In the long run it is going to be difficult to justify a Single Farm Payment (SFP) model that is based on historical receipts. This model originated in the generous compensation given to cereal farmers for cuts in intervention payments in the 1992 MacSharry reforms. There will be a shift to a regional model with a flat rate payment per hectare in each region. This is already under way in England, Finland and Germany and all the new member states have a flat rate payment system.
However, those member states that have introduced a regional model have seen applications for CAP support rocket, e.g., on horse paddocks which are a popular use of land near any centre of population. These claims are frequently for small amounts, e.g., €50 – €100, but the high number of applications – 40,000 in England and 20,000 in Denmark – imposes considerable transaction costs.
It is likely that the Health Check will look at introducing some form of lower threshold for SFP funding, such as a minimum amount or raising the current 0.3 ha minimum area requirement for applications.
Senior DG Agriculture officials have confirmed to me that there is certain to be a minimum single farm payment threshold included in the Commission’s proposals for the health check.
I agree that in the long run it will be very difficult to justify a Single Farm Payment that is based on historical receipts. For one thing, it is hard to understand why one farmer should receive €50 per hectare (or, indeed, nothing at all if he has traded his entitlements) and a neighbouring farmer €600 per hectare for essentially observing the same statutory minimum regulations. But I have seen no sign that the Commission is prepared to grasp this nettle in the forthcoming health check review.
The focus seems to be on the transaction costs of making small payments rather than the redistributive effects of the way in which SFP is paid. However, it is interesting that the FNSEA in France is now giving serious discussion to backing a regional model.