Source · Select Committees · Public Accounts Committee
Recommendation 17
17
As part of the new scheme, direct payments to farmers will reduce by 55% by...
Conclusion
As part of the new scheme, direct payments to farmers will reduce by 55% by 2024– 25 before being phased out completely. The NAO found that the Department expects the reduction in direct payments and introduction of its replacement arrangements to have a significant impact on profits for many farmers. Analysis of the Farm Business Survey shows that many farmers are reliant on direct payments to support their business. Without direct payments, and with no other changes (such as income from new schemes or rent reductions), the average farm in England would have an annual net profit to the farmer of only £22,800, a fall of 53% compared to their average profit for previous years. Over a third (38%) of farmers would make a loss without direct payments.52 The Department asserted that farmers can manage the impact of these reductions through a range of business improvements. It expected that this would include both increasing income, such as through participation in schemes and other approaches such as diversification or exports, and reducing costs through improving productivity and reducing waste.53
Government Response
Not Addressed
HM Government
Not Addressed
3: PAC conclusion: We are not convinced that the Department sufficiently understands how its environmental and productivity ambitions will impact the food and farming sector over the next decade. 3: PAC recommendation: The Department should urgently explain to the Committee, showing its forecasts both for changes in land use and resulting changes in payments to farmers, how it expects its farming programmes to affect food production and farm productivity in England and report annually to Parliament on the level of food price inflation together with any changes to the proportion of the food we consume that is produced in the UK, which was 53% in 2018. 3.1 The government agrees with the Committee’s recommendation. Target implementation date: end of March 2022 3.2 The government agrees that it is important to understand the impacts of reforms on the food and farming sector and, with that in mind published a detailed analysis in 2018 and 2019 that set out the likely impacts of direct payment reductions on different types of farm business. 3.3 The 2019 Future Farming and Environment Evidence Compendium sets out a comprehensive analysis of the impact of removing direct payments alongside an analysis of routes to improve productivity and grow farm incomes. 3.4 The government is currently updating this analysis to reflect data on farm incomes immediately preceding the start of the agricultural transition and will publish an update by 31 March 2022. 3.5 The government agrees it is important to publish regular data on food price inflation and food self-sufficiency. Food price inflation and self-sufficiency is reported annually in the Food Statistics Pocketbook sections 6, 7 and 9 (a National Statistics publication, Food Statistics in your pocket: Summary.