Examination of Witnesses (Questions 80
- 99)
TUESDAY 30 JUNE 1998
MR DUDLEY
COATES, MS
JUDY ALLFREY,
MS LINDSAY
CORNISH AND
MS DIANA
KAHN
Mr Curry
80. Is that about a differentiation then between
Less Favoured Areas?
(Ms Cornish) Yes, it is. It is difficult to actually
estimate how you would apply differentiation, because at the moment
it is based on different rates for different types of animal,
both different sheep types and, obviously, between sheep and cows,
and on different stocking densities for sheep in the different
types of LFA area. But if you simply did a relatively crude assessment,
based on how much more is currently paid on average in the SDA
per hectare than in the DA, and you maintained that differential[5],
total UK expenditure would probably be in the order of £370
million, so it would be an even more substantial increase than
the estimate in the memorandum.
81. So, if, let us say, then, we move to this
new system, and we go back to Great Whernside, and there, I think,
there are three or four farmers who graze the slopes of the peaks
and they are doing it entirely legally under their entitlements
under the present headage payments, but it has a certain consequence,
and it is difficult to know whether the sheep or the walkers do
the most damage, but there is a real problem there, if we move
to this new system, how would you imagine the distribution then
changing amongst producers in that sort of area with the move
to the new system? Would you imagine that we would then have to
look to wider measures, more broadly-based, agri-environmental
measures, for example, perhaps linked to certain forms of husbandry,
in the context of the CAP reform, in order to maintain those landscapes?
Because, after all, people would accept that they are grazed and
managed landscapes, they are not wild landscapes, and one is trying
to find the balance at what maintains their natural qualities
while they are under management. Because that sounds to me like
these farmers are going to get less, you see, under what you have
just been telling me. Can you talk a bit about the distributional
effects?
(Ms Cornish) It is quite true that there will be redistributional
effects, and that is something that—
82. So who will win and who will lose?
(Ms Cornish) In general terms, those farmers who stock
most intensively, if you move to a straight area-based payment
system, would be likely to receive less than hitherto, and those
who farmed on larger areas at much lower intensities would proportionately
receive more, if it is a straight switch to an area-based system.
83. So it might well be then that it would actually
become very difficult for those farmers on Whernside now, I have
no idea how they voted, by the way, I am using them as an example,
but it might actually become difficult for them then, without
additional help, or activities outside their agricultural businesses,
allied businesses, to actually maintain their livelihoods?
(Ms Cornish) The thing you need to bear in mind is
that the support through compensatory allowances is only a part
of their total income, they would continue to receive the majority
of the financial support they receive through their headage payments
for the livestock that they keep. So it could be a lowering of
income but it does not mean to say that it would radically alter
their overall income profile.
84. No, but part of income will, of course,
depend upon the traditional pattern of rearing, which is the rearing
of animals up the hill and then they are moving down the hill
and they are being sold on. Now one of the real crises we have
at the moment in agriculture is actually the lowland livestock
farm, no compensatory payment, no special benefits at all, they
have not got the scale elsewhere; could you imagine anything in
these broader proposals which might help producers who actually
form quite an important chain in the sort of pattern of agriculture,
as it were, but themselves are possibly the hardest hit of all?
(Ms Cornish) Sorry, are you referring there to the
lowland producers?
85. I am referring to the lowland livestock
producer now; my own view is that they are probably the hardest
hit of the lot, at the moment, in present economic circumstances.
They do not have the benefits of the particular payments, the
LFA payments, they tend not to have the sort of scale, they are
hit by problems in the market-place, they often cannot compete
for land purchase because they do not have a particular grant,
and I just wondered whether you felt that the sort of measures
we are talking about, in more general terms, but they are part
of a chain which is important, and whether you thought that there
might be any benefits we might direct towards maintaining that
bit of the agricultural economy?
(Mr Coates) I am not sure that we have a fixed view
about that. Clearly, there are downstream effects, I would take
that point. But the whole question of the impact of livestock
reform, particularly the beef and dairy reform proposals, would
also cut into this, as far as the cattle side of the business
is concerned. And whilst I do not think I am wanting to express
an opinion as to whether I agree or not with Mr Curry's comments
about who are the most disadvantaged in the present circumstances,
judgements will have to be made. I think it would be rather difficult
to see any way in which general support for lowland livestock
farmers could be done under this Regulation, I think, if that
is the import of Mr Curry's question. I am not sure this is the
right instrument, if such support were thought desirable.
