Examination of witness (Questions 600
- 619)
WEDNESDAY 8 NOVEMBER 2000
MR ELLIOT
MORLEY
600. Is that enough to allow you to formulate
a long-term strategy for organics?
(Mr Morley) Yes. On the organic side, I think that
is in one of the more comfortable positions, relatively speaking,
mainly because, of course, the organic sector falls within our
English Rural Development Plan's budget, which is a £1.6
billion package over the next seven years. There is substantial
funding available within that budget of which the organic sector
is a part. So we are on a rise in spend in relation to agri-environment
and a rise in spend in relation to the organic sector. So that
will give us a bit more flexibility in terms of making choices.
I do come back to the point, however, that while we have this
flexibility and while we do have to try and look ahead and try
and project trends, we really feel that, at the moment, the organic
sector is being market driven by market demand, and we think that
is quite right and proper—although there are benefits, particularly
environmental benefits, which organic farming give, which we do
recognise as a public good.
601. You have laid the emphasis on the environmental
side for the long-term support. Let us just turn to the consumer
side of it, because you have evidence of the kind of Krebs position,
that the Government wishes to avoid the inference that it is somehow
safer or of better quality than well-produced food by standard
farming methods. I think that is a sensible position. However,
it must give you some concern, having taken that position, that
some of the advocates of organic are casting doubt on the safety
of conventional chemicals and treatment for conventional farming,
and there was "knocking copy" against the sector which
is now less favourable.
(Mr Morley) I understand this, but of course, as I
think you hinted at, the Government's position is that any food
that is sold in this country should and must be safe. That is
a priority for MAFF and, of course, now we have the Food Standards
Agency, which has an independent overview in relation to food
safety. Therefore, we are confident that every food produced by
whatever means in this country is safe for consumers, and it is
quite wrong to say that one particular method is necessarily a
safer method for consumers than another, because our priority
is to make sure they are all safe. I have seen the reports by
Professor Krebs and the Food Standards Agency on the organic sector,
but that is, of course, a matter for them. I think the point that
they were trying to make was that there is no evidence, for example,
that at the present time organic food has nutritional advantages
over conventional food. Of course, the organic sector put different
cases, as they are perfectly entitled to do, but what it comes
down to, in the end, is that it is an issue for consumer choice.
If consumers are more comfortable with organic baby food, for
example, that is fine with us as a Government, and we want consumers
to be able to have that choice. We want those products to be produced
in this country and we want to facilitate our producers to have
a share of the market. That is what it comes down to, basically.
602. That is a question of fashion or fad, is
it not? It may be right, it may be wrong—I do not know—but
is there not the responsibility to commission research and to
discover whether, in fact, the claims made for organic are accurate.
You are investing money in it, and you are placing the emphasis
on the environment—which is right, in my view—but
the claims for organic as a consumer choice and as healthy and
better and superior in some way—should these claims not
be examined?
(Mr Morley) Yes, they are examined. There are a number
of studies which are being commissioned, not all necessarily government
studies but independent studies, in terms of the claims which
are being made in relation to nutritional standards, safety standards
of organic foods. Of course, that is an on-going debate. In actual
fact, in terms of "case being proved"—if I can
put it that way—the strongest case for the advantages of
organic farming, in my view, in terms of all the evidence I have
seen, is on the environmental side. The Soil Association have
produced their own report which was a very respectable report.
We have done some research ourselves through MAFF in relation
to environmental benefit, and, also, bodies like CWS have done
research on environmental benefits, too. I think that evidence
is convincing. So there is very clear scientific evidence on the
environmental side, but there is no clear scientific evidence
on the nutritional side.
603. What the review of organic farming schemes,
which was announced last week, has said, essentially, is that
key decisions are going to be postponed until 2003. Is this review
anything more than a means of postponing those decisions?
(Mr Morley) No, the review is a general review in
2003, which we are going to have of all our schemes. That is a
review that we are committed to as part of the English Rural Development
Programme. The review is partly for agri-environment schemes,
of which the Organic Conversion Scheme is part. It is a routine
review, but it is an opportunity for looking at some of these
issues. We have just completed a review on the actual scheme as
to whether or not it needed major changes. We have made some changes.
For example, the period for applying for aid after registration,
which was three months, we have now doubled to six months, and
that has been, I think, warmly welcomed by the organic sector,
because it makes it a lot easier and more convenient in relation
to conversion and getting the grants. We also looked at the structure
of the grants and whether it was the right kind of structure;
whether front-loading was the right thing to do, and in relation
to how we were paying the grants. We had to bear in mind, of course,
that we were under some constraint because of the ERDP measures,
and the fact that we had to get approval from the Commission and
the time-scales were difficult. In actual fact, Chairman, all
the responses that we had felt that the current structure of the
scheme was about right. Obviously, there was argument about whether
there is enough money in it, but the structure people felt was
delivering.
604. Let us talk not about the structure but
about the level of payments, because we have a lot of submissions
which say that the levels of payment—
(Mr Morley) That is a different argument.
605. Can you confirm that some of the respondents
in the consultation paper suggested that they were too low?
