Industry braced for sharpest cuts in 80 years

Agriculture is on the brink of the biggest spending cuts for 80 years with DEFRA poised to announce how it plans to meet coalition government targets in next week’s spending review.

Plans to establish an independent animal health body will be among the first to face the axe as DEFRA slashes its £2.9bn budget.

Any cuts of less than 30% will be seen as a victory for DEFRA secretary Caroline Spelman, who struck a deal with the Treasury, which has ordered departments to cut budgets by between 25% and 40%.

Proposals for the animal health body, which would have taken over disease control from DEFRA, was part of draft legislation set out by the previous government. It was aimed at sharing the cost of fighting animal disease with farmers.

But NFU head of food and farming Kevin Pearce said it was now unlikely to go ahead. “The significant change of course is the new government’s opposition to setting up new bodies,” he told this week’s NFU council.

“It also looks like a specific animal disease levy is off the agenda,” he added.

But farmers could still end up sharing the cost of combating animal disease outbreaks, Mr Pearce warned. Cost sharing was not dead, especially when farmers wanted the government to help fund action against bovine TB, he said.

What else will go to achieve a slimmed-down DEFRA is unclear. Insiders suggested that farmers have less to fear from the cuts than they might have thought, raising hopes that ministers will grab the opportunity to save significant sums by targeting backroom staff and reducing red tape and over-regulation.

Richard Macdonald, head of DEFRA’s taskforce on farming regulation, hoped his report on regulation reform, due in April 2011, would be put to good use.

“Some decisions are unlikely to be made for several months. I think we can make a number of recommendations that could streamline processes and deliver savings.”

Obvious areas for overhaul included duplication of dairy hygiene inspections, where the state and the private sector each carried out 11,500 visits a year, and meat hygiene inspections, which tied up many vets and trading standards officers.

“We need to work out where to go to target the risk, rather than waste resources in a scatter-gun approach,” he added.

Tenant Farmers Association chief executive George Dunn said his main concern was access to funding. “If we see big reductions in staff numbers it could take longer and become more difficult for farmers to get access to rural schemes and grants.”

He was also worried that much-needed investment in the Rural Payment Agency’s computer systems could be put on hold, leading to further problems over single farm payment delays.