86. What I am thinking of, we are talking about
what is intended to be a fairly broadly-based Regulation, which
needs quite a wide amount of discretion as to what is supported
and the way people are supported. If you look at what is vigorous
and active and working in the countryside, there are a number
of industries which are not actually related to agriculture which
seem to be doing very well. If people want to set up tele-cottaging,
I really see no reason why anybody should give a great deal of
help for tele-cottaging, and that sort of activity. But there
are some basic industries there which are in difficulty, there
are all the social exclusion points which are being referred to
about old people trying to make their sort of K-registered Volvo
do another year's duty, as it were, people who are isolated because
of bus services, that sort of thing, but there is also the problem
of some very difficult farming communities. I am just anxious
to make sure that, when you prioritise and when you look hard
at this, one does not get too diverted into all sorts of vaguely
feel-good schemes, in villages which do not need them and people
which do not need them, but they tell of the sort of traditional
fabric of the countryside which is in difficulty, that you try
to find ways which may not be related directly to agriculture
but which may help that chap to put on an extra bed and breakfast,
or an extra tea room, or the sort of things which bolster the
agricultural economy by helping the broader role economy and creating
the jobs Andrew George is keen on?
(Mr Coates) I think I hear what Mr Curry says; whether
I should pass comment on my K-registered Astra, parked at a station
somewhere, I am not sure. One positive point I think I hear Mr
Curry saying is that there are important questions about priority-setting
that will have to be addressed, in the context of the whole of
the CAP reforms and not just of this Regulation, I think it may
be that some of his concerns might be possible to be met under
the beef reform regimes and the specific beef envelope, to go
back to something that confused us earlier, which, as I understand
it, would allow some redistribution of the funds within the beef
regime. That is about the limit of my understanding of that proposal,
so I would not want to be pressed on that. But it might be that
some of Mr Curry's specifically livestock-related concerns could
be met by that. On his broader point, I do take the point that
in operating this Regulation, we would clearly, as we said earlier,
want to be looking for is real need, and real need includes social
exclusion sort of points, access to—
87. A lot of farmers are socially excluded,
of course?
(Mr Coates) Indeed, and I would very much accept that
point; some of the farms I have visited over the last three years
since I have been in this job have been in very remote locations,
with very difficult access to education and health services, and
so on. I would argue those are real issues, they are issues for
farmers, but they are issues also for other people who live in
some of the remoter rural areas, like Upper Langstrothdale, where
I was a month ago.
88. One final question. You talked about, and
I accept that this was in the context of modulation, which always
gets Brits sort of twitchy, but you were talking about farm businesses
need to be economically viable. Do you mean economically viable
on the basis of the market-place, do you mean economically viable
on the basis of the market-place plus the aid which we think it
necessary to give them, in order to maintain them in the countryside,
if you like, or do you simply mean big, capital-intensive and
moving towards agri-business?
(Mr Coates) Economic viability does not necessarily
mean big; the last is not necessarily the only way of being economically
viable, I am clear that it is possible—
89. Very few people in the hills are economically
viable, in any sort of commercial sense of the word, without support?
(Mr Coates) Equally, insofar as we are talking about
areas where we think, in the long run, where there is general
agreement, that in the long run some taxpayer finance may well
be necessary. I guess there would be quite widespread agreement
that that would be the case, in relation to some hill areas, perhaps
all hill areas, then my concept of economic viability would take
into account the fact that there will be some taxpayer support
in those areas.
90. My concern, you see, is this, there is a
real danger that we are going to end up, and encourage the whole
of Europe to follow us into producing agriculture which is massively
intensive, over 80 or 85 per cent of its activities, with little
oases of highly-managed, agri-environmental schemes here and there,
and I am not sure that that is the way I want to go?
(Mr Coates) I do not think I would want to end up
in that extreme position. It seems to me that the English countryside
certainly, perhaps the UK countryside, is what it is because it
is multi-functional and we do not have just little pockets that
are about biodiversity and other pockets that are prairies. One
of the things we have been concerned about in MAFF has been trying
to see whether we could get more environmentally-friendly arable
farming; we are running a couple of pilot Stewardship Schemes.
So I think my sympathies are with Mr Curry's general point, even
if I would not necessarily agree with every last detail of his
view.
Chairman: Right. I have four quite short, sharp,
specific questions on LFAs, before I move on to Sally Keeble.
First of all, you acknowledged the redistribution problems, in
answer to Mr Curry, and, indeed, they are in your memorandum as
well, a full acknowledgement of the redistribution problems. You
also advocate their removing the minimum rate. If we remove the
minimum rate, are not those redistribution problems made even
worse?
Mr Curry
91. You can always pay the minimum it is possible
to pay?
(Mr Coates) I am not sure I quite heard what Mr Curry
was saying.
Chairman
92. He said, we always pay the minimum, whatever
it is.
