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

Examination of Witness (Questions 160-176)



  160. I would take issue, Chairman, with the earlier statistic given by Professor McInerney, who talked about agriculture contributing 1 per cent to GDP and 2 per cent of people trying to live on that, I paraphrase slightly. Obviously, members of this Committee probably would adjust that figure to suggest that at least 5 or 6 per cent of GDP is directly dependent, in some way, on the existence of a vibrant and profitable agricultural sector, particularly in rural areas, and that is why it is disproportionately important; to measure it merely by a narrow economist's statistic is not doing it very much justice?
  (Professor McInerney) I would agree. I was merely trying to point out, in a very simple, arithmetic way, that these crude statistics highlight the overpopulation, if you like, in the feeding-ground of agriculture.

Mr Drew

  161. I am sorry to have missed the earlier bit; and I pick up on that. Give us some figures; what is a sustainable agricultural sector in the UK, what level of GDP and what level of employment?
  (Professor McInerney) In terms of how many people, or what proportion of—

  162. Let us take people, first. We had the figures before, you were at the back, you were hearing them. The sorts of figures that the previous group of academics and consultants came up with, they were talking about 130,000, is that figure too big, too small?
  (Professor McInerney) There is no easy answer to it, because it depends on people's income aspirations, and if you can get people happily running agriculture for £15,000 measurable taxable income a year and all the lifestyle benefits that go with it then that is sustainable; it is sustainable to the extent that people will happily live there without support. But if you are saying a place in the agricultural labour force ought to generate an income level that somehow is comparable with the mean in society, I threw in a calculation in that paper that said, approximately, if you look at the data, it looks as though agriculture could generate £2.5 billion of agricultural income a year, over the years; divide that by 20,000 and you end up with a certain number of full-time places. Now, increasingly, more and more people who operate a farm also have another source of income, so you can only talk about full-time places; that may be twice as many bodies, because there will be "also" farmers and "only" farmers. And, it seems to me, we have, what, 220,000 people claiming the label of "farmer", including me, because I have a 50-acre holding, and, as I say, I just produce evidence for the statistics on the low incomes from owning land, but I just happen to have 50 acres attached to the old place I live in; but technically I am a part-time farmer. I would say, if you were looking for a sustainable population of people who could live totally out of agriculture, you would have to be talking half the number of people now. But we have got not much more than half of the current farming population claim to be full-time farmers anyway, and it is a very poor definition, because a definition of a full-time farmer is someone who has no other source of income, and I keep quoting Oliver Walston, who is a large farmer, but he is also a journalist, so technically he is a part-time farmer. So the statistics are very difficult to juggle with, and they are not planning parameters anyway; all one knows is that agriculture, really, unless it is going to have transfers of income in to keep people going, is going to have to sustain far fewer people. And the regional implications of that really are very severe; because there are some parts of the country where you would imagine a massive decline in the number of farmers if you took away the supports, and the less-favoured areas, and the hill areas and disadvantaged areas just are not the places to try to run a biologically-based business.

  163. Can I ask you just one question, which I know sounds rather bizarre, but what do former farmers do? We have some notion that former steelworkers can be retrained and work in other industries, the same with coal-miners, but an awful lot of them, because of the nature of the areas they came from, have ended up long-term unemployed, out of work indefinitely. Let us take the less-favoured areas, is that what would happen to those people, or would they move, from what recent history suggests, or would they turn their hands to other things?
  (Professor McInerney) All of those. Those who manage to sell their farm probably can buy a nice little bungalow somewhere and retire, and I think something like a fifth of all farmers, or something, or even more than that, are over 65 anyway. It depends, I think, on the age group when they become a former farmer. I know a middle-aged farmer who retrained and is now an accountant. I know one who bought a shop and set up a shop. There are all sorts of things you can do, as a former small businessman. The constraint on it really is whether you can confront moving out of your society and leaving behind your house, and the constraint is, really, is there any alternative occupation in the rural area where you want to stay, or do you have to go and start to run a hotel in Torquay, which is what someone else I know has done. I do not think you have to define the transfer occupation of people who fail at farming, or cannot sustain themselves in farming, any more than in any other business.

