By unlocking the export potential China offers the pig industry, not to mention the red meat sector as a whole, we could gain entry into a marketplace which comprises a fifth of the world’s population.Defra could be forced to pay millions back to EU
DEFRA is likely to have to return millions of pounds of unused EU money, including funds taken from Single Payments, to Brussels because it has over-estimated uptake of its flagship English organic scheme.
A report by the National Audit Office (NAO) has accused the Department of making ‘over-optimistic’ assumptions about uptake of the £200 million Organic Entry Level Stewardship (OELS) scheme.
While Defra assumed a constant take up during the scheme’s life, the NAO’s inquiry found that uptake has ‘tailed off’.
It projects that this will mean around £160m will eventually be spent on the scheme, compared with a Defra forecast of £176m and a more recent Natural England forecast of £197m. This could mean £10m disappears back to EU coffers, the NAO report warns.
This could just be the tip of the iceberg, the report suggests. The NAO said that in June 2009 Defra reported an under-spend of £420m across the £3.9 billion, seven-year Rural Development Programme for England.
The programme is funded by a combination of core EU funding, voluntary modulation receipts taken from Single Payments, with UK Treasury match funding of both elements. The bulk of the money, around £3bn, is allocated for agri-environment schemes, primarily ELS, OELS and Higher Level Stewardship.
The rural development schemes finish in 2013 and EU funds, including those raised by voluntary modulation, must be used by 2015 or they will be retained by Brussels.
Part of the problem, ironically, is that exchange rate movements mean there are more funds available than originally anticipated. This has also significantly pushed up the Treasury’s match-funding requirement.
The report also reveals that Defra has ‘started informal discussion’ with the European Commission with a view to reducing the levels of match-funding it contributes for voluntary modulation.
If the bid fails and the Treasury cannot meet its match funding requirement, it will mean more money taken in national modulation could have to be returned from the EU, the NAO report warns.
The report concluded that OELS was ‘likely to have achieved environmental benefits by supporting organic farming’. It said the money paid to farmers for adopting environmental land management measures has had some impact, but that this could be increased.
An NAO survey revealed that 57 per cent of scheme participants chose measures that involve managing features already in place on their farm, while many of the more challenging options are ‘rarely implemented’.
It said farmers were ‘happy’ with the quality of service provided by Natural England in administering the scheme.
A Defra spokesperson said the Department ‘recognises the concern that EU funds could remain unused’.
“That is why we manage the funds as part of the total programme to maximise the benefits across a number of environmental and rural development schemes,” she said.
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Readers' comments (1)
Lawrence Woodward: Organic Research Centre - Elm F | 31 March 2010 4:49 pm
It is good that you mention the fact that the NAO report acknowledges the environmental benefits that accrue from the OELS. However, you highlight the fact that 57% of participants in the scheme adopted practices that were already in place on the farm and did not take up more challenging options. Which presumably means that 43% did; a remarkable achievement given that the OELS is one of the “broad and shallow” schemes designed by DEFRA as a strategy to encourage farmers to take up management of the environment as one of the legitimate outputs of farming.
The NAO is fulfilling its remit by raising questions about value for money but its report fails to take in to account the push throughout the EU – by all member states and the Commission – to engage farmers in environmental management through this kind of incremental approach.
It was and remains the right thing to do and the NAO should take this into account. Furthermore, this report into the OELS should not be presented as pointed criticism of organic farming. Because of its small size, the OELS is a relative easy scheme to audit which is why it was chosen. Many of the NAO’s comments apply to ELS and schemes in other member states. This report should be seen primarily as criticism of the whole “broad and shallow” approach by accountants who are unable to consider the wider political, policy and environmental management context. As such it should be read with circumspection.
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