The Single Farm Payment is an
agricultural subsidy
An agricultural subsidy (also called an agricultural incentive) is a government incentive paid to agribusinesses, agricultural organizations and farms to supplement their income, manage the supply of agricultural commodities, and influence t ...
paid to farmers in the EU.
History
Historically, the EU's
Common Agricultural Policy
The Common Agricultural Policy (CAP) is the agricultural policy of the European Union. It implements a system of agricultural subsidies and other programmes. It was introduced in 1962 and has since then undergone several changes to reduce the ...
(CAP) emphasised direct subsidies for agricultural produce. To reduce price distortion, the connection between payments and specific crops was removed; instead, a "Single Farm Payment", which subsidised farmers on a per-hectare basis, was introduced in June 2003; although farmers may now attempt to claim subsidies for more land than they actually have. This "decoupling" of subsidies means they are accepted in the "
Blue box
A blue box is an electronic device that produces tones used to generate the in-band signaling tones formerly used within the North American long-distance telephone network to send line status and called number information over voice circuits. ...
" category of subsidies in the WTO
Agreement on Agriculture
The Agreement on Agriculture (AoA) is an international treaty of the World Trade Organization. It was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade, and entered into force with the establishment of the WTO on J ...
negotiated at the
Uruguay Round
The Uruguay Round was the 8th round of multilateral trade negotiations (MTN) conducted within the framework of the General Agreement on Tariffs and Trade (GATT), spanning from 1986 to 1993 and embracing 123 countries as "contracting parties". The R ...
, in line with
international agreements
A treaty is a formal, legally binding written agreement between actors in international law. It is usually made by and between sovereign states, but can include international organizations, individuals, business entities, and other legal perso ...
to reduce market-distorting subsidies and price controls.
Payments to farmers
National governments within the EU make their own arrangements for implementation and for paying subsidies to farmers. When the UK was a part of the EU, this was done by the
Rural Payments Agency
The Rural Payments Agency (RPA) is an executive agency of the UK Department for Environment, Food and Rural Affairs (Defra). Prior to Brexit, the RPA delivered the European Union (EU) Common Agricultural Policy (CAP) payments to farmers and trade ...
, an executive agency of
Defra DEFRA may refer to:
* Deficit Reduction Act of 1984, United States law
* Department for Environment, Food and Rural Affairs, United Kingdom government department
{{Disambiguation ...
. Some British farmers experienced problems due to delays in verifying how much land they have which is eligible for subsidy.
The Scottish government offered farmers an online system to claim subsidies, which reduces the burden of paperwork.
In non-Euro countries, payments to farmers may be made in local currency at an exchange rate set by the
European Central Bank
The European Central Bank (ECB) is the prime component of the monetary Eurosystem and the European System of Central Banks (ESCB) as well as one of seven institutions of the European Union. It is one of the world's Big Four (banking)#Intern ...
.
Trading
Some farmers trade their subsidy entitlements.
Economics
The Single Farm Payment is a large proportion of income for many farmers, who say they could not profit without subsidies. However, farm subsidies in developed countries push down
food prices
Food prices refer to the average price level for food across countries, regions and on a global scale. Food prices have an impact on producers and consumers of food.
Price levels depend on the food production process, including food marketing an ...
and impoverish third-world farmers. Taxpayers in the EU get more than most in return for their money.
In 2010, the EU spent €57 billion on agricultural development, of which €39 billion was spent on direct subsidies.
See also
*
Single Payment Scheme
On 26 June 2003, EU farm ministers adopted a fundamental reform of the Common Agricultural Policy (CAP) and introduced a new Single Payment Scheme (SPS or Single Farm Payment) for direct subsidy payments to landowners.
The system of subsidy appli ...
*
Intervention storage
*
European Agricultural Guidance and Guarantee Fund
The European Agricultural Guarantee Fund (EAGF) consumes a large part of the general budget of the European Union. It finances direct payments to farmers under the Common Agricultural Policy (CAP), as well as measures to regulate the common markets ...
References
Economy of the European Union
European Union and agriculture
Agricultural subsidies
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