  Mr Jack: Professor, you take a jolly good sideswipe, on pages 9 and 10 of your stimulating paper, about some of the agri-environment schemes. The delightful opening of your paragraph G: "There is an immense amount of tosh propagated nowadays to the effect that farming should be focused primarily on countryside management, that agri-environment schemes should be designed to restore the farmland biodiversity that was lost during the 20th century," and on page 10 we get another go at this, where you say: "The aim of regaining all environmental elements that have been lost is not only unreal, it derives from an obsessive concern with what has been lost in the development of modern agriculture". Now does that mean to say that you have severe doubts about the sort of cosy image that the Curry report points to, that it thinks it could buy with modulation? Perhaps you could develop your thinking about the worth of these agri-environment schemes, because pages 9 and 10 do lead us to the conclusion of a hint of scepticism, on your part, about their worth?


  164. If I may interject, I heard you at the LEAF Conference, at Linton, at about this time last year, which was a little later in the year, talking about the real dangers of accumulating a hedge surplus?
  (Professor McInerney) Yes. If you read those statements, what they say, they were picking up on very authoritative statements that were stated, that said agriculture should now concentrate, should now focus, on producing countryside; it should not focus on anything, whether it is, as I say, brussel-sprouts or dairy. That is a silly statement; as though there really is only a single orientation for agriculture, now. It is a very diverse industry, it will continue to be a diverse industry, it may need to change its emphases, but focusing on something is silly. Recreating biodiversity that is lost, is a preposterous thing to say; we cannot, and why do we want to. What I was trying to get at is that the environmental outputs from agriculture are simply economic commodities for which there is a value and a demand, and we want as many of them as we want and no more; and a surplus of bull-rushes, or a surplus of hedges, is just as inefficient a use of countryside resources as a surplus of wheat or milk. And the danger with asserting that "farmers have now got to produce environmental goods" is so imprecise as to give no guidance at all. You see, if one said "agriculture has got to produce more food," we might accept that, because we are accustomed to a kind of structure of agricultural output, and no-one would imagine that if you said "you've got to produce more food" it will all come as brussel-sprouts, or it will all come as milk. But when people say, "we want more environmental goods," one needs to stop and say, "well, which ones and where?" and do we only want more of the environmental goods that people can see, like hedgerows, and all the ones they cannot see, like the lesser spotted-black-legged beetle, or something, is it only a very small interest group who wants that. And a lot of these are extremely competitive with one another, because if we want access and we want wildlife and we want habitats and we want nice visual amenity, does that mean we trim the hedges very regularly and make them tidy, or we let them grow up, because then they become a different kind of environmental good. And the big difficulty, in the discussion that I heard at the end, in the previous group, in the last ten minutes, was the difficulty of knowing what exactly is this pattern of environmental goods; sure, people have this feeling that either they want more or they are worried they will get less, and it is not quite clear that people want more. A lot of the response is to a fear that unless you do something there will be none.

