Assessing the options for upland livestock systems under CAP reform: Developing and applying a livestock systems model within whole-farm systems analysis

This paper presents a scenario-based analysis of the impacts of Common Agricultural Policy (CAP) reform for upland agriculture using a Welsh case-study. Specifically the paper examines the impacts of the introduction of the single-farm payment (SFP), the modulation of direct payments under Pillar I of the CAP and the increase in agri-environment payments under Pillar II. Three enterprises are examined, upland sheep rearing with lamb finishing, spring- and autumn-calving suckler-cattle with calf rearing. These enterprises are modelled under conditions in 2002/3, 2004/5 and for the reformed CAP in 2005/6. To support this analysis a livestock system model (LSM) was implemented. The model assesses alternative management regimen using a flexible state-transition approach. This simplifies the realisation and parameterisation of potentially complex management regimen. The model tracks fodder requirements to achieve targets based on defined diets. The LSM underpins whole-farm analyses of stocking-rates, labour and other resource requirements and net-farm income. From the case study the paper concludes that the impacts of the introduction of the CAP reform on the financial performance of the systems are small but negative (a net reduction of around 5% in support). The larger reduction in direct payments (15–18%) is partially offset by agri-environment measures. The paper concludes that while SFP encourages a more market-oriented outlook, the adaptive capacity within systems as they stand is very limited. There are a range of possible adaptation strategies, but for the uplands the extensification of cattle systems by reducing stock numbers and cutting back on labour seems most probable.