(Mr Morley) Yes, and some of the respondents queried
whether we should be giving a conversion payment at all.
606. Too high?
(Mr Morley) Yes. Some respondents said that because
of the premiums and the benefits or organic farming, where was
the justification of using public funds to pay farmers to convert,
when they get a very good return from the market place? We did
get respondents who said that.
607. You also got some who suggested they were
too low.
(Mr Morley) Oh yes, we did get some who suggested
it was too low. I think, if my memory serves me right, the majority
of respondents felt that the payments within the conversion scheme
were reasonable enough. We did get respondents who were arguing
there should be an on-going maintenance payment, and that is a
long running debate in this country—about whether we should
have maintenance payments or not or whether we should concentrate
on conversion payments as a priority, or whether we should have
both. So we have had all these submissions. It was a range of
submissions, including, as I say, people who queried the justification
for a conversion payment.
608. There has also been criticism—and
we have had criticism—of the stop/go aspect of Government
funding, particularly the drought of funding. How confident are
you that the £139 million which is available until 2006 is
going to be enough to meet the demand?
(Mr Morley) I cannot guarantee, Chairman, in all honesty,
that that is enough to meet demand, although, in all fairness,
that is a seven-year programme and there is scope within that
seven years to make adjustments to budgets in the light of changing
developments.
609. So it is possible to do a review—
(Mr Morley) Yes, within the seven-year time-scale
it is perfectly possible to increase budgetary programmes within
the ERDP, depending on and in the light of circumstances. In relation
to the stop/go, I do understand the concerns of the organic sector.
I do not like that stop/go approach either myself. What I would
say in defence, though, Chairman, is that we have dramatically
increased the amount of money available for organic conversion
under this Government. It has been a huge change. In fact, the
numbers have risen dramatically in terms of farmers that have
converted, ranging from round about just under 200 in 1996 to
1600 in 1999. Of course, the budget has gone up from less than
£1 million a year to, last year, £12 million, and we
are planning to spend £18 million plus over £2 million
on R&D—so about a £20 million budget—starting
from April of this year. By putting all that extra money in, we
did not know quite what demand there was going to be and we wanted
to increase demand. It is very difficult to predict the uptake.
It was also the case, I think, with the previous budgets that
many people who were thinking of converting knew we were reviewing
the scheme. They, of course, assumed that the review would mean
there were going to be increases—in fact, we doubled conversion
payments—and, of course, when we opened it all of that backlog
of people who had been waiting pitched in with their applications.
Of course, they did, very quickly, use up the funds. We did find
an extra £10 million to put in to deal with those people
who, when we closed the scheme, had started conversion, and I
think we have removed a lot of the backlog of people waiting.
I think the £18 million, which comes on-stream in April,
may be enough to have a steady increase. What I would also say,
Chairman, is that even if we had more funds available, I am not
at all sure myself it would be good for the organic sector to
have a huge increase in one year of people converting, who would
then all come on-stream in one go, with a great wave of organic
produce which could completely collapse the market, collapse the
premiums and overwhelm distribution and processing. It is better
for everybody to have a nice, steady increase, year-on-year, which
is the policy we are pursuing.
610. That is a conventional government excuse
for not putting enough money in. The reality is, with the closure
and then the extra £10 million and then the re-opening next
year, you are well behind the exponential growth in demand for
organic. It might be a fashion, it might be a fad, but your provision
is lagging well behind the need to produce in this country.
(Mr Morley) We are on a rise in spend in terms of
money available for organic conversion. I believe that, at the
present time, we have adequate resources in relation to helping
those farmers who currently want to convert. I would like to say,
it is a seven-year scheme, it is not set in stone, and we do have
a facility for reviewing it.
Mr Opik
611. Organic farmers in my area have been a
bit cautious because they are not quite clear what the long-term
economic strategy or financial support strategy is. From what
you are saying, the Government is saying they want to have a gradual
increase. Do you think there would be a prospect of sharing your
specific strategy as best you know it at the moment with farmers?
(Mr Morley) Yes, the kind of points I have been making
to the Committee are points which I have been making when I have
been speaking in public meetings around the country which have
been organised by various organic organisations. I have been trying
to spell out to those existing organic farmers and potential organic
farmers where we stand as a Government: the fact that we are making
funds available and the fact that we do see it as a long-term
business. We do not see it as short-term, and none of us can predict
market trends and whether it is a fashion or whether it is a fad,
but I suspect that we are going to see growth for some time. There
is a lot of headroom within the market place, and we want to help
farmers to do that. We think it has a good future. I would also
make the point that at the moment our priority is to provide funds
for conversion. I think that is where the money should go, myself.
I think it is the right policy. I do believe that we need to manage
this in a managed increase year-on-year rather than a great bulge,
because that can have a desperate impact on the market. I do genuinely
believe that. We also recognise that there are environmental benefits
from the organic sector which could give it a claim for a similar
kind of support under the agri-environment budget as our countryside
stewardship. Indeed, I would say, Chairman, existing organic farmers
can already apply for stewardship, and some do. So they can get
that. There is an issue of double-funding, which is a bit complex,
but they can do that now.
