Subsidies should be removed gradually – January 2016
This Christmas the bearded old fellow in the red overcoat was under pressure. Already burdened by the task of delivering Millennium Falcons and Chewbacca costumes to thousands of Star Wars fans, he could not ignore a troubled force from an unusual source!
In previous years farmers were delighted if the single farm payment (SFP) cheque arrived in December. But if it crept into January this was only a minor problem. This year was different, the chubby man’s sensory antenna was overwhelmed by a reoccurring message: “Please Santa, bring me my SFP now!”
In times like these the subsidy is an undeniable lifeline. Yes it is true that owner occupiers have st rong balance sheets underwrit ten by buoyant land values seemingly unaffected by disastrous farm profitability. But a high net worth is pretty academic if there isn’t any cash in the bank. The only solution is to borrow more or sell something, neither of which are particularly palatable. For tenants one or both of these solutions will be unavailable making the delayed arrival of the SFP not just inconvenient but potentially much worse.