In response to criticism of his proposals for the new hill farming support system, Agriculture Minister Nick Brown explains the Government's reasoning behind the new Hill Farm Allowance scheme:

Hill Farmers in South Lakeland are facing serious financial problems so I am grateful for this chance to explain why I think the Government's strategy for hill farming is the only one which can offer a viable future for upland agriculture.

I do not think the Government's commitment to the hills can be doubted.

In England, £170 million a year, a quarter of all annual Common Agricultural Policy direct payments, are made to hill farms.

This includes the £27 million Hill Livestock Compensatory Allowance budget, a £15 million enhancement over the last three years.

Along with agri-environment and other schemes, the average annual subsidy is more than £30,000 per farm.

Yet in spite of this, average net incomes from hill farming fell below £6,000 last year.

Support payments linked to numbers of livestock have tended to encourage overproduction and depress prices.

They have also been criticised for increasing stocking densities to levels which risk damaging the environment andfor keeping production levels determined by subsidy instead of by the market.

The joint decision of the EU agriculture ministers to move to area-based payments was the right one because it removes the incentive to increase stock levels.

The new scheme also breaks the trade-distorting link between support payments and production levels and so the new scheme and will not be an issue in our forthcoming negotiations wth the World Trade Organisation.

The new Hill Farm Allowance scheme is not a continuation of the old HLCA on an area basis.

It has new objectives with both social and environmental aspects and fits into the framework of the England Rural Development Plan (ERDP).

It is an important part of the new direction for agriculture announced last year and developed in the Prime Minister's Action Plan for farming.

Under the new system there will be more winners than losers.

I understand the industry's reservations about the changes but I have tried to smooth the transition and cushion the impact on the losers with a safety net worth more than £6 million in 2001 and almost as much in 2002.

The lower rate of subsidy for moorland has been criticised, but I consider it essential for two reasons.

Firstly, it is cheaper to practise sustainable agriculture on a hectare of moorland than on a hectare of in-bye, and so deliver the social and environmental benefits from keeping it in production.

Secondly, the rates I have proposed are those which will minimise the redistribution of aid between farmers and minimise the disruptive effect of the change - the alternative would only concentrate the bulk of the support in the hands of a few large farms with extensive moorlands and relatively limited expenses.

On their own, the changes will not guarantee the future of hill farming.

Farmers must continue to make the most of the agricultural and non-agricultural potential of their land and I hope hill farmers will take full advantage of the other elements in the ERDP which is worth £1.6 billion over the next seven years.

Many hill farmers are well placed to benefit from agri-environment schemes and from assistance to improve marketing, product development and diversification.

To do this they may need to learn new skills which is why I have made £2.6 million available for business advice and training.

I intend to establish a network of demonstration farms where we can work with farming communities to equip them for a viable future.