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UK data on distribution of farm payments

The UK Department for Environment, Food and Rural Affairs (DEFRA) Agricultural Change and Environment Observatory recently published a statistical analysis of the breakdown of the Single Farm Payment (SFP) in England, one of the four regions for the purposes of administering the SFP scheme in the UK. The report analyses 2005 payments, with some historical comparison with the distibution of payments in previous years. One of the findings is that average payment rates per hectare are related more to farm type than to farm size. Apart from the very smallest farm size group (holdings with between 0 and 0.5 Standard Labour Requirements), the average payment per hectare for all remaining farm sizes varies minimally between £187 and £197/hectare.

The English figures are interesting because England opted for a dynamic hybrid SFP scheme: the payment combines historic and flat (or area) rate components with the percentage share of the former decreasing and the latter increasing so that, by 2012, payments will be entirely based on eligible area. Thus, 10% of the 2005 payments are contributed by the area payment (itself further distinguishing between moorland Severely Disadvantaged Area, non-moorland Severely Disadvantaged Area, and non-Severely Disadvantaged Area land. The remaining 90% is contributed by historic entitlements.

The average payment per hectare was £183 in 2005, with the distribution varying from less than £50/hectare to over £550 per hectare. The report suggests that these very high values of payment per hectare are due to farms with large historic entitlements downsizing, so that the payment entitlements are concentrated on a smaller number of hectares. Under the dynamic hybrid model, this distribution will gradually narrow towards the mean (though because of the three-fold distinction between different types of land, differences will still remain in payment/hectare even after 2012). That mean will itself fall because of the high rates of voluntary modulation recently announced for England within the UK. 

Nonetheless, eyeballing the data in the chart suggests that there will be relatively few farm businesses which will lose significantly from the change in the basis of payment over time (those currently in receipt of more than $250/hectare) but that a significantly larger number of farmers will lose out to some extent over the next seven years (those with payment rates between £200-250/hectare.

DEFA distribution of SFP payments in England 2005

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