DEFRA'S Dairy Reform Challenged By Euro Barrister

Defra's recently introduced dairy reform has been brought in both unfairly and illegally with regard to the effect that it will have on English dairy farmers, according to a leading Euro barrister's Opinion.

The Opinion document was initiated through a campaign, led by Charles Holt of the Farm Consultancy Group, to challenge Defra on the unfairness of the dairy reform package in England. Mr Holt has now written to all English dairy farmers who supported his campaign and helped to raise the funding required to examine the legal validity of the case by a Euro barrister.

On behalf of the campaign, solicitor William Neville of Burges Salmon assessed the decision by Defra and considered that it may be illegal and Defra may have a case to answer. The decision was made to progress this with a Euro barrister.

“As the reform stands, dairy farmers in England will lose about 6ppl in total over the next seven years,” says Mr Holt. “For a dairy farmer producing 1 million litres a year this is a loss of £60,000 compared with his Scottish, Welsh and Northern Irish neighbours. Dairy farmers in the Severely Disadvantaged Areas and Moorlands of England stand to lose even more.”

“The Opinion document I received last week supports our case very strongly,” he adds. Issues lie in the framework for reforming the support schemes under the CAP. At issue is the relationship between two different payments - the 'Single Payment', also known as the de-coupled payment, and the 'Dairy Premium - based on the reference quantity (milk quota) available to the holding on 31 March 2005 - and Additional Payment', made each year.

The relevant EU regulation states that the Dairy Premium and Additional Payment will be made in addition to the single payment up to 2006. From 2007 the legislation envisages that the separate Dairy Premium and Additional Premium will be included as part of the Single Payment Scheme.

“This means that dairy farmers should receive a supplementary payment in 2005 and 2006 based on the dairy premium and additional payment,” says Mr Holt. “We have been informed that this is exclusive to dairy farmers. There is no mechanism within the regulation for withholding the money, nor for paying it to other (non-dairy) farmers”

The barrister questions how the Dairy Premium and Additional Payment will be dealt with under Defra's scheme of implementing the Single Payment in England where they plan a gradual reduction of payments initially based on historical entitlement, to be replaced with increasing flat rate payments based simply on the eligible area farmed.

In his view, it would be correct to pay the Dairy Premium and Additional Payment on top of regionalised payments. He is also of the opinion that these two payments constitute a specific legislative regime, which is distinct from the Single Payment Scheme.

If the Dairy Premium and Additional Payment are not available to English dairy farmers, but are available to dairy farmers in other regions of the UK and elsewhere in the Community, English dairy farmers will be placed at a competitive disadvantage.

Following advice from the barrister, Charles Holt has asked Burges Salmon to forward the barrister's Opinion document to Defra. “We would like Defra to confirm whether they intend to implement the SPS in accordance with what we consider to be the correct approach,” he says. “If not, then we require an explanation as to why they consider a different approach to be permitted by the relevant legislation.

“And if we do not get a satisfactory response then we will have to launch a full legal challenge. I understand this is likely to take place in the European Court of Justice, due to the complexity of the legislation.

“Defra appear to be reallocating half the funding - £500 to £600 million - destined for the Dairy Premium and Additional Payment away from dairy farmers. In my view this is money that should come to English dairy farmers,” adds Mr Holt.