Examination of Witnesses (Questions 70
TUESDAY 5 NOVEMBER 2002
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
(Mr Felton) I have no information either
way on that, Chairman.
71. But you have heard the Lord in the way we
(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?
(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.
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
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
(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.
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