1 January 2005 and is due to be reformed in 2014 against what is likely to be a background of continuing financial pressure.
Work on the reform proposals is well under way and once again there are strong rumours about proposals to cap the amount of subsidy that any farmer can receive.
This gives rise to heated debate about:
- whether it is right for the biggest and most successful farmers to receive subsidies from public money; or (conversely)
- whether it is money well spent to concentrate subsidies in the hands of the smaller and perhaps less efficient operators rather than those capable of growing the most food.
While these issues can provide hours of discussion, the practical issue facing bigger farmers is whether to split into multiple smaller and separate units and then to trade off the loss of the benefits of scale for the possible (but by no means certain) advantage of avoiding a reduction in the amount of their subsidy.
There are always enormous difficulties in taking action to avoid the impact of legislation that does not exist and which may never come about. The economies of scale of large farm businesses have often been painstakingly built over a number of years and are not lightly to be discarded. Nevertheless, some will feel that it is best to take action now and, if the accounts coming out of Europe prove to be right, then those who want to take action will need to do so well before the announcement of any formal proposals if they are to increase their chances of navigating the inevitable anti-avoidance provisions.
Taking into account the uncertainties of success, the costs of making and maintaining any changes, the impossibility of being sure what changes are really going to happen and what level of subsidy will be available in the future, any decision to restructure will appeal only to bolder spirits.