Select Committee on Environment, Food and Rural Affairs Minutes of Evidence

Examination of Witnesses (Questions 70 - 79)




  70. Gentlemen, welcome to the Committee. The first question is actually an aside: are you expected to be merged with anybody shortly? Have you any idea what Lord Haskins is up to? Are you expected to become part of the Countryside Agency or vice-versa or both? Have you anything that you can share with us?

  (Mr Felton) I have no information either way on that, Chairman.

  71. But you have heard the Lord in the way we have?
  (Mr Felton) We read the papers too!

  72. You were fairly supportive of the Mid-Term Review, but since then of course you have had to re-evaluate quite what is left of it and where it is likely to go. What is your appreciation of where we are? What do you think may well emerge? What is your response to that now?
  (Mr Felton) You are referring to the statement made at the Council last week or thereabouts?

  73. Yes.
  (Mr Felton) I think there are two things that we would say about that. First of all, it clearly is a moveable feast about what actually comes out of anything that is just put forward as a Mid-Term Review Communication, so it is not altogether surprising that the landscape changes as things unfold. However, our understanding about it is that it has settled a longer-term budget arrangement but has not precluded most of the changes in the Mid-Term Review and the important one from our perspective is decoupling because we think that changes the nature of the debate. We have spent years arguing about incremental change to a complex set of market regimes and measures and suddenly the agenda has sort of changed. We have a single income payment and the issue then is, what is that for and what do we do with it? So, we do not think it undermines the potential for decoupling and explicitly does not change the potential for increasing payments in what is referred to as Pillar II for positive public good. So, in practice, it may well cause some serious thinking because the budget line is now going to be set for the Pillar I.

  74. You referred specifically to this decoupling. As you know, the intention was to create a single payment based on some historical level and although you welcomed getting there, that was not the end of the process as far as you were concerned.
  (Mr Felton) What we think that does is to reduce the strength of the incentives to specialise and intensify production and so on. The market and modern business management would change the way farming gets done in future anyway, but the really important thing is recoupling payments for public benefits. So, yes, we have removed one set of incentives, but you have not built up the positive rewards and the positive encouragement for the good things that we want out of farming.

  75. You have to be careful when you do build up these positive things that you want out of farming that you do not build mechanisms which are themselves as inflexible as the ones you are removing. Is there not a danger of that?
  (Mr Felton) I think that is absolutely right.
  (Mr Rutherford) That is absolutely right and some of the problems that were identified in some recent research that we have been doing looking at the Rural Development Regulation that has been implemented across Europe is that the Commission, to a certain extent, is trying to achieve quite complicated environmental rural development objectives but using instruments that were designed essentially to support the price of agricultural commodities and, until you start changing those instruments and the way that they can devolve decision-making down to individual Member States or even regions within individual Member States, then you are going to have problems in having a CAP that is not flexible to regional needs and regional opportunities.

Mr Jack

  76. What do you mean by the term "public benefits out of farming"?
  (Mr Felton) We tend to mean goods that are not rewarded in the market by payments directly from consumers to the provider. So, farmland birds, to give an example, where they have declined significantly over the past 30 years: we tend to adopt the market failure argument that economists would adopt. So if we value market birds, there is certainly no direct payment for having them on your farm except through agri-environment type payments.

  77. Have you done or seen any work which attempts to quantify, describe or list precisely what the public would think these benefits are because what we have heard is what English Nature think they are but it is what the paying customers, the tax-payer, think they are and what they are prepared to pay for?
  (Mr Felton) There is a considerable amount of work over time that has been done, some of which we have contributed to, showing how the public perceive the value of heath land for example, that was done some time ago. There have recently been published reports from organisations like CSERGE, which is a department in the University of East Anglia, which have demonstrated the value of using public stated values of nature as it is versus the alternatives, using mainly international examples, which largely show the current values as it is stated by the people and in the way people express their preferences, it would exceed the commercial value. Wildlife is quite complicated and, as such, I think it is quite difficult to value one beetle versus a bird versus a habitat because a lot of that is fairly specialist. On the other hand, there has been quite a lot of public participation in setting bio-diversity objectives as part of the bio-diversity action plan process.[1]

  78. I sometimes struggle to understand how far we have to wind the clock back and some of the best examples of conservation and of response to the loss of flora and fauna which you have just referred to have come from successful farmers who have been able to incorporate that type of work into their normal farming programme because they understand that it is part of their responsibility as stewards of the countryside to do it and I just wondered if you felt that the reform, at least as originally outlined, had potential to put success back into farming in such a way that much of the work that you see wanting to be done could be done as part of the normal farming enterprise rather than a new set of schemes.
  (Mr Rutherford) I think increasingly farming is and farmers are realising that, in the future, they will be increasingly seen as not just providers of food but also providers of uninterrupted landscape on which a successful diverse rural economy can be very dependent and also producing bio-diversity and the protection of cultural and historical resources. Farmers are not going to do that for no reward and you cannot identify a market mechanism that is going to provide this for them. I think it is increasingly accepted by Government, political parties and even Treasury that the provision of public payments for the production of public goods is a legitimate role of the State, of Government. Certainly we want to see farmers being rewarded for providing those public goods, those environmental benefits, but we also want to see farmers trading on the quality of the environment to add value to the products that they are producing. Some farmers will be able to do that more than others. You cannot give a blanket prescription about what the future farms are going to look like. That will depend on individual farmers and individual entrepreneurs to maximise both the provision of public goods and maximise their place in the market as well. I do not think that is a backward move, I think that is a very forward looking move for the industry.

Mr Mitchell

  79. Why is everybody so insistent that despite the Chirac coup at the Council, that the prospects of reform in the Mid-Term Review was still as good as ever? I can see the Prime Minister and DEFRA saying that because they have to salvage something from the wreckage, but surely it cannot be true because what the coup does is freeze the allocations to countries and France is going to continue to get what it gets and the French farmers are going to continue to get what they get and that is frozen now until the end of Chirac's presidential term. What scope does it leave for reform because you cannot transfer things to environmental work because that might be a different ball game with different priorities and allocations?
  (Mr Felton) My reading of the advice we have received on that is that it freezes the total budget at EU level but not necessarily its allocation between countries.

1   Note by Witness: English Nature has also reviewed this issue in Revealing the value of nature which we submit to the Committee as supplementary explanatory evidence. We would also refer the Committee to work by Hanley, Whitby and Simpson, Assessing the success of agri-environmental policy in the UK (Land Use Policy 16 (1999)). Back

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