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Last Updated: Monday, 3 July 2006, 22:23 GMT 23:23 UK
Farmers feel pinch of payment failure
By Chris Impey
Farming Today

Cows on a farm in Hampshire
The new system depends on land owned rather than food produced
Last year saw the introduction of one of the most significant changes to English farming in the last 100 years.

For the first time, farmers would get a single subsidy payment for looking after their land rather than the amount of food they produced.

What followed was government mismanagement of such a scale it's pushed some farmers to the brink of financial ruin and could cost the taxpayer millions of pounds.

The change to the way farmers are paid is part of the reform of the Common Agricultural Policy.

The amount farmers receive largely depends on the amount of land they own.

They were told to fill in their forms by the middle of May 2005. Those who didn't were fined for every day they were late in handing them in.

But when all the forms were in, how long would it take to process them and when would the money arrive?

The autumn of 2005 was given as an initial date, but it quickly passed with no sign of substantial payments.

Eventually the government gave a commitment that 96% of the 1.5bn it had been given by Europe would be paid out by the end of February 2006.

The deadline came, but the money failed to materialise.

'Desperate situation'

Those who were depending on the cash to pay bills, buy in feed and support their families began to feel the pinch.

Farm gate in Devon
Without the funds some farmers have had to cut down on upkeep

The effects have been deeply felt.

The Farm Crisis Network received up to 60% more calls to its helpline in the first months of 2006 than in had in the same period of 2005.

The organisation has compared its impact on the rural community to the Foot and Mouth epidemic of 2001.

Paul and Fiona rear pigs, sheep and cows on their small farm in Norfolk.

They have six young children to support and say their situation has been desperate.

They told an investigation by BBC Radio 4's File on Four that the creditors have been knocking at the door and that they go to bed worrying about losing their house.

Their cows aren't getting wormed because they can't afford the medicine.

Arthur Hill, who runs an arable and livestock farm in Shropshire, was owed more than 70,000 as of June 2006 and intends to take the government to court over the fiasco.

The impact has been felt across the wider rural community with farm suppliers and many other businesses suffering because farmers have been unable to pay them.

Computer failure

So what had happened? Because the new system depends on how much land people own, people who hadn't previously received subsidies such as vegetable growers and pony paddock owners were able to apply.

The Rural Payments Agency (RPA) which was set up by the government to see farmers got their money was overwhelmed with applications.

Around 120,000 forms were received, 40,000 more than had been predicted.

The forms themselves were detailed and what farmers thought they owned often didn't tally with what the RPA had on its records.

The multi-million pound computer system which the agency had installed to process the applications simply couldn't cope.

Nowhere else in Europe has there been failure to pay on the level of that in England.

Across the borders in Scotland and Wales for example, a simpler system based on how much farmers had been paid in previous years has been employed.

The system began to smooth out in April, but by then it was too late for the government to reach the deadline set by the European Commission of the end of June 2006.

It had requested an extension, but the request was refused.

When the deadline passed around 10,000 farmers still hadn't been paid.

The Commission is now considering how much to fine the government for its failure - it could be many millions of pounds - and a House of Commons investigation into the chaos is underway.

Secretary of State for the Department for Environment, Food and Rural Affairs, David Miliband, admitted earlier this month that the failure of the payments system had caused real problems for farmers.

"I know that this year's problems have caused real distress and I repeat the apology to farmers I have made before," he said.




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