(Mr Coates) It is the case that we pay very close
to the minimum at the moment on HLCAs. Our view is that these
proposed minima are both too high and, in principle, debatable.
It does not seem to us that there is a clear reason why there
should be a minimum at all, and certainly it seems to us that
the minima proposed, both here and in relation to the forestry
parts of the proposal, where there are also minima, are too high.
Our current position is to take a stand, in principle, against
there being minima at all, because it seems to us that, if we
are going to have a simpler, more flexible approach, that should
encompass the rates of payment as well.
93. Yes, but you will make life more difficult,
will you not, for the smaller, heavily-stocked farm, as a result?
(Mr Coates) Only if Mr Curry were right.
94. We will take a view on that, I will not
push you on that, we might ask the Minister about that, I think,
later on. Any estimate of the transfer of resources between Member
States, as a result of the Commission's proposal on LFAs?
(Mr Coates) Between Member States; no, I think it
is too early to have any view about that. Judy.
(Ms Allfrey) We come back to the financial allocations
that are set for each Member State, and it will be up to Member
States to decide within those allocations how much—
95. Not envelopes; allocations?
(Ms Allfrey) Yes. I was trying to avoid the word this
time. How much to spend on each of the measures; so if a Member
State decides to spend a lot on compensatory allowances, it has
got its own redistribution problem, because it will have to spend
less on something else.
96. The NFU think that the new environmental
emphasis of LFA support, and I quote from the memorandum, "can
be satisfied by the application of good agricultural practice".
Is that your understanding?
(Ms Cornish) Yes. The Commission has already made
it clear that it is not expecting the requirements to go beyond
good agricultural practice and we do actually already have codes
of good practice, which include a code for the uplands as well
as for soil, water, air and pesticides, and we are currently looking
at the possibility of a code specifically for conservation as
well. But the existing codes are quite complex and, I think, to
use them as a basis for any sort of scheme or compensatory allowances
they would have to be simplified.
97. And one final detailed question, the NFU
also drew our attention to the possibility of extending the area
of LFAs, and I quote again, to include "other areas affected
by specific handicaps, in particular by specific environmental
constraints", that is Article 19 of the draft Regulation,
I believe, and they suggest that we could look at farming activities
in EU Habitats Directive areas, in that context; is that something
the Government has looked at?
(Mr Coates) Not yet, I think would be the answer to
that. We are not currently envisaging that there would be change
in the areas designated as LFA here. It would be something to
be settled in the context of the programmes under this Regulation,
but we were not currently envisaging that; and this part of the
Regulation is still one which the Commission's views are not entirely
clear either.
Chairman: To an extent, the question Sally Keeble
is about to ask has been partly dealt with but I think there are
still issues to address.
Ms Keeble
98. You say that the Commission's proposals
on agri-environmental policy explicitly address two recommendations
made by the previous Agriculture Committee and that the Regulation,
as drafted, no longer provides for support for the provision of
access, training and demonstration projects though those may be
covered by other parts of the proposal. I wonder if you could
just clarify this, and also say whether it is the Government's
view that provision for public access should still be made under
agri-environmental policy?
(Ms Allfrey) Firstly, access, training and demonstration
projects; well training is in the Regulation, it has got a specific
Article, demonstration projects and access do not get a specific
mention but it is still possible that they could be funded under
Article 31, and we are pressing for greater clarity in the Regulation
and would like to see a specific mention, in particular, of access.
And you asked about the Government's view on public access provision;
of course, there is a manifesto commitment and the Government
is committed to greater opportunity for people to explore the
open countryside. We have got a current regulation which specifically
provides for support for public access. We now think it is more
likely that that is going to go into Article 31, which would put
it separate from the agri-environment schemes, and we must admit
there is some logic in that, but that certainly does not rule
out the possibility of us integrating access into our agri-environment
schemes in our own plans, so we could do it at a national level,
even if, bureaucratically, under the Commission rules, they fall
under different headings.
99. You point out that the draft Regulation
provides for EU co-financing rates to be increased by up to 10
per cent for agri-environment measures of special merit from the
environmental viewpoint. Do you know what that actually means,
special merit, what are they thinking about?
(Ms Allfrey) It is something that we will be seeking
clarification from the Commission on; so far, all they have said
is that such cases are likely to be very exceptional and they
would look at them in the context of the plans that Member States
put in. That is not terribly helpful if you are trying to frame
a plan, so we will be pressing for firmer criteria to be set so
we know on what we can base our cases. We think that the targeted
nature of our agri-environment schemes may justify special treatment.
5 Note by witness: ie, with the new 40 ecu minimum Back
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