Posts tagged ‘CAP’

July 22, 2017

If the CAP fits: time ticking on down on EU subsidies the gift that kept on giving will be no more

Brexit shambles continues apace. That overused phrase of politicians going forward is not applicable to the current state of Brexit negotiations which appear to consist of nothing more than each side eyeballing the other. And is that a nervous tic on the collective face of Britain’s farmers I detect?

A cursory riffle through May’s fantasy Brexit filing cabinet only as far as A for agriculture reveals something of the complexity of the task ahead, as a politician might say.

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For an outsider like me it was hard to understand why so many farmers and landowners were quite so keen in voting to leave the European Union and the increasing murmur from these bodies suggest one or two are becoming a little bit sweaty that the future is not as rosy as it appeared when they voted to leave the reviled EU. But hope emerged for some in the guise of the ambitious Michael Gove with his promise of  a ‘green Brexit’ and promise, if qualified, of continuing subsidies. He is not the first person I associate with a commitment to green policies and suspect the green he’s contemplating is a fig leaf and his ‘earned subsidies’ is an early warning that not all will be as it was under CAP.

That it was never on the cards that the generous EU subsidies would continue post-Brexit either didn’t occur to Brexiteer farmers or else they assumed the British government would step in and fill the void left post-CAP – such blind faith.

The National Farmers’ Union of Scotland has pounced on Gove’s words as recognition of its position on the need for continuing support for certain farming communities. It welcomes Gove’s ‘must be earned’ statement and with another leap of faith declares Scottish agriculture  must receive –

‘the same levels of funding as it currently receives ring-fenced and spent in new and more effective ways to improve productivity, efficiency and resilience.’

The NFU Scotland talk of making farming and crofting more profitable but just what that will mean is anyone’s guess – family farms already operate with minimum labour comprising mainly of the farmer and any family he or she has – working from before dawn until late into the night seven days a week. How that could become leaner is not apparent. Food prices could rise, as they are doing, bringing about even more squeeze on farmers by supermarket chains. Where does that leave Scotland’s crofters and hill farmers already eking out scant livings? How persuaded will Mr Gove be that they are deserving of financial support once that falls into Westminster’s lap?

Farming subsidies were introduced in the UK a century ago by the government concerned by severe food shortages during the First World War when 60% of food was imported. Minimum wages for those involved in agriculture and guaranteed produce prices were imposed until 1921 and during the 1930s protectionism was again high on the agenda. At the end of World War Two government intervention guaranteed payments to farmers to encourage an expansion in food production while rationing continued long after the end of war.  

It was in 1958 the contentious Common Agricultural Policy (CAP) of the then European Economic Community was introduced to boost food production across the EEC and provide reassurance to food markets. (This was long before the UK joined it.)

The CAP worked well. Too well. It led to a grim landscape of beef, butter, fruit and vegetable mountains and wine and milk lakes as a means of keeping up prices for farmers. Some of this food was simply destroyed to maintain food prices at acceptable levels and some was dumped on poorer countries at a cost to their small-scale farming which could not compete against the collective might of the protected farmers within the EEC.

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When I looked at who are recent recipients of the EU’s agricultural subsidies I was astonished to find not only was it a list of the ultra rich but topping the list of payout recipients was sugar manufacturer Tate & Lyle. Along with the British sugar giant were French sugar giants, Spanish sugar giants, German sugar giants and a lesser giant from Poland. Sugar processors have attracted much criticism for their contribution to junk foods and their association with the huge rise in diabetes and because of pressure placed upon these industries in Europe to reduce their output they have been amply compensated by CAP subsidies.

Dairy companies have also been winners in the great EU scoop a fortune lottery. Along with sugar they are implicated in the junk food market and have attracted the attention of aid agencies for being supported at the same time they are dumping milk powder and butter on vulnerable markets and consequently undermining small producers in poorer nations.

In Scotland Balmanno Farms Ltd are lucky recipients of EU subsidies- qualifying for quite a bit in subsidy. Their ultimate parent company is Streetfield Property Company of the same address, presumably property developers.

What struck me was the number of recipients of public handouts who don’t sound like the everyday image of our local farmers: Broadway Tower Country Park Ltd; Execs of the Late Mrs C Campbell, Isle of Sky; Gisburne Park Estates Ltd; J and V Casey and son Ltd of New York – hang on a minute – New York? There is it appears a New York in Lincolnshire.

