The Minister has written to the Environment and Sustainability Committee to update them on how Common Agricultural Policy funding for 2014 -20 will be split between Pillar 1, direct payments to farmers, and Pillar 2, which funds projects that support agricultural development and people living and working in rural areas through the Rural Development Programme.
Under the new CAP rules the Welsh Government must confirm these details with the European Commission before the end of 2013.
Following an extended consultation period and meetings with the EU, UK Government and key partners across Wales, the Minister has decided that he will not allocate any money from Pillar 2 into Pillar 1, and that he will transfer 15%, the maximum permitted level, from Pillar 1 to 2.
This will result in an extra £286m to support rural activity in Wales.
Alun Davies said:
“Both Pillars of the CAP are crucial to the future development of Welsh agriculture and I believe they must be taken together as a single package.
Single Payments are an important part of the support given to farmers but they are complemented and enhanced by the Rural Development Programme which provides farmers with essential business support and underpins vital programmes for people living and working in rural Wales. I want to build on Pillar 2 on and make further investments in the future of our agricultural industry and the wider Welsh economy.
“I also believe that the regrettable reduction in CAP budget for 2014 to 2020 is just the first step in a real term decline in direct support for farmers as the EU adjusts its priorities and adjusts to tougher economic times.
“I am determined that Wales will use the period up to 2019 to put its farming industry on the best possible footing so it is equipped to cope when financial support from the public sector is reduced further . Pillar 2 allows for effective and targeted support for our agricultural sector and rural communities, and as such provides a better return for public expenditure than Pillar 1.
“I have made this decision because I believe it will result in a rural development fund that is large enough to help the farming industry in a sustainable and meaningful way.”
In his full letter to the Environment and Sustainable Committee the Minister said that whilst Pillar 1 was an income support safety net for a farming industry that had to cope with risk, it could not be a never ending subsidy. He also expressed concerns that Pillar 1 could stifle modernisation and innovation, noting that there was still a wide gap in the relative performance of livestock farms across Wales.
The Minister said he would begin detailed consultation on the next RDP in February 2014 and he would ensure that in t it improved take-up of best practice and provided targeted support for upland farmers and communities.
The Minister added:
“This is a time of significant change for Welsh agriculture but also one of considerable opportunity. I am optimistic for the future and determined that these CAP measures should put our industry on the best possible footing for the future.”