Mr Jack

  165. Let me ask you a question. Do you think we have got too much countryside; because, in a way, what we are saying is that there is an economic resource which is being defined out there by geographic boundaries, urban countryside? If you were saying, "Well, the biological activity is now not required as much," you would look economically at another way of deploying those resources. But, on the other hand, when people say, "I'd like to live out in the countryside," the planning laws say, "We can't have too many houses;" if somebody says, "Well, we want to develop some new forms of economic activity," "We can't do that, it's not compatible," are we looking at this thing in the right way. If we are trying to be thinking, as the Chairman said at the beginning, outside the box, do we actually have to think, have we got too much countryside, are we actually deploying those resources properly; or are we actually posing ourselves the unanswerable question, "Whither agriculture?" because we are not allowing the proper forces to redistribute activity with those economic resources?
  (Professor McInerney) So long as one does not talk about agriculture as a uniform glob, or countryside as a uniform glob, I think it is a very valid question to ask; and one could say, in some areas, there is too much, or more countryside than really people know how to value. You could well say, in East Anglia, "The best use of this land is to knock out wheat as cheaply as possible, and the fact that it hasn't got many trees, well, it doesn't matter, there are plenty of other trees over there." And one should not imagine that every piece of agricultural production land has also got to be environmentally-valued countryside. We do not apply that criterion uniformly to land, no-one says, "Well, Heathrow Airport's an environmental desert, there are actually no beetles there; what a terrible use of land," we recognise that, some bits of land, their best economic use probably has very few environmental benefits. And, as I said earlier, I think a lot of the reaction in favour of more environmental goods grows out of the fact that there is a belief that if you do not do anything about agriculture it will actually destroy vast areas of the countryside, which I think is tosh, to be honest. I think that you can drive from Penzance to Thanet and you would be very hard pushed to say, "Well, this is a totally destroyed countryside;" it may be different from what it was 30 years ago, but sticking a few more trees in my county I do not think is going to alter radically anything very much to the better or to the worse. So I do not think one has got necessarily to do much to plant trees there. What possibly people want, in a food-secure, very mobile and leisure-oriented society, is a lot more access to the countryside; now that is very strongly in competition with many of the biodiversity, biological, or even visual, elements of it. So I think that there is this danger of talking about environmental goods and generalising them as though they were a uniform commodity, and the same danger as if you generalise about farmers, or about consumers, or about academics, or MPs, or anything. We are talking about tremendous diversity here, and we cannot deal with it as a homogeneous glob of goods and services. And so, until we can refine what we want, and that is what the Curry report does not do, it falls into the trap of talking about more environmental goods, as though we all know what they are, but what the RSPB would want from it, and CPRE, and the Ramblers, and so forth, might be very, very different, and yet they think they are all arguing for the same thing.

Mr Lepper

  166. It is pursuing the point, I think, that Michael Jack has raised. You say, in your paper, that the demand for that bundle of things to do with conservation, amenity and rural environment is not simply the insistence of interested lobby groups, but clearly is very real, in an economic sense; and what I wonder is, how do we measure that demand? One hears what is said by the Ramblers' Association, or the Council for the Preservation of Rural England, etc., and you acknowledge that, but, in terms of public demand, how do we measure it, can we measure it?
  (Professor McInerney) With great difficulty. I heard David Ansell say, "Yes, well economists have techniques for doing this;" but that is very partial. We can pick on something, and I can do an expensive research study and tell you how some footpath over the Berkshire Downs is valued, or something, but to do it for the mass of the UK countryside, I think, is almost impossible. That is the problem with identifying values when there are no markets to do it, because markets have thousands and thousands of people, all getting involved in the valuation process and sorting it out amongst themselves. When you are dealing with public goods, it is down to some research studies, and some civil servants, and so forth, to try to make these decisions, and it is impossible, rationally, any more than you can measure the demand for defence services, or education. So there is conceptually a demand, in the sense that there is a lot of evidence that people, when confronted with the question, "Declare a value," in the sense that, they would feel a loss if it disappeared; but that is very different from being able to stick a monetary valuation on it and adding it all up and knowing, therefore, how much money to spend on its provision. And I do not think that it is possible to do that. But I think it is possible to explore the components of environmental goods and see which ones, I mean, is it really skylarks, or red kites, or robins, or what is it that people worry about when they think about the bird population; it is no good saying, "All of them," because when there come to be choices somebody has to put their money somewhere, and it is no good saying, "Well, we want hedges, and we want this and we want that," because you cannot have it all, any more than you can have brussel-sprouts and milk, and so forth, all from the same area of land. And I think that one needs to focus more regionally. I think it is a good question; if the public want a bit more countryside, should it be near centres of population, where they can actually get out and enjoy it, and therefore will they care what happens up in the flow country, because nobody goes there particularly. So should we be looking locationally, (a) where countryside should be encouraged, and then we need to say, there are good areas and bad areas for trying to produce countryside. And I think probably East Anglia is not the best, the best use of East Anglian land is not trees and beetles and birds, whereas I would suggest in the South West probably it is. I think it is just refining the questions a little more and getting some more focus on the targeting of these policies, rather than assuming that the whole of the land area in agriculture has also got to be a land area producing environmental goods of the same order of magnitude.

