Annex C
AGRICULTURAL LIBERALISATION
AND ITS
ENVIRONMENTAL EFFECTS
Note: being a study of farmers' intentions,
the results of this study must be interpreted with caution. They
are also based on a more radical liberalisation scenario than
is likely to be agreed in the next round. Nevertheless, the results
provide a useful contribution to the debate and correspond with
earlier research for the Agencies (Doyle et al, 1997).
EXECUTIVE SUMMARY
FROM THE
REPORT FOR
THE UK WILDLIFE
AND COUNTRYSIDE
AGENCIES BY
POTTER ET
AL, WYE
COLLEGE, 1999
1. There has long been speculation about
the likely social and environmental consequences of a complete
withdrawal of agricultural support under the CAP. The contention
that the CAP has been one of the major causes of the environmental
damage and decline of the last 40 years has underpinned campaigns
to rebalance agricultural support in favour of the environment
and provided a convincing intellectual justification for long
term reform. Nevertheless, from an early stage, there has been
ambivalence towards the idea that simply dismantling the CAP would
redress the balance and a growing sense that agri-environmental
change may be subject to "hysteresis"—the failure
of effects to reverse themselves even as their apparent underlying
cause is removed. It is a paradox of the present debate that while
the present CAP is clearly unsustainable in its present form,
dismantling it quickly and without replacement is coming to be
seen as equally problematic from an environmental point of view.
2. With the liberalisation of the CAP now
a more realistic long term possibility in the wake of the Uruguay
Round Agriculture Agreement, predictions about how Europe's countryside
would adjust to more open market conditions are of greatly more
than academic interest. Indeed, there is already evidence that
the hypothesised social and environmental implications have been
factored into the policy making process, forecasts of the "desertification"
of rural Europe being used to justify the need to maintain a "European
model" of agriculture beyond the next WTO Round. In reality,
little is known empirically about the likely sequence of events
following agricultural liberalisation; while modelling work has
improved knowledge of the way economically rational decision makers
might respond to policy change, it cannot identify any systematic
variations in the way farm households would respond to the withdrawal
of agricultural support. The GB Statutory Countryside Agencies
are aware of this, and over the last two years have been commissioning
empirical research to assess the environmental consequences of
short and long-range CAP reform. This report sets out the results
from the most recent of these studies, undertaken to gain a better
understanding of the farmer response to agricultural liberalisation
in different environmental settings across the EU.
3. The specific objective of this research
was to carry out an intentions survey of farmers in five countries
(England, Wales, Scotland, Germany and Spain) in order to better
understand how farmers would respond when confronted with such
sudden and radical policy change. A questionnaire survey of 244
farmers identified current plans and farm family trajectories
and then used a form of sensitivity analysis to measure the degree
to which these would be adjusted, reinforced or abandoned under
conditions of Full Liberalisation. Further analysis explored some
of the environmental consequences of the observed tenor and pattern
of response in different agri-environmental settings. In addition,
the presentation of a "Green CAP" scenario has enabled
analysis of the willingness of farmers to take up environmental
payments under some future rearrangement of the agricultural support
system.
4. Five study areas were selected, ranging
from an intensive, largely arable landscape in East Anglia to
an example of one of the EU's most extensive farming systems in
the dehesa heartland of Extremadura in Cáceres, southern
Spain. In between there were study areas in Wales (a mixed farming
area in Ceredigion), Scotland (a hill farming area in mid-Argyll)
and Germany (an area of mixed, part-time farming in the Swabian
Alb).
5. According to the survey results, Full
Liberalisation would elicit the following types of farmer response:
(a) cost cutting and enterprise restructuring;
(b) reductions in farm household consumption;
(c) diversification and a move towards becoming
more pluriactive;
(d) sale of land and other farm assets;
(e) early retirement, with or without succession;
and
6. Of these options, significant numbers
of respondents said they would be more likely to consider (d)
to (f) than (a) to (c). In fact, 25 per cent of farmers in the
sample predicted they would leave farming within the next 10 years
if agricultural liberalisation came about. The resulting shake
out of farmers and land would be most decisive in the Welsh and
Scottish study areas (60 per cent predicting they would leave
farming), locations where farmers are most dependent on existing
agricultural support, and have fewest opportunities for off farm
work or diversification. It would be least pronounced in East
Anglia and Spain, where policy change would be met with a more
graduated agricultural response. In the German study area, while
it was clear that large numbers of farmers would plan to give
up farming, it was less obvious that they would give up land.
This exception aside, analysis suggests that, overall, as much
as 42 per cent of land on survey farms overall would change hands
within 10 years of the liberalisation of support. For many of
the remaining family farmers determined to remain on the land,
the initial response to a cost-price squeeze would be to adjust
consumption rather than production, with a small minority contemplating
any serious disengagement from agriculture as an income source.
It remains unclear how far their attempts to absorb the economic
consequences of the withdrawal of support would ensure long term
survival. Indeed, there was evidence from the survey that a further
shake out of land is likely to take place in marginal countryside
as the rate of succession to existing farms declines.
