Elsevier

Land Use Policy

Volume 27, Issue 2, April 2010, Pages 550-563
Land Use Policy

The effect of decoupling on marginal agricultural systems: Implications for farm incomes, land use and upland ecology

https://doi.org/10.1016/j.landusepol.2009.07.009Get rights and content

Abstract

In many parts of Europe, decades of production subsidies led to the steady intensification of agriculture in marginal areas. The recent decoupling of subsidies from production decisions means that the future of farming in these areas is uncertain. For example, in the uplands of the United Kingdom, an area important both for biodiversity conservation and ecosystem service provision, hill farmers steadily increased stocking densities in response to headage payments but must now reconfigure farm businesses to account for the shift to the Single Farm Payment scheme. We examined hill farming in the Peak District National Park as a case study into the future of marginal agriculture after decoupling. We surveyed 44 farm businesses and from this identified six representative farm types based on enterprise mix and land holdings. We developed linear programming models of production decisions for each farm type to examine the impacts of policy changes, comparing the effects of decoupling with and without agri-environment and hill farm support, and evaluating the effects of removal of the Single Farm Payment. The main effects of decoupling are to reduce stocking rates, and to change the mix of livestock activities. Agri-environmental schemes mediate the income losses from decoupling, and farmers are predicted to maximise take up of new Environmental Stewardship programmes, which have both positive and negative feedback effects on livestock numbers. Finally, removal of the Single Farm Payment leads to negative net farm incomes, and some land abandonment. These changes have important implications for ongoing debates about how ecological service flows can be maintained from upland areas, and how marginal upland farming communities can be sustained.

Introduction

In many parts of Europe, decades of production subsidies led to the steady intensification of agriculture in marginal areas. The recent decoupling of subsidies from production decisions means that the future of farming in these areas is uncertain. European uplands are nationally and internationally important for biodiversity as well as being of significant landscape, archaeological, recreational and heritage value (Hanley et al., 2007). The UK uplands play a key role in supporting habitats and species of conservation concern (Ratcliffe and Thompson, 1988, Rodwell, 1991). However, large areas of upland habitat deteriorated throughout the last century (Anderson and Yalden, 1981, NCC, 1987, Tudor and Mackey, 1995), due in part to the steady intensification of hill farming (Anderson and Yalden, 1981, Dallimer et al., 2009a). English Nature recently found that two thirds of the most valuable moorland areas in England are now in an unfavourable condition with historical and current overgrazing by sheep presenting the most common threat (English Nature, 2005).

Upland farming communities are also seen as being important to maintaining social capital (community inter-linkages and institutions), and for many years governments have offered additional supports to upland farmers in an attempt to sustain incomes, rural services and populations in these areas. The impacts of policy change on the uplands is thus of interest for both environmental and social reasons.

The Common Agricultural Policy (CAP) has been the most important land use policy within the EU. Production-based payments under the CAP provided an incentive for farmers in the uplands to increase sheep and cattle numbers, which resulted in some areas in damage to vegetation and soils through overgrazing. Problems of surplus accumulation and trade interventions were also important factors for reform of the CAP (HM Treasury and Defra, 2005). The CAP has recently undergone a series of significant changes, most recently those of Agenda 2000 (1999) and the Mid Term Review (June 2003 and April 2004). These reforms are phasing out production-linked support and protection (“decoupling”), and are re-targeting support on environmental and rural development outcomes. In 2005, the Single Farm Payment scheme (SFP) was introduced, replacing most existing crop and livestock payments. However, the SFP is planned to be progressively reduced and phased out (HM Treasury and Defra, 2005), being currently only guaranteed until 2013.

Hill-farmers have come to depend on subsidy programmes additional to those received by farmers outside the uplands, such as the Hill Farm Allowance (HFA), and on payments from agri-enviroment schemes (AES). These programs are also in flux. The Environmentally Sensitive Areas (ESA) program and Countryside Stewardship Scheme (CSS) are in the process of being replaced with the Environmental Stewardship Entry Level (ELS) and Higher Level (HLS) schemes. The current version of the HFA program was due to end in 2007, although it has been extended through 2009. What form any new scheme will take is subject to an ongoing policy debate in the context of the new Rural Development Regulation which covers the period 2007–2013 (DEFRA, 2006). Reforms to the HFA will have to be in line with the current re-directing of CAP support away from production and towards Second and Third Pillar measures (Latacz-Lohmann and Hodge, 2003); it thus seems likely that the HFA will become an agri-environmental scheme targeted at landscape and biodiversity concerns in upland areas.

