Select Committee on Environmental Audit Minutes of Evidence

Examination of Witnesses (Questions 40 - 59)



Mr Gerrard

  40. May I return to the point about measurement which I should like to follow up with the agrochemicals industry and the NFU? In the NFU submission you said, on this question of outputs and measurement, "In the vast majority of situations, pesticides are applied with no effect whatsoever to the environment". This was suggesting that the polluter-pays principle should not be applied. That is a very bold statement. What I should really like to ask is what evidence you can put forward which supports what is a very bold statement?
  (Mr Pexton) I have to point out that all the materials I use as a farmer are regulated, they are controlled as to whether I can use them or not and then they are controlled as to when I can use them and how I can use them. The environmental impact is part of that regulation assessment.

  41. Are you suggesting that the ECOTEC report is wrong when it says that the regulatory authorities do not have the ability to predict the likely environmental consequences of approving chemicals for use.
  (Dr Buckenham) I would support Mr Pexton. Certainly the regulatory regime is very strict and environmental impact is a major part of it. No product can be used in this country, no product can be sold or used in this country until it has approval. A major part of that approvals process is environmental impact. The assessment which is done is such that any product that is deemed to cause an unacceptable environmental impact would not be approved for use. What we are really looking at here are indirect effects. So, for example, if you want to produce a crop which has not been damaged by an insect pest, you may use an insecticide and then by doing that you might actually be removing some of the food for some birds or something like that. They are not direct effects of the pesticides themselves, they are indirect effects and that is why it is so much more difficult to quantify. Indeed a report has been published recently by the British Trust for Ornithology where they say that other agricultural management variables were much more strongly associated with bird declines than pesticide use per se. They do actually say that it is extremely difficult. You cannot take a simple correlation to show that one factor is causing a decline in bird species.

  42. I appreciate that. Everything we have heard and seen in your submissions is saying this is a very complex and difficult area to make measurements in, to be precise. That is why I am somewhat surprised at you making a statement which is so simple and bold that there is no problem, which is what you really seem to be saying in your submission to us.
  (Mr Lunniss) I suppose in making that statement we are balancing a statement which seems even more simple and even more bold that by imposing a blanket tax, which would be an incredibly crude instrument, you could start the process of maintaining and improving biodiversity. The whole thrust of our evidence is that we believe a tax would be incredibly damaging. It would have a range of effects, some of which would inevitably work in the direction that the policy makers are trying to go; some of them would be certainly perverse, encouraging people to do things which policy makers do not want to do, but there are other and potentially better targeted instruments which you could use instead.

  43. I appreciate that you might want to argue against the tax. You could put forward economic reasons, all sorts of reasons why you might want to argue against the tax. I was just surprised at what you were saying about the polluter-pays principle not applying at all, which is perhaps a slightly different point from whether you address that by a tax or some other way.
  (Mr Lunniss) We certainly believe that the majority of pesticide applications do not have a direct polluting consequence.


  44. Despite what you say about the strictness of the regime, the fact is that all the indicators have been pointing in the wrong direction over the last few years. In those circumstances, is it not reasonable as the RSPB and the Pesticides Trust were arguing, that economic instruments should be brought into play, especially as they have been brought into play in other countries? Leaving aside the RSPB's uncertainty over the details, is not the principle, given the seriousness of the situation, something the Government is bound to address in the public interest?
  (Mr Pexton) We support the action to reduce the risk and the potential environmental impact, but there are better ways of addressing this than with what we see as the blunt instrument of a tax.

  45. That is to prejudge whether or not it is a blunt instrument, is it not?
  (Mr Pexton) This is a mechanism which is going to tax use rather than effect.

  46. Yes, but taxing use has some impact on effect inevitably.
  (Mr Pexton) That is questionable. What we would say is that some of the effects could be perverse and there are better ways of achieving the agreed objective.

  47. Let me come back to something you yourselves said. In Appendix 2 of your submission, paragraph 3, you criticise the ECOTEC report as rather weak. You go on to say, and I am quoting you here, "This is disappointing as evidence from other countries suggests that effectiveness of their pesticide policy has been enhanced by a levy imposed at a low rate which has been used to fund research, education and training. If the government is minded to introduce an economic instrument to accelerate pesticide reduction then it should give more detailed consideration to the potential for a charge specifically to fund `accompanying measures'". Does this not mean that you can conceive and possibly would support a low level tax if the proceeds of that tax were used in the right way? Is this not what the RSPB and the Pesticides Trust were arguing?
  (Mr Lunniss) I am not actually sure in some cases what argument the RSPB were making in that context. It is very important to decide how this tax or any potential measure would be intended to work.

