Select Committee on Agriculture Minutes of Evidence


Examination of Witness (Questions 1 - 19)

TUESDAY 23 MAY 2000

RT HON NICHOLAS BROWN, MP

Chairman

  1. Minister, we may well be more delighted to see you than you are to see us.
  (Mr Brown) It could not possibly be the case!

  2. Thank you very much for coming. You will be on the Internet at 3.30 tomorrow afternoon. No doubt that makes you feel greatly reassured but I am obliged to tell you that. We may not be allowed to use computers in Committee in the House of Commons, the modernisation tide has stopped short of anything as useful as that, but you will be happy to know that you are on the Internet at 3.30 tomorrow.
  (Mr Brown) Chairman, life is full of excitement.

  3. We wanted to discuss the Action Plan with you because it is clearly a significant document and there is a lot in it and we need to find out what it adds up to. If I may, I am going to start by asking you a question which you will probably have anticipated because I have asked it of you in the past, but I think it will be very helpful to have it on the record again because in the debates in the House you intervened. My question is as simple as this: is it now the Government's policy that in the interests of sustaining competitiveness amongst our farmers in relation to their competitors that regulation both in terms of its extent, intensity and timing, and the cost which is passed back to the industry whether to the farmers or the abattoirs, should all be measured and imposed in relation to those faced by competitor producers in the competitor industries?
  (Mr Brown) It has always been my view—always been my view—that we should not gold-plate the regulatory regimes that are common throughout the European Union. When I became the Minister I examined a whole range of issues and largely because of representations from the National Farmers Union and others as well, I have to say, including individual Members of Parliament, I set up three industry-led bodies to review the administrative regime, the three key ones IACS, the CAP and the Meat Hygiene Service. We are also across the Department looking at other regulatory regimes to see what we can do to help the industry. My very strong view is that everything the Government does, not just in my Department but in other Departments as well, should be proportionate.

  4. May I ask the second part again, if I may, in slightly different terms. There is something called "full economic cost recovery" because the Government of which I was a member introduced it, as I recall. Under that the Treasury does seek that where the service is delivered for example to farmers that they pay the cost of that service. There has always been a slight argument as to what it constitutes but the doctrine is in place. In the Action Plan you have alleviated a series of charges. Is it now the Government's policy that full economic cost recovery cannot be applied if the effect of it is to place charges on British farmers significantly greater than the charges faced by their competitors?
  (Mr Brown) The Government have not abandoned the doctrine. Nevertheless, given the prevailing circumstance in the industry, we have had three years of depressed farming income as the whole Committee is very well aware, and given the effect on competitiveness, the Government, considering all of the issues in the round, felt it right to alleviate charges that would otherwise have fallen on the industry. The cost is being borne by the public purse. You know and I know because we argue about it that there is this debate whether the alleviation of the charges is new money or a burden not imposed on farmers that would otherwise have been imposed—it is effectively a semantic debate—and if the burden was due to fall on farmers and I wish to alleviate it, I have to fight for that money within government. If I get the money to carry the cost that is won in competition with other public expenditure bids.

  5. You will perhaps be reassured that when we had Mr Timms in front of us looking at the integrated pollution control programme, we asked him the question directly, "Does the Government believe its purpose should be to help industry to be competitive?" and he replied monosyllabically "Yes." The implications are, I am afraid, uncomfortable in the sense that either the farmer pays or the public purse pays but that is a choice we all make. If we look across to the Continent we find competitors who clearly are not going to be facing charges as a matter of policy and quite legally under the regulations.
  (Mr Brown) That is of course something we have to bear in mind when we are framing our policies because of difficulties in the domestic sector, and for these broader reasons of fairness I have fought the farmers' corner as sturdily as I can within government.

  6. Finally, Minister, could I ask is the Action Plan a collection of emergency policies in response to a crisis or is it a strategy?
  (Mr Brown) It is supposed to sit alongside the Government's strategic approach to the industry which we have discussed here before and in particular to complement the announcement I was able to make to the House on 7 December regarding the very ambitious plans we have for rural development regulations, the Second Pillar of the CAP. I believe—and it is a view shared by my colleagues—that there is a need across government to look at what more we can do to help and also to look at how we can do things better. A lot of work was put into preparing for the Prime Minister's summit right across government and by the private sector and by the organisations representing farmers as well and I think the approach the Prime Minister adopted is the right one, to try and pull these different strands together and come to some conclusions which are set out in the Action Plan. I think it is quite a significant package.

Mr Jack

  7. The plan before us this afternoon was borne out of the present crisis in agriculture and the need to respond to it as far as the Government was concerned—
  (Mr Brown) Can I just say I think it would be right to do some of these things anyway but you are right the present difficulties in the sector do set the background to this. We are trying to do what we can to help the industry get through.