7. The environmental consequences of all
this would be complex, long term and heavily sensitive to context.
The following main types of environmental effect were identified:
Short term, direct effects: It is clear that
there would be some in-field extensification of production driven
by the need to cut "discretionary expenditure" during
the initial phase of the transition. But there would also be a
cut-back in conservation investment and management of the conservation
resource, identified by respondents in the East Anglian study
area particularly as an early casualty of the expected squeeze.
Medium term, indirect effects: Further into
the transition, there would be indirect (and less determinate)
environmental consequences resulting from the adjustments farmers
make in order to maintain farm household income. Among these would
be a trend towards more pluriactivity and there are hints in the
data that this would be associated with an extensification of
production on farms.
Long term, delayed effects: It is likely that
there eventually be profound changes in land use and management
brought about by longer term farm structural change. If the analysis
presented here is correct, these structural changes will eclipse
any adjustments made within fields or farms on surviving farms,
reallocating land to surviving farms but in locations such as
mid-Argyll, Ceredigion, and Cáceres, also bringing about
transfers of land out of farming altogether. Again, the geographical
unevenness of this adjustment is an integral part of the story:
while in East Anglia 80 per cent of any land given up is predicted
to remain in farming, in Ceredigion 48 per cent is thought likely
to move into a non-agricultural use.
8. It is difficult to draw up a balance
sheet of the environmental costs and benefits of these different
effects. This uncertainty is greatest in relation to the environmental
consequences of large scale structural change, where the relocation
of land between farms and land users may create opportunities
as well as threats for conservationists. In the East Anglian study
area, the disappearance of the few remaining "residual"
farms currently operating in the spaces between larger holdings,
could trigger the further rationalisation of field boundaries
and the loss of habitats associated with small scale farms. In
the Scottish, Welsh and Spanish study areas, it is a reasonable
assumption that there will be a new pattern of land holding centred
on larger, more extensively managed farms. The likely consequences
of this for conservation capital and, in the Scottish case, upland
vegetation, require further investigation. Some land may well
be bought up by forestry interests or, in the Scottish and Spanish
study areas, revert to estate owners with game or forestry interests.
The environmental implications of such transfers depend on the
form and pattern of any new tree planting and the management regimes
installed by landlords and new owners.
9. The policy implications of these findings
need to be interpreted with care. For instance, it is probably
now politically unrealistic (and may be environmentally undesirable)
to argue for the retention of base-line agricultural support in
order to underwrite the survival of large numbers of marginal
farms. By emphasising the sensitivity of many family farms to
the withdrawal of agricultural support, the research also underscores
their heavy policy dependence, their economic marginality and
their vulnerability to the larger technological and cultural forces
for restructuring which operate beyond policy control. A more
reasonable policy stance is one which accepts the inevitability
of further structural change in marginal countryside but also
identifies limits to this process, beyond which savings from agricultural
support are outweighed by the growing social and environmental
costs of farming decline and rural depopulation. A corollary to
this analysis is the adoption of a precautionary approach to designing
alternative systems of rural support, setting up payment structures
which enable many (though probably not all) existing farmers or
their replacements to occupy rural land, while also providing
an incentive to maintain and enhance biodiversity and countryside
character. The system must be dynamic and capable of adjustment
up or down as the limits of acceptable change are better understood
and have been aired in public debate.
10. The Green CAP was presented to farmers
in the sample in order to assess their reaction to a system of
payments which combined an element of support subject to environmental
compliance with higher tier incentive payments for environmental
management. It was found to be effective in retaining farmers
and land in agriculture, though its purchase was greater in study
areas like Argyll with a history of agri-environmental involvement
than in Cáceres, where decoupled environmental payments
were viewed as a foreign concept. Overall, however, farmers' responses
suggest that 23 per cent more land is likely to be retained in
farming under a Green CAP than under Full Liberalisation. Of the
land given up by the existing generation of farmers, 30 per cent
more would pass to a successor and less onto the open market.
At the same time, however, farmers' expectations regarding compliance
requirements were low, with the most willing participants being
the farmers who expected to have to make the fewest adjustments
to their current farming practices. This suggests that, while
acceptable as a safety net for vulnerable farms, a tiered system
of environmental payments may continue to be resisted if it requires
substantial changes to farming systems and the way land is managed.
11. The research has shed new light on the
nature of the farmer reaction to what, by any standards, would
be very radical policy change. In this, it elaborates the "benchmark
scenario" within the current debate about long range CAP
reform. Nevertheless, it is clear that more work remains to be
done if policy makers are to have a sound knowledge base for future
policy development. This should include:
— research which develops the policy
applicability of the concept of limits to acceptable change in
both farm structural and land use terms;
— further empirical research in order
to map the relationship between current farming practices, systems
and structures and biodiversity and countryside character; and
— longitudinal research to track the
sort of agri-environmental transformations mentioned above as
they occur.
In all these cases, it will be necessary to
link the collection of land cover and ecological change data to
socioeconomic surveys of the decisions, motives and aspirations
of individual land managers. There is a particularly strong case
for such work taking place within the context of the Government's
Countryside Surveys.
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