Examination of Witnesses (Questions 40
TUESDAY 30 NOVEMBER 1999
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
(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.
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
(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?
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
(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.