THE New Year brings the biggest changes for British agriculture for half a century with the implementation of the reform of the CAP.

Subsidies to encourage food production are being phased out. In future, farmers must look to the market for their income, with no supplement in the form of production incentives.

We are, at last, moving on from the lingering aftermath of the siege economy of the Second World War, when the all-out efforts for maximum home food production were vital for our survival. The post-war years have seen European determination to safeguard home food supplies, with agricultural support taking the lion's share of budget expenditure. Now CAP reform brings a profound change of policy.

The European Agricultural Commissioner Mariann Fischer Boel says that the CAP reform will allow farmers to become real entrepreneurs. "Our rural areas will be offered a sustainable future, a chance to diversify and to contribute to making Europe more competitive.

The reform will allow us to play to our strengths, producing world-renowned foods of the highest quality. It sends out a strong signal to the world, boosting our chances of a successful outcome to World Trade talks."

The president of the National Farmers' Union, Tim Bennett said: "As an industry we face some tough decisions that will revolutionise our businesses as we move to reconnect to the market place. To many, this seems a daunting process, particularly as a number of the new and changed rules remain unclear.

"It is vital farmers fully understand the implications of the changes before making long-term decisions. Many of us will be making decisions that will only bring returns in the long term. We need to be sure a market will be open when our investments mature, especially in the dairy and beef sectors."

He concluded on an optimistic note - "farming has a profitable future. It is down to all of us to talk up our industry."

The Tenant Farmers' Association chairman, Reg Haydon sees 2005 as a watershed year of opportunity. He said: "There will be an opportunity to take stock and make decisions which might have been impossible before."

Sir Don Curry who is the Government's independent adviser on farming, has been wholehearted in embracing CAP reform and wanting Britain to set the pace when some across the Channel might seem to drag their feet.

"I am extremely positive for the future of this industry," he declared. "I think it's exciting. There will be lots of exciting opportunities out there."

But he sounded a note of caution: "I have met so many farmers who say they just want to continue doing what they are doing and what their fathers did before them. But that's not an option. Their businesses will not be sustained if they do not recognise that these changes are fundamental.

"Once support is decoupled from production, farmers are going to be exposed to the big global market forces and this is going to be tough for British farmers because we can't compete with the likes of South America, Australia and South East Asia in terms of bog standard commodity production. We are looking at what we can do to assist the farming industry to become economically more viable."

The present intense competition among the big supermarkets is forcing prices down. This is a welcome boon to shoppers, but increases the difficulty for farmers and growers to get more acceptable returns for their produce.

The plight of many dairy farmers highlights this problem. More and more farmers have been giving up and selling their cows, seeing no viable future in selling their milk.

An extra three pence per litre would make all the difference in enabling herd owners to make an acceptable living.

David Handley, chairman of Farmers for Action (FFA), has been foremost in championing the plight of fellow dairy farmers. FFA and the NFU have found positive support for a proposal that would involve all milk suppliers invoicing every retailer for an additional three ppl for all its milk.

This cost rise is seen as imperative if the dairy industry is to survive, faced as it is with a burden of greatly increased input costs.

If the plan succeeds, the additional profit would be shared among processors and producers. There would be a minimum of an extra 1.5 ppl to the dairy farmer.

The plan, to be successful, must have the whole dairy industry behind it, with no exceptions. David Handley and the NFU Dairy Board Chairman, Glyn Jones, have been busy rallying support from companies. Mr Handley said that Tesco, Milk Link and Wiseman have given the green light to the plan.

"The response is extremely positive" said David Handley, buoyed by a surge of support from producers.

Such a small increase on the price of milk would scarcely be noticed at the checkout with the typical supermarket trolley, yet could make the world of difference to dairy farmers and their families.