§ Baroness Byford
asked Her Majesty's Government:
Further to the proposals for changes to the system of farming subsidies announced on 22 January, how many farms which have an income above the threshold for a cut in subsidy of 12.5 to 19 per cent do not have a profit level sufficient to absorb the subsidy cut without making a loss. [HL1509]
§ Lord Whitty
The proposals announced on 22 January form a complex package of measures. A significant part of the package is the proposal to decouple the majority of the subsidy payments from production and to create a "single farm payment". This decoupling will permit farm businesses to restructure in order to achieve business profitability exclusive of the new income payment. In addition, the proposals allow for the recycling of a share of the modulated funds to producers for rural development.
The specific nature of farm business restructuring as a result of decoupling will depend on producers' preferences and their responses to market signals. Furthermore the modulation rates of 12.5 and 19 per cent will not be reached until 2012, around a decade hence. For these reasons it is not feasible to give reliable estimates of the effect on farm profits.