Changes in core support to upland farmers through the SFP and the HFA, and in agri-environment provisions, could be expected to have significant impacts on how farms are managed, on hill-farm income, and on the ecological impacts of hill-farming (for example, through changes in stocking rates). This paper quantifies these policy reform effects for a range of farm types in the English uplands, for a range of policy scenarios. We use hill farms in the Peak District National Park (PDNP) as a case study. The challenges faced in what is Britain's oldest National Park epitomise those faced throughout the UK uplands. The area is rich in biodiversity, a major carbon store, and provides a major recreational resource for one-third of the UK population that lives within an hour's drive. However, local hill farmers constitute one of the most deprived farming communities in the UK (PDRDF, 2004), with contemporary data indicating that Less Favoured Area (LFA) farms make an average loss (Farm Business Income basis) of £16,000 per farm from crop and livestock production. These production losses are offset by SFP, HFA, AES and diversification revenue to generate a headline Farm Business Income of £10,800. Net Farm Income averaged approximately £6000 per farm (Franks et al., 2008). These data clearly demonstrate dependence of farming activity in the uplands of the UK on subsidy.

Given the relationship between agricultural and environmental activity in the uplands, the analysis of the link between public support and agricultural and environmental activity has received considerable research attention. Several studies have analysed decoupling at the EU level using partial equilibrium models (e.g Witzke and Zintl, 2005, Banse et al., 2005, Binfield et al., 2004, Chantreuil et al., 2008, Britz, 2004) and general equilibrium models (Gohin, 2006, Hertel, 1997), as well as regional and sector models (Shrestha et al., 2007, Schmid and Sinabell, 2007) and agent based simulation models (Happe et al., 2005). Some studies have investigated the effects on farm outputs and incomes at the farm level (Matthews et al., 2006); others have utilised multi-period LP models (Breen et al., 2005) in their analysis. However, only Revell and Oglethorpe (2003) have analysed the effects of CAP on the uplands. In contrast to these existing studies, our paper examines the impacts of the decoupling across a range of farm types in a marginal upland setting, in the context of reforms to agri-environmental schemes for an upland area where farming and biodiversity are closely inter-linked. The key outcomes presented here are in terms of changes in farm incomes, land use and ecological pressures. We relate these impacts to current biodiversity levels on case study farms. We also cast light on the likely problems due to the partial abandonment of upland livestock enterprises which would appear to follow both from decoupling and from the complete removal of core income support for upland farmers.

Section snippets

Methodology

Several techniques can be used to analyse the relationship between agricultural policy and land use decisions at the farm level, including normative and econometric approaches. Mathematical models, such as Linear Programming (LP) and agent-based models, have frequently been used for policy analyses for previous CAP reforms (Donaldson et al., 1995, Bos, 2002, Pacini et al., 2004, Veysset et al., 2005). For present purposes, a mathematical programming approach would seem to be preferable, since

Optimal production plans

From the perspective of upland biodiversity, the most important impacts of policy reform are those on land use, livestock density and fertiliser use: this section thus focuses solely on these variables. The changes in predicted land use for each farm type across the six policy scenarios can be seen in Table 9. The land that is used for livestock production or maintenance – under SFP and AES – and the land that is left as fallow (“unused land”), is taken as a proportion of the total land

Discussion

The key results that emerge from the analysis described above is that the effects of policy reform vary substantially across farm types, although some general trends can be discerned. Our discussion of these findings is organised according to (i) the effects of de-coupling itself, (ii) the mediating effects of agri-environment scheme payments (including the HFA), (iii) the effects of loss of the Single Farm Payment, and (iv) ecological implications. For all cases, the base level is the HP

Conclusions

In this study the aim was to investigate how policy changes under CAP reform affect farmers’ income and land use in marginal upland farming systems, and to relate these to likely ecological impacts. Different policy scenarios were analysed and compared using linear programming models developed for six representative farm types in the Peak District. Results show that the change from headage-based payments to the Single Farm Payment motivates farmers to operate more extensively with part of the

Acknowledgements

This study would not have been possible without the generous time commitment and interest of the hill farmers of the Peak District. Help identifying suitable farms was provided by: NFU; Catherine Gray and other staff at the Peak District National Park; Aletta Bonn of the Moors For the Future Partnership; Mike Innerdale and Russell Ashfield of the National Trust; Chris Thomson of the RSPB; and Andrew Critchlow. Socio-economic surveys were performed by Helen McCoul, Richard Darling, John Farrar,

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