  167. You suggest, however, the demand is there, and that most—
  (Professor McInerney) The statement you picked on, that paper I wrote for an agricultural audience, and I was conscious of the fact I was using the word "demand" as an economist does, and not as a trade unionist does; it is not a just demand, as it were, it was not an insistence, that we demand to have it, so much as the way that economists use "demand" is that I have a preference for it and we are prepared to express that preference in the valuations.

  168. I think that is the way I read it, and as you have just explained it. You have suggested, also in the paper, and in what you have said, that perhaps most of the current agri-environment schemes in operation may not be appropriate for delivering those elements of conservation, amenity, rural environment, etc. Can you suggest any mechanisms, I know you have talked about the regional and the local focus, that might be better at delivering those elements?
  (Professor McInerney) That is a difficulty. I think things like the Countryside Stewardship Scheme, which are much more targeted, have more sense to them than something like Environmentally Sensitive Areas, which are broad areal definitions. I was part of the discussions when Exmoor was made an ESA, and there seemed to be some rather strange contradictions in it, like, "Well, there's a certain budget for this, and if more than 60 per cent of the farmers sign up we shall run out of money." So, although you define the whole area as an ESA, really you want only 60 per cent of the land in the ESA, which means 40 per cent of the land in the ESA is not an ESA; and, therefore, you could get this sort of patchwork of environmentally-protected and environmentally-unprotected land, which makes a nonsense, it seems to me, of the whole thing. And so I think some schemes, like that, just are not that clear about what they are trying to achieve. The principle of economics is that you pay a price for something that represents its value, not what it costs to produce; so a scheme which compensates farmers for their loss of income is not particularly a very rational scheme. If you compensated me for my loss of income on my time input in doing you a work of art, it would cost you a lot, but, I guarantee, the work of art would not really be very valued, and I think one can be compensating all sorts of farmers for things they do when you do not value the output. So I think we have got to get round somehow to knowing better, and until we do we cannot have sensible environmental policies that make economic sense, I think, in terms of sticking on an incentive price, roughly reflecting the value of something, so that it calls forth the quantity that is required. Now you will never get it as precise as that, as markets do, but I think some of this kind of thinking has got to go in, in constructing an administrative scheme, rather than saying, "Let's say 10 per cent of budget, and we'll call that the environmental budget and then we'll just distribute it, as so much per hectare, and that is a way of getting rid of the money, and, good, we have got an environmental scheme."

Mr Breed

  169. Surely, only one part of it, and, in fact, a major part of it, is very simple, it does not require great complex thinking, we want agriculture to be less intensive. It is very easy to work out the difference between the intensive use of certain pieces of land and the extensive use, which actually we believe to be more environmentally sensitive; the two values are almost precise, we can work out almost exactly what the difference is?
  (Professor McInerney) I have trouble with an assertion "We want agriculture to be less intensive."

  170. I was just about to come to that; that is part of the perception that you are placing on this. To others of us, who actually have perhaps more sensitivity to that, we think the system actually is very simple to work out, on balancing the difference between extensive and intensive, because what you are getting out of a field or a farm actually can be measured quite simply. I know there are going to be efficiency aspects there which will distort some of it, but, in terms of market price, the amount of wheat or grass that you are growing, whatever it is, based upon an intensive or extensive method of farming, is relatively easy, surely, to calculate?
  (Professor McInerney) If you are saying there are some areas of land where, if it were farmed less intensively, it would not necessarily, as a result, generate much in the way of environmental benefit, I would agree with you; and I think there are major areas of land where de-intensifying them, if that is a word, would just reduce agricultural output, but will not produce very much else. The set-aside seemed to be a classic scheme.