Because of difficulties some farmers have surviving by traditional agriculture diversification is encouraged and rewarded: rented out land; farm shops; tourism; woodland; improved land management so while Highland Grain Ltd of North Kessock  a cooperative mainly made up of  Black Isle and Easter Ross farmers who grow malting barley for whisky and get considerable amounts of cash from European Agricultural Fund fall firmly into the category of genuine farmers Flamborough Holidays Ltd must surely fall into the diversity grouping also attracting aid. Likewise Tongue and Farr Sports Association at Bettyhill, a community venture running a pool, spa, sauna and fitness suite in the north of Scotland. As for O’Neill’s Caravan your guess is as good as mine – and the same goes for Shield Engineering Syston Ltd. Then again Hound Parish Council at somewhere called Netley Abbey, Southampton appears along with The Royal Farms Windsor. Hello? What? The Queen picks up loadsamoney through her Sandringham Farms.

Trawling through the CAP list is time-consuming for it is very, very long with no fewer than 19,613 recipients listed in the UK and not a few, in fact quite the reverse, millionaires and zillionaires which suggest the EU CAP system is something of a money printing press for powerful agencies. One in five CAP handouts goes to toffs.

Khalid Abdullah al Saud, owner of Frankel the racehorse.

Prince Khalid Abdullah al Saud

The last thing you might imagine a Saudi prince really needed was a cash handout from the people of Europe but that’s because you aren’t a Saudi prince. Prince Khalid Abdullah al Saud has expensive pastimes – breeding racehorses and hobby farming on his Juddmonte Farms (registered offshore in Guernsey.) He enjoys CAP pocket money of around £400,000 a year.

the Guardian https://www.theguardian.com/environment/2016/sep/29/the-queen-aristocrats-and-saudi-prince-among-recipients-of-eu-farm-subsidies

Who is/was – delete as appropriate – the richest landowner in the UK? Easy question – it is of course the Duke of Westminster and wouldn’t you know it he is on the list as is vacuum cleaner man Sir James Dyson – sorry, the billionaire Dyson. Why?

From my neck of the woods is Frank A Smart who has done very nicely out of EU subsidies. He is described in the local press as a slipper farmer for he buys up land with subsidies attached and there is nothing at all illegal about this. On being questioned over the huge sums of money he receives each years Mr Smart replied to BBC news, “I don’t want to discuss any part of my business with the media, thank you.”  And why would he.

http://www.bbc.co.uk/news/uk-politics-37493956

Here in Scotland we are forever being told how much money shooting estates bring to the economy but not what the EU brings to grouse moors. Imagine how much good could be done with equivalent handouts to these barren areas of land preserved for the dubious activity of slaughtering defenceless birds and beasts by improving conditions to develop diversity of flora and fauna. The specious argument that subsidies can be justified as a reward to landowners as caretakers of land hardly applies to grouse moor lairds especially those whose gamekeepers persecute our magnificent raptors and other birds and animals, many of whom are protected (in theory.)

https://www.theguardian.com/environment/2016/oct/28/grouse-shooting-estates-shored-up-by-millions-in-subsidies

Farming in the UK is struggling if figures are to be believed and the average farmer, whatever that may be given who appears on the CAP list, could not survive without hefty payouts. Figures for last year indicated that the average farm made £2,100 from farming and £28,300 from subsidies.

In Scotland the average farm (excluding pig and poultry) made £23,000 profit from their business in 2014/15 which includes subsidies. They lost c £21,800 on agriculture but took in £39,900 in subsidies and other payments.

https://fullfact.org/economy/farming-subsidies-uk/

I noticed this year farms around Alford were ploughed and sown right up to dykes and fences with virtually no wild margins left for birds and wildlife. Is this the future? So much for Gove’s ‘green Brexit’ when cereal farmers post-subsidy will turn over every inch of their land and to hell with nature. Anyway out of the EU those pesky controls over pesticides will be lifted and production will be increased to make up for payout losses at no cost other than to our health and the environment.

The UK government says it will retain subsidies until 2022 by which time the money will have run out. In free-for-all post-Brexit Britain agriculture crops will be even more intensively sprayed with pesticides in attempts to compete with the big boys and will fail because then we will be the little brats. Our grass reared cattle and hill sheep will be reared for a niche market for they will be too expensive for most of us who will have to tuck into US beef pumped full of growth hormones, chlorine washed chickens and Frankenstein GM foods of every description. Gove’s green Brexit Britain will be a poorer and nastier place with horrible unhealthy food where the government will have to sit down and negotiate support for food producers at levels that will enable them to compete not only with the US but the EU as well.  