  48. There you are putting it clearly that there is merit in a low level tax providing the funds are used sensibly.
  (Mr Lunniss) The tax could work in two ways. You could either try to use it as a direct economic instrument, in which case you would be trying to hit somebody hard enough directly to stop them using the input. We believe that to do that the elasticities involved are so low that you would have to have an extremely large tax, in the range of anything between 30 per cent and 80 per cent.

  49. May I clarify whether you are in favour of a low level tax, provided the proceeds are used in the right place, or not?
  (Mr Lunniss) We think you have to start from the other way. We believe there are direct measures which can be taken which are being taken and which can be accelerated to try to maintain the increased biodiversity.

  50. So you are not in favour of even a low level tax, despite what you said in your submission.
  (Mr Lunniss) Surely what you have to do is to decide on a programme of action which needs to be taken. If at that point you decide there is a shortfall, there is a hole which needs to be filled by more R&D and more technology transfer, and if the only way to fund it at that point is by a hypothecated tax at this low level, then certainly we would be prepared to consider that as an option. It is a very different animal from saying we want to raised 1.5 per cent to two per cent for hypothecated research as opposed to saying we want to hit farmers with 30 per cent, 50 per cent tax and try to achieve some—

  51. So it is a question in your mind as to whether other measures begin to be seen to be not really affecting the situation. There comes a point when clearly they are having no effect on the environmental indicators and you would consider a low level tax.
  (Mr Lunniss) Pesticide use has been reducing. If that is what you are trying to achieve then that has been going on. If biodiversity at the same time is decreasing, it suggests there are more complicated interactions in place and maybe a tax is not going to achieve your goal. If we need to have a low level hypothecated levy to raise revenue then as the National Farmers' Union we would not rule that out for one minute.

Mr Loughton

  52. On the subject of hypothecation of a pesticides tax, where would you see it hypothecated to? You just mentioned research. Would you envisage a system whereby farmers will get a higher rate of set-aside or some other form of encouraging pesticide free areas of their farm which would encourage feeding ground for birds, etcetera? You could actually have a farm split in two or optimum pesticide usage so that it does not make the whole crop unviable and non-pesticide usage which is receiving some form of subsidy. Is that at all viable? Is that what you are envisaging or what?
  (Mr Pexton) I believe that is part of the partnership approach because there are other things which affect biodiversity, as we have said and other witnesses have already said. Buffer zones for example, wildlife refuges, all sorts of things, even farming practices. At the moment my farm is 90 per cent winter sown. It obviously has an effect on the wildlife population on that farm if 40 per cent of it is in grass and 40 per cent spring sown and 20 per cent winter sown, as used to happen in the old days. There are other issues which we have to address and if we are looking at a partnership approach to address this particular issue of biodiversity, then yes, there are very definitely steps which I as a farmer will be wanting to take. However, there are going to be policy issues as well which governments or the EU can include in their policy decisions. We see the stewardship schemes, for example, arable stewardship, countryside stewardship, hugely oversubscribed because farmers do want to get involved in these things and they are successful. That is a very positive outcome on those targeted schemes. Can we target those schemes once they are found to be effective on a wider acreage?

Mr Blizzard

  53. It would be helpful to distinguish between a low level levy on an industry to raise money for R&D and a fully fledged pesticides tax, the idea of which is to alter behaviour. Obviously such a tax or any environmental tax is only successful if it does alter behaviour. The key question is: what scope is there in your view for a reduction in pesticides? What scope is there for a reduction? A tax is designed just to reduce the level of use, is it not?
  (Mr Pexton) The tax is, or other actions?

  54. I am talking about a pesticides tax now. A pesticides tax will only work if it can alter behaviour and as I see it, it is designed to reduce the usage of pesticides. What scope is there in your view for the reduction in the usage of pesticides.
  (Mr Kershaw) What comes up must come down. May I give you an illustration? Last year the cereal herbicide market came down by 25 per cent in price and the volume was not affected at all. One would assume that if there were any elasticity the volume would rise. It did not. The opposite is almost bound to be true, so it is extremely inelastic. Really the impact of the tax is purely going to make farming more expensive, that is all.