612. Do you think you will be able to give those
year-on-year targets—accepting you might revise them—to
farmers so that they can see the figures?
(Mr Morley) Yes, we have actually published the rise
in spend year-on-year over the next seven years. So all farmers
can look at our budget for the next seven years and can see there
is a minimum guaranteed funding for organic.
Mr Drew
613. Just on that point about organic stewardship,
I wondered has the department actually carried out an evaluation
of what it would cost, and therefore talked to the Soil Association
who are the great protagonists in that direction?
(Mr Morley) Not at this stage, Chairman. As I say,
I think the time to do that is the 2003 review.
Chairman
614. You said earlier that we were pretty much
self-sufficient in organic meat. You equally pointed out that
there are some sectors where it is not practical to produce ourselves.
(Mr Morley) Yes, we are not too good on bananas and
mangoes.
615. I appreciate that. In those circumstances,
would it not make more sense to target this aid at those commodities
where the deficit is more startling and, as sectors do begin to
move towards self-sufficiency, to be able to move the aid? For
example, it is more costly to convert horticulture, and that is
where some of the biggest deficits are. Is this because, administratively,
it is just too demanding of manpower to have a very differentiated
scheme—that is a perfectly reasonable response and it is
applied in other schemes—or is there some particular reason
why you want to maintain non-differentiated schemes?
(Mr Morley) Not in that sense. There is differentiation
at the present time in that there are different rates of organic
payment relating to unimproved grassland at the lowest rate to
arable land at the highest rate. So there is a differential which
both reflects the costs of conversion and, in some ways, also,
in relation to the fact that it is comparatively easier to convert
upland grasslands to organic farming than it is to an East Anglian
cereals farm, for example. I was a bit surprised, Chairman, that
in the review that we have had—speaking personally—I
thought we might have seen some submissions arguing for different
rates exactly in the way that you said in terms of areas where
we have problems such as cereals. That was not the case, in actual
fact. People were not arguing very strongly for differential rates
and my own understanding is that in relation to the horticultural
sector there are not huge losses in the sense of the changeover
compared to the kind of losses in rotation of farming, for example.
Mr Mitchell
616. But horticulture was wanting more.
(Mr Morley) The horticultural do want more, yes, and
we have considered that. Those people who converted on the horticultural
side, again, are doing very well with that. I have actually been
to visit some recently and looked at what they were doing. What
it comes down to is that while there is an argument for some level
of priority, what we would not want to do is to say "We are
doing quite well on organic meat, so let's switch away from that
and concentrate on something else", and then run the risk
of beginning to lose our market share on the organic meat side.
I think the best approach is probably to try and defend those
areas where we have dominated the market share and concentrate
on trying to build up those areas where we need to.
Chairman
617. We want, obviously, to avoid erecting a
kind of COP (Common Organic Policy) alongside the CAP.
(Mr Morley) Yes, Chairman.
618. You said you were looking for evidence
which might sustain the case for on-going aid, and earlier on
you said that in different sectors economic circumstances change.
That may be one of the options for a mid-term review. What sort
of evidence are you looking for? What do you expect to find? It
does sound, in a sense, as if the review did not come up with
some of the things you thought it might.
(Mr Morley) In some ways I thought there were some
things some people might say, or organisations might say, although
I am quite pleased that, generally speaking, they feel that we
have got the scheme about right, in terms of its structure. I
think the point about maintenance payments for the organic sector
is that there is a move internationally away from production payments.
They are not going to last. They are under pressure from world
trade changes, they are under pressure from enlargement. The CAP
in its present form is not going to remain as it stands, it is
going to change; the only issue is how far and how fast? Really,
a maintenance payment is, in many ways, a production payment,
and we just want to get away from that. Therefore, (and this is
the debate they are having in the organic sector) I think it is
hard to justify a simplistic maintenance on the grounds that "We
are an organic farm and, therefore, we demand on-going subsidy
from the state." I do not think that is enough. I think that
the organic sector can put forward a case to say "We are
an organic farm, we provide a wide range of benefits in terms
of increased employment opportunities and, certainly, environmental
benefits; it meets some of our targets that we have set for sustainability
and so, therefore, as part of our environmental approach, as part
of our stewardship approach, we have a claim to a stewardship
scheme in the same way as any other stewardship scheme to give
environmental benefits." I accept that argument. That is
a perfectly rational argument, but if I may make a gentle criticism
of the organic movement, I do not think they have focused enough
on the justification and they have been far too obsessed with
saying "We are organic and that in itself is justification
for support." I think there has to be a bit more than that.
619. That brings us precisely to one of the
things you consulted on. You decided, in fact, not to ask for
a business plan. I am slightly surprised about that because, after
all, if you get money from Business Links you have got to submit
a business plan, and if you submit bids for regeneration programmes
you have a business plan, and, of course, the Treasury requires
MAFF to produce the administrative equivalent of a business plan.
Why should the organic sector by excused something which, presumably,
would be an aid in deciding how our money was going to be well-spent?
(Mr Morley) The idea of a compulsory business plan
was universally panned in the consultation.
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