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Sir John Bourn, head of the National Audit Office, reported today on programmes run by the Department for Environment, Food and Rural Affairs (Defra) to help English farm businesses adapt to changing markets and reforms to the Common Agricultural Policy (CAP). Farmers in the United Kingdom currently receive nearly £3 billion a year in subsidies under the CAP, but the substantial CAP reforms agreed to in June 2003 will necessitate major changes to the way support is delivered in the future.

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Defra is keen for farm businesses to be seen as part of the economic mainstream and to provide them with the support necessary for a successful transition. The transition to a more open and competitive market, combined with new environmental requirements, will be difficult for some farmers, particularly the roughly 90,000 individuals and families operating small- and medium-sized farm businesses. Defra has a range of measures in place including the provision of advice, capital grants, and where appropriate, regulation. It also operates four specific schemes to help farmers become more business-like, three of which are co-funded by the European Union. Some £250 million has been allocated to the four schemes between 2000 and 2006, but independent evaluations suggest a number of problems with them. Take-up and awareness levels are variable and application procedures are perceived to be complex and costly. Defra has initiatives under way to address these concerns and has taken steps to improve the administration and accessibility of its existing schemes.

The emphasis on capital grants schemes in England – which comprise 80 per cent of the funds available from Defra – differs from assistance in other countries. The National Audit Office, with the help of experts in each country, looked at farm business development schemes in Ireland, France, Germany, Denmark, Sweden, New Zealand and Wales and found much greater emphasis on providing advice and training to help farmers develop business opportunities and re-connect with the market.

Based on the good practices examined in these countries, the NAO report makes a number of specific recommendations as to how Defra should adapt its programmes. These include: increasing the proportion of funds spent on advice to farmers; making it easier for farmers to apply for support; merging farm business development schemes so that they can be accessed as a single package; widening the support available to farm businesses by making them eligible for existing loan-guarantee schemes available to other businesses; encouraging the use of local partnerships to join up agri-environmental initiatives with farm business development; giving farmers and others in the local community a greater say in how support is delivered; and shifting some support away from individual farms to support wider local initiatives to promote demand.

"Farming remains an important business in the UK, employing some 530,000 people and generating over £8 billion a year in income. Many farm businesses face an uncertain future, and Defra’s efforts to find innovative ways to help them adapt to new realities should be encouraged. My report considers good practice emerging in other countries, and makes recommendations as to how the Department can use this experience to improve its efforts to help farmers adapt to the commercial marketplace."

Sir John Bourn


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