  55. We heard from the previous witnesses that they felt there was evidence to say that more pesticides are used than is necessary. They have said overuse of pesticides. Have you seen that evidence? What do you think of that evidence?
  (Mr Pexton) I was surprised when that was said because of the economic pressures which are on us, the commercial pressures which are on us to adopt integrated crop management techniques. I am in no position to understand where they have got that sort of approach from. All the pressures, as mentioned earlier on, are that we make sure that we optimise the use of our inputs, whatever they are.
  (Mr Lunniss) Farmers certainly have every economic incentive to reduce pesticide use. Having said that, we certainly do believe that to increase the adoption of things like integrated crop management there is potential to make further reduction in pesticide use. That is a process which is going to be driven by R&D and by technology transfer. They are no single big hits you could make to reduce pesticide use at a stroke, but farmers are already being challenged to keep the pressure on to reduce pesticide use and inevitably that will continue and further reductions can be achieved and we believe should be.

  56. What initiatives are you engaged in that would clearly demonstrate that you are really keeping up to date and using the latest techniques and doing everything possible?
  (Mr Pexton) On-farm techniques are available now. We are learning more about them and using them. For example, there are beetle banks, which are areas of land, a bank of land between fields or within a field, which gives overwintering facilities for predators of pests. We are learning how to manage those, we are learning the effects of them. They do obviously make a contribution to pests which tend to come in from the edge of the field because the predators are already there. There is a great deal of research and development going on, for example into patch spraying where we can identify where patches of weeds are and through global positioning satellites get the sprayer to turn itself on and off as it is going up and down the field so we actually only spray the areas where there are weeds rather than making a decision to spray or not to spray the whole field. Techniques are being developed where you have direct injection of the spray into the spray boom rather than having a mixture. You are cutting back on the risks of spillage and what you do with what is left at the bottom of the tank later if you come to the end of the field being sprayed. There are all sorts of technologies there which are in the process of being developed; because they are there, we have to develop them onto the practical scale. There are techniques on farms such as beetle banks and our understanding of how various integrated crop management techniques work, variety selection to increase the disease resistance. There are really many issues there which have been developed or are in the process of being developed. One of the issues which has to be developed is to speed up the transfer of that knowledge onto the farm.

  57. Do you think the threat of a pesticides tax has prompted or will prompt more action in that area of speeding up this technology transfer?
  (Mr Pexton) This has been happening for some time; no two ways about it. At the same time, we recognise that the Government has given us an opportunity to convince them that we are in the process of reducing that risk evolved with pesticide usage and therefore we have to make sure that we pull out every stop to convince the Government that the action we are taking is effective and we believe it is.

  58. Is this what you understand by the partnership approach which was referred to in the Pre-Budget Report?
  (Mr Pexton) Yes. I referred earlier to actions which we believe that the industry has to take in looking at funding research and development, for example, even at the farm level at the assurance scheme which I am a member of whereby I pay for an independent person to assess my storage facilities, my decision-making process, my equipment, whether the guy using that equipment is properly trained, whether he understands what he is doing, right through to policy issues reference set-aside strips. We can now come down to a 10-metre rather than a 20-metre strip. A 10-metre strip alongside a ditch does have implications for environmental issues. There are policy-making issues here, there are industry issues, there are on-farm issues and that does imply a partnership.

  59. Back to Mr Kershaw's point about data regarding elasticity. Is that data officially collected? Is that something the Treasury would have, something the Committee could have access to? You spoke about prices and consumption by volume. That seems to me a very important issue.
  (Mr Lunniss) There is no single point for collecting that data. A variety of studies has been carried out. Overall we are in agreement that probably the best measure is a 10 per cent increase in price which might bring an average reduction in the range of three to five per cent. One of the points we do have to stress is that we think the range around that is very large. For some farmers elasticity is much less. If you are a horticultural producer, certainly with an extremely narrow range of products cleared for use on your crop, then you are depending on making the supermarket quality specification for that crop and effectively you are practically almost completely inelastic because you either use that chemical or you do not make the spec and you do not make the sale.

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