  8. You have quite clearly thought very carefully about the range of programmes which are part of the plan. I wonder if you could share MAFF's vision for agriculture over the next decade and perhaps tell us, in your view, what sectors are going to expand, what sectors are going to contract and what you see the role of MAFF being in the new world that you have created.
  (Mr Brown) This is a very important question because the industry is going through a period of transition and many of those who own and operate farm businesses will be asking themselves how far the current difficulties in the different agricultural sectors are cyclical and how far they are due to structural changes taking place in international commodity markets and world trading conditions. I believe the answer is a combination of factors but there are some trends that are absolutely remorseless including a decline in total numbers employed in agriculture domestically, an increase in the size of farm businesses—

  9. Can you quantify it for the Committee?
  (Mr Brown) This is the summation of a whole series of private sector business transactions. I do not want to quantify it. You asked me where I think we will be in ten years' time. We are clearly going through a process of change. I believe the outcome, provided the Government's policies are pursued in the way that they are being, will be that we will be able to assist the smaller and medium-sized farm businesses to have a range of income streams, not necessarily just conventional agricultural production, and that we will have been able to assist all farm businesses to get closer to the market-place but the overarching instrument here is not one over which I, or indeed any of us, have complete control; it is of course the Common Agricultural Policy.

  10. This particular plan, Minister, includes a series of expenditures and you will have had to have battled very hard with the Chief Secretary to get this money.
  (Mr Brown) I do not think I am revealing any great secret if I say, yes, that is true.

  11. From the way the Treasury operates, I know you will have been required to have quantified some of the benefits that were going to result from this because I am sure you will want to be able to measure the success of what you are doing. Could you tell us a little bit more about what you think the quantified results are going to be because you will have had to work these things out otherwise you would not have got the money from the Treasury? How are you going to measure the success of this plan because the Chief Secretary will be no doubt calling you in and saying, "I have given you all this money, are you doing better or worse than you were before?"
  (Mr Brown) We have a range of targets—

  12. Such as?
  (Mr Brown) For the success of our environmental stewardship policies we are intending—I am not sure if this is in the public domain or not but I am quite happy to share it with the Committee—to use the varying number of birds that flourish in the schemes as a measurement of the success of the intervention.

  13. What about the sectoral impact because you deal with dairy, sheep and cattle? Can you not tell us what the impact of this strategy/plan is, I am sure people would like to know what arguments were put forward to say this was the right and proper place to spend this money. There must be some quantifying output that you are expecting from all this?
  (Mr Brown) You cannot quantify it as easily as that.

  14. I know it is difficult.
  (Mr Brown) The purpose of the immediate assistance we are providing is to help farm businesses get through what we acknowledge are difficult times and in particular to get through to the time when the Rural Development Regulation comes on stream. Just remember this is our principal instrument for achieving farm diversification and non-farming solutions for the problems of some farm businesses.

  15. Just one last overview question. The theme running through this plan is to suggest in the changed nature of farming that not all farm income in the future will be derived exclusively from agricultural activity. Can you share with the Committee any results of studies or work that you have done to show us how the ratio will change over, say, the next five or ten years between income that is derived from wholly farming activities and income going into farmers' pockets that will be derived from non-farming activities?
  (Mr Brown) The broad trends are clear.

  16. What are they?
  (Mr Brown) The trend for the size of farm businesses is for them to steadily increase in size. As I said before, the total numbers employed directly in agriculture is steadily in decline. Because these are all private sector decisions made individually business by business, I think it would be difficult to provide an objective forecast.

  17. Your Ministry has done no modelling to tell us whether it is 90 per cent agriculture and ten per cent other now and, say, 50/50 in five years' time? You have got no feel for that? Yes you have, no you have not?
  (Mr Brown) Yes, I can see the general direction in which things are going and we want to help but there are a range of possible solutions for farm-based businesses and ultimately the choice is for the farmer. The government is there to help and to assist and to—

  18. But what do you think? You are the Minister of Agriculture, what do you think is going to happen?
  (Mr Brown)—To candidly explain the way we think trends in the market place are going. What it is not for us to do is take direct responsibility for all these private sector decisions and somehow to assert the outcome. The overarching point of course is the reshaping of the Common Agricultural Policy.

  19. To sum up, you have spent a lot of money against a range of uncertain outcomes without a clear idea of how income streams are going to develop over time?
  (Mr Brown) No, I would not accept that as a fair summary of what the Government has done or why. It is a party political point and if you want to make it, it is your right to do so but it is clearly not what we have done. It is a series of very targeted measures designed to meet current difficulties and to help farmers get through to better times. I say more than that: on the regulatory side I think it is right for government to address these questions anyway regardless of the actual circumstances in the industry. I think it is a fair point to make that current circumstances throw these issues into sharper relief.


 
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