A dramatic restructuring of the rural economy in the East of England will result from the Mid-Term Review (MTR) of the Common Agricultural Policy, according to a report commissioned by the East of England Development Agency (EEDA).

The EU’s farm policy (CAP) is scheduled for reform after the Mid-Term Review of the CAP takes effect in 2004. Changes in the MTR will be agreed by this June and will run through to 2012. At the heart of the proposals is a shift to a single area payment in place of various production subsidies, and an increased emphasis on delivering market-focused farming and environmental benefits. The general aim of the review is to create a ‘level paying field’ for farmers across the EU and to increase competitiveness.

Under the proposals the amount of support paid to larger farmers would decline by around 19% by 2012. As the East of England contains 50 per cent of country’s most productive land and some of the largest farms, the reforms will impact particularly heavily on the region.

The East of England contains some of Britain’s most productive, large-scale farms. It also contains a high proportion of farm supply and food processing businesses. Therefore, the MTR is likely to have a heavy impact on both food production sectors and the rural economy, according to the report produced for EEDA by Andersons, the farm business consultants. The report details the changes in profits that are likely to occur for typical farms in FoodFen and East Anglia. A 200 ha arable farm is expected to have a profit fall of 62%, a beef and arable farm will see profits fall by over 600% and a 250 ha organic farm will see profits decline by 66% by 2012. You can see a full copy of the report’s findings here

EEDA’s rural policy manager, Fiona Bryant explained: "The UK is committed to a reduction in the overall CAP budget, which EEDA and EERA accept in principal. However, CAP payments – currently contributing £300m a year to the region – are vital to the whole rural economy. Therefore, both regional organisations are concerned about the effect such cutbacks, especially as UK agriculture is currently enduring its worst economic crisis in recent history. Everyone is aware how farm incomes have fallen. Therefore, the UK must ensure that integrated support is in place to enable farmers to adapt and thrive".

The Andersons’s study concludes that overall, the MTR proposals will increase economic pressure for restructuring within the rural economy, particularly across the intensive farming enterprises in the eastern region.

David Bolton, a partner at Andersons in Bury St Edmunds said, "There are likely to be fewer, more efficient farms producing commodities. However, there will still be scope for the increase of niche markets, for rural diversification and use of land for alternative crops – particularly for ‘green’ energy."

Fiona Bryant added, "Funding support to individual farmers is available through grants for farm diversification projects such as the creation of office space from redundant buildings. Also farmers and farm workers are taking advantage of the training offered through the Agricultural Diversification in the Eastern Region (ADER) project, which provides a variety of courses from IT skills to practical case studies of diversification at work. While some of the proposals give cause for alarm, there is no doubt that for those involved in farming and the rural economy there are opportunities to generate new, efficient businesses and EEDA is well-placed to play a significant role in accomplishing this."