Five-Year Brexit Transition Funding to Help U.K. Farmers Adjust

(Bloomberg) -- The U.K. government will extend its Brexit transition regime to help farmers cope with the loss of European Union subsidies when the country leaves the bloc in 2019 in a move that will add billions of pounds to the cost of the split.

Environment Secretary Michael Gove will on Thursday give a speech outlining his plan to overhaul the way state funds are spent on farming once Britain withdraws from the EU's Common Agricultural Policy, his office said.

The U.K.'s governing Conservative Party promised last year to match the CAP rate of annual payments worth 3 billion pounds to farms for three years after Brexit -- until 2022. On Thursday, Gove will signal he's extending these grants until 2024, effectively giving farmers a five-year cushion to soften the impact of Brexit.

“I want to give farmers and land managers time and the tools to adapt to the future, so we avoid a precipitate cliff edge but also prepare properly for the changes which are coming,” Gove will tell a farming conference in Oxford, England. “I want to develop a new method of providing financial support for farmers which moves away from subsidies for inefficiency to public money for public goods.”

Preparations Crunch

Gove's announcement comes at a critical time in the U.K.'s preparations for Brexit. Prime Minister Theresa May's government will begin negotiating the terms of a two-year transitional phase with the EU later this month, a plan she hopes will ease the adjustment process for businesses.

Gove's extra help for farmers could lead other sectors to step-up their own demands for a longer transition period. The minister, who is 50, is one of the most prominent Brexit backers in May's cabinet. With Foreign Secretary Boris Johnson, he led the Vote Leave campaign in the U.K.'s 2016 referendum on EU membership.

In his speech at the Oxford Farming Conference, he will set out his aim for a new regime of state subsidies that will replace the CAP over time, according to extracts released in advance by his office. Gove wants to reward farmers who protect wildlife habitats, open their land to the public, plant woodlands and safeguard the landscape.

These criteria will replace what he sees as the flawed CAP model, which pays farmers based on how much land they have, a system that benefits the richest.

“Paying land owners for the amount of agricultural land they have is unjust, inefficient and drives perverse outcomes,” Gove will say. “It gives the most from the public purse to those who have the most private wealth.”

An exception to the proposed rule changes could be made for hill farmers who would struggle to survive without payments based on land area. Further details will be announced in a government blueprint expected later this year.

To contact the reporter on this story: Tim Ross in London at tross54@bloomberg.net.

To contact the editors responsible for this story: Flavia Krause-Jackson at fjackson@bloomberg.net, Robert Jameson

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