Brian Pack’s eagerly awaited report has some very interesting proposals. A period of wide consultation now starts, with the final report likely to be produced in the summer.
 

It is unlikely there will be any significant changes to the existing system until 2014. Following that, an area based subsidy system has been proposed to take over from the current historic payment system.
 

That will mean the main part of the existing ‘subsidy cake’ will be divided and spread over a much larger area. There will inevitably be winners and losers; the losers being those who have large subsidies and the winners those who may currently have eligible land but no subsidy.
 

This redistribution will have a major impact on businesses that rely on their existing level of subsidy to make a profit and any reduction could, if agricultural and commodity prices remain at depressed prices, find themselves put out of business. Those who may be affected should start planning now to survive with less subsidy.
 

The winners will no doubt be extremely grateful for the unexpected windfall.
 

Depending on the detailed rules relating to transfer of subsidy payments it could conceivably affect the value of land.

There is likely to be an incentive to keep livestock in marginal areas which will hopefully reduce the decline in the numbers being kept and halt the decline of the rural population in areas where thriving communities should be maintained. Keeping remote communities alive was one of the original objectives of the subsidy regime.
 

The suggestion that payment of subsidy will be linked to agricultural activity, whether that is cultivation of arable land or minimum stocking rate, is welcome. Again there will be losers, namely those who currently claim subsidy without actually farming but perhaps they will have few sympathisers.
 

Part of future subsidy, named the ‘Top Up Fund ‘, may be linked to undertaking specific activities, for example renewable energy schemes or water management. Some of those who lose out may be able to access these additional payments. However, if the scheme is competitive there may be too many applicants for a limited pool of funds.
 

The report will stimulate a lot of debate and sets an excellent framework for a review of the subsidy system. Saying that, there is a very long way to go between the proposals made in the final report and those which the EU will finally agree to adopt in 2014.
 

Whether any of the proposals made now, other than moving to some form of area based scheme for payments, survive in a recognisable form in 2014 is a moot point.