Environment Secretary and NFU President clash over Pillars cash

Where should support payments for agriculture go?

Should they be directed to supporting farmers for what they do, in what the European Union calls Pillar One, or to environmental and rural infrastructure, in Pillar Two.

It was the cause of a major rift between Peter Kendall, President of the National Farmers' Union (NFU) and Environment Secretary Owen Paterson, who clashed at the NFU's annual conference in Birmingham.

Mr Kendall voiced strong concerns about British Government moves to "modulate" another 15% of farmers' support payments from Pillar One to Pillar Two.

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"When our dairy farmers are already getting 200 euros per hectare less in farm payment than their Danish counterparts, it's really unfair to impose this extra modulation," he said. "We all want to be able to farm more efficiently but we don't want to see the Government deciding how to spend our money. There's not a farmer here who wants to go down his local pub and talk about being kept going with subsidies."

And unsurprisingly, the 1,000-stong audience was with him.

But Mr Paterson stressed he did not want to see "coupled payments" – where payments were made directly on production. There were member states within the EU who wanted public money used to support products that were not wanted, leading to food mountains, he said.

And he warned that the ongoing (and convoluted) negotiations to produce a new EU Common Agricultural Policy will inevitably involve compromise for us.

"But taxpayers will be with us if we allow farmers to decide about what to grow, as well as being compensated for environmental benefits and tourism benefits."

Mr Paterson, who represents the farming constituency of North Shropshire, said he did not see the level of direct Pillar One payments as the be-all and end-all, but public money should be spent skilfully, using Pillar Two cash to support sectors like the uplands, where it was impossible to make a living without extra help, environmental tourism, and technology and training.

Mr Paterson, whose tenure in office has generally been welcomed as being farmer friendly, gained qualified approval from Westcountry members, who made up about a tenth of the audience.

"He answered all the questions and gave a good impression – but the big problem was on Pillar Two," said Brian Trewin, chairman of the Cornwall NFU branch.

Colin Rowland, the Devon branch chairman, agreed, saying: "he needs to change and show some give and not retreat on direct payments. In an ideal world we would not need them, but we do." Mr Rowland said the Government was still promoting cheap food. "But we can't produce food and cut cost of production, because we would very quickly be in financial difficulties."

During the conference Tesco's announcement about procuring more UK chicken was welcomed by speakers. "There's a sense of optimism in farming," said Mr Paterson.