Last time the UK government stopped subsidising farming agricultural wages fell by 40 per cent in 12 months and then the threat to British cereal producers didn’t come from the US but from Canada. As a consequence people were thrown out of work, poverty increased and fertile land was abandoned and did not greatly improve until after World War Two with the introduction of guaranteed prices.

Back at the list at least one 14 year old received CAP payments but that’s not a category I could fit into although two folk over 100 years old also made it in so there’s a ray of hope for me. The centenarians were both dead – hope for us all – although if I were a farmer, especially a crofter or hill farmer in Scotland, I would be very very worried as 2022 approaches.

 

 

June 22, 2013

Millionaire Carpetbaggers

 

How on earth have we come to the point where a company can be successful, pay its directors big bucks and substantial dividends to its shareholders and be in receipt of public subsidies?

Large-scale farms, high profile entrepreneurs, pharmaceutical giants, multi-national corporations surely should not be taking public handouts – but they are.

Every successful business knows you have to speculate to accumulate but with whose cash?

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Innovation often comes at the end of years of research. Good research costs and success is never guaranteed but there are ways of alleviating overheads. Super successful giant Apple was helped on its way by a $500 000 research programme paid for by the US government. But once Apple became successful where was the quid pro quo? There was none.

Where a private enterprise uses publicly funded and operated facilities shouldn’t there be some means by which the intellectual property becomes a stake in the enterprise for which a percentage comes back to the public body in profits?

It’s not just Apple, Google too built its empire on an algorithm funded by the National Science Foundation, a government funded agency in the US. Shouldn’t some of that success have been shared with the NSF?

That is not how the world of entrepreneurship works. Not only do companies walk away with all the benefits provided by the taxes of Mr and Ms Average but many of them take advantage of every loophole to avoid paying taxes which support the social fabric which underpins the lives of Mr and Ms Average.

When I hear people proclaim how successful capitalism is I wonder how they calculate success. Being dependent on state subsidies is not being successful.

They provide jobs it is claimed. But where? Not necessarily in the countries where they got the leg-up. Large parts of Apple’s production takes place outside the US.  Can you think why?

And it’s not just in the USA.

Every year £4bn of our cash is paid to subsidise franchise rail companies in the UK. I don’t object to paying for utilities. I do object to paying private companies subsidies which are integral to their success and allow them to pay out handsome salaries to directors and dividends to shareholders.

Why have access costs to Britain’s rail tracks been slashed since the 1990s? Because public money is being poured in to offset the actual charges which should be made by rail companies which then appear more efficient than they are and enable them to pay dividends to their investors. Whatever happened to the free market? Network Rail issues private bonds that are publicly guaranteed – to the tune of around £30 billion which means that it can then charge, say Branson’s Virgin Rail, artificially low charges for track access.

The £½ billion profits made by the Virgin rail franchise tells its own story: charismatic entrepreneur shakes up inefficient public institution and transforms it into a success.  Believe that if you like.

The billions that have gone on subsidising the rail system disguises the truth about privatisation. Money not only goes to allow them to operate but to finance their management and pay out to shareholders.

Everyone knows about the profits enjoyed by pharmaceutical companies. They, of course, have their own laboratories but they also benefit from research funded from the public purse as we’ve seen in the US. Fair enough but what isn’t fair is that once a drug has been proven a winner and being sold around the globe there is no pay-back in the form of sharing that success with the state that funded its new multi-billion drug. Instead we pay for the development of the new medicine and we pay to buy that same medicine. We pay and we pay again.

Where is the public interest in this arrangement? If we are paying for research why aren’t pharmaceuticals nationalised to provide us with cheaper medicines? If the pharmaceutical companies can do without publicly funded research why aren’t they?

If Virgin and the rest are able to pay dividends to their shareholders why aren’t they able to pay back public subsidies? More to the point why are they recipients of any public subsidies? Why do we have franchised rail companies if they cannot operate without state help? Why are they taking our money and labelling them as their ‘profits’?

If you can’t afford to operate a rail franchise or are not some cool dude with a keen eye for a canny business setup then there are still ways of raking in public money. You could take a piece of land out of agriculture for example.

