The Single Farm Payment is an agricultural subsidy paid to farmers in the EU.[1]
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Historically, the EU's Common Agricultural Policy (CAP) emphasised direct subsidies for agricultural produce. To reduce price distortion, the connection between payments and specific crops was removed; instead, a "Single Farm Payment", which subsidised farmers on a per-hectare basis, was introduced in June 2003; although farmers may now attempt to claim subsidies for more land than they actually have.[2] This "decoupling" of subsidies means they are accepted in the "Blue box" category of subsidies in the Agreement on Agriculture, in line with international agreements to reduce market-distorting subsidies and price controls.
National governments within the EU make their own arrangements for implementation and for paying subsidies to farmers; in the UK this is done by the Rural Payments Agency, an executive agency of Defra.[3] Some British farmers have experienced problems due to delays in verifying how much land they have which is eligible for subsidy.[4]
The Scottish government offers farmers an online system to claim subsidies, which reduces the burden of paperwork.[5]
In non-Euro countries, payments to farmers may be made in local currency at an exchange rate set by the European Central Bank.[6]
Some farmers trade their subsidy entitlements.[7]
The Single Farm Payment is a large proportion of income for many farmers,[8] who say they could not profit without subsidies.[9][10] However, farm subsidies in developed countries push up food prices and impoverish third-world farmers. Taxpayers in the EU get very little in return for their money.[11][12]
In 2010, the EU spent €57 billion on agricultural development, of which €39 billion was spent on direct subsidies.[13]