Anyone who owns land may be able to pick up Farm Woodland Payments which run from £121 to £60 per acre.

The less you earn through agriculture in relation to your overall income the lower the subsidy you can claim but if you own a country pile, let’s say, and perhaps earn your living elsewhere, perhaps in a rail franchise, then you might think of setting up a separate farming business on that country plot. Do this and your other income is ignored and you will be free to pick up your public subsidy. If you remember to register your farming business for VAT you will be able to save in running this agri concern, whatever it is.

How does £85 an acre each year sound? For townies an acre isn’t much land but we’re not talking the odd acre here. This handy sum can be had under the Single Farm Payment. Add to this the Environmental subsidy which goes from £12 to a whopping £121 an acre and you’re talking lots and lots of cash for just being you. These two subsidies alone for doing sweet nothing amount to around £200 for every acre around your pile. Not to be sniffed at – enough not to worry about having to have the oiks constantly traipsing around your grounds and charging them for the privilege.

In Scotland under 19 000 landowners/businesses receive £484,528,467 in Single Farm Payments  and if you think, single payment sounds puny then how about Torphins farming business Frank Smart and Son who were the lucky recipients of a cool £3.2 million in 2012. I’ve rounded it down for simplicity. And don’t go away with the idea that times are tough and we’re all in it together – the Smarts subsidy from us rose by £781,853. 93 from their previous handout. In 2009 the Smart business was handed a mere £1.2 million – does this mean it has become less efficient to the tune of £2 million?

You may want to pause for a cup of tea to digest these figures. They amount to money. From you and more importantly, from me.

I can’t get my head around the fact that anyone who can claim £3 million is in any way entitled to public handouts. The lists of land subsidy winners is a who’s who of estate owners and big knobs from British society. Outside of Scotland the Queen and Duke of Westminster also benefit from public handouts.

http://www.pressandjournal.co.uk/Article.aspx/3269422

Landowners, at least farmers, can buy up entitlements to subsidies – that is buy land away from their main holding which may or may not be farmed but which adds to their business portfolio.  

If you’re serious about your land you might actually farm it and then you can claim some of the £21 918 281 paid out to Scotland’s nearly 8 000 beef producers (farmers).

If your land is not up to supporting beasts don’t worry. You can still get your hands on public dosh through the Less Favoured Area Support Scheme. Last year 11 000 Scottish land owners were able to claim £66 533 651.

It is a very very long time since farming went it alone in this country. Fear of food shortages led to agri subsidies and, well, have you ever tried to get money off a farmer?

The president of the Scottish Farming Union recently declared the arrangement for SFPs was wrong. He was responding to complaints that some farmers are unable to claim subsidies but why are we still paying out subsidies to them at all?

There are other agri subsidies such as Weather Aid. This is a pot of £6 million to cushion the blow of the impact of extreme weather on farming production such as loss of stock or arable crops.

http://www.heraldscotland.com/news/transport-environment/revealed-the-scots-farmers-made-millionaires-by-eu-subsidies-1.1026316

But back to the railways. New Labour in government completed the privatisation of Britain’s rail services and so enabled the system where private rail franchises are able to claim subsidies higher than the premiums they pay to the government for the franchises they claim to be able to run efficiently.

Where is the sense in that?

Virgin receives 3.6 p per passenger mile to the tune of £133 million. Of £41 million pre-tax profits it provided £29 million to shareholders. At the same time the east coast service receives 0.5 pence each passenger mile.

Virgin has denied any imbalance.

The system of subsidies in this country is a win win for those who are prepared to work the system. At a time when seriously ill and disabled claimants are having their incomes reduced by changes to DLA is it acceptable that multi-nationals, landowners, pharma giants and the rest are being provided with non-returnable public money collected from our taxes? Talking of taxes – another day.

Any private company reliant on the state for subsidies is a failing business. If the state has to act to finance any private organisation then the state should take over its business.  Don’t tell me the state is necessarily more inefficient. What we have now is subsidy-junky culture which camouflages failures in private enterprise. Why are we pretending private is better than public in cases when it is patently incapable of supporting itself or unwilling to do so? It used to be that the free market was a risky place to enter but for some that element has been removed knowing failure will be underwritten by those of us who pay our taxes.

See also

http://www.guardian.co.uk/commentisfree/2013/jul/01/farm-subsidies-blatant-transfer-of-cash-to-rich