  171. You say set-aside; it is the classic example, is it not?
  (Professor McInerney) Yes; you reduced agricultural output but it is not clear that you produced anything really valuable in its place. So again it comes back to particular areas of land where their possibility of producing valued environmental goods is quite significant, and the competition between agricultural goods and environmental goods makes the choice quite stark, and, there, you may want to consider de-intensifying. But in other areas, I would go back to East Anglia, I am not sure that there is a good use of East Anglia, particularly.

  172. That might be flooded in ten years' time anyway, might it not, so we will not have to worry about that area?
  (Professor McInerney) Yes; okay. But I think this is why, that is what I am saying, that we need to target areas, if we may.

  173. Can we just move on, perhaps in a slightly more positive sense, in the way you say opportunities for using the land, in other words, alternative uses of land, diversification, and everything else, and you highlight a number of potential ways that that may happen. Is that not actually subject to an enormous number of potential barriers, of planning, through standards, of all the bureaucratic aspects, down in our part of the world, highways, as much as anything else? What are the real opportunities for people who do that, let alone their ability to raise capital, their ability actually to acquire the skills to run an alternative business, and everything else, where really are there major diversification, new opportunities for land use, other than selling it for housing?
  (Professor McInerney) I think they are immense, but they are all very small, the so-called niche markets. We did a study on diversification at Exeter, ten or more years ago, and we had 99 code numbers for the activities that we found people doing, and there were not enough code numbers, in other words, there were more than 99 different sorts of things that were taking place on farms that were not conventional food production.

  174. And how many were profitable?
  (Professor McInerney) It depends how you assign charges to them. If they are using a barn that really has not got a lot of use and you end up renting it out for somebody to renovate cars in, or something, fine. There is a lot of unsuccessful diversification, in the same way as, if you charge the full price, there is a lot of unsuccessful pig production and milk production going on, with all sorts of marginal businesses, where the management is not good and the resources are not good. The trouble with using, again, diversification as a collective category is that it is presumed somehow that there is something you can pick on, like pig production, or going into poultry, or having a camp-site, on some of the bigger ones; and they are all very diverse, they are very locationally-specific, and if that guy has done it there then nobody for the 50 miles around has a hope of doing it. Planning is a serious problem. The reasons why planning regulations came in were not a lot to do with easing the adjustments that economic forces bring about, and a lot of the planning regulations relate to an era when we were worried about loss of agricultural production capacity, which is not particularly a worry any more. The thing about getting capital and skills, that is no more a problem for farmers than for any other businessman, and maybe less of a problem for farmers, because often their businesses have such low indebtedness anyway that if only they prepared to mortgage a bit of land, or something, they could raise money.

  175. How much do you feel there is any obligation on society, at all, perhaps, to be more flexible, in this time of agricultural problems, to try to assist people to do that, perhaps by relaxing, to a degree, some of the planning, to reducing some of the high levels of standards that we try to achieve, in order, at least, if you like, to try to increase the flow of potential, economically-profitable diversification exercises by people with land, at the present time?
  (Professor McInerney) There is a lot of need for this, not to help farmers, particularly, because I do not think that is the question to ask, but if there is a demand for various non-food developments in the countryside that do not damage other people's interests then, in a sense, the demands in the economy are increasingly seeking value created in that use. So I see no reason why planning regulations should stop these developments, in response to genuine demands, any more than you have planning regulations that stop you growing brussel-sprouts, when there is a great shortage of brussel-sprouts.

  176. Many rural areas, of course, they already were the designations of areas of great landscape value, and the ESAs, and all those to do with conservation, a huge number of those sorts of things, which actually go against the opportunity actually to use land, or develop land, because that is what it is really about, what they want to do is to keep it as a green-grass field, but to develop these sorts of businesses, or business opportunities. Do you see that we ought to really now start to shift the balance back a bit, that we have had over the last 25 years, perhaps?
  (Professor McInerney) Very strongly. I see no reason why you should not permit a genuine economic development on a site somewhere on environmental grounds, as though every site has got to be an environmentally-beneficial site; on those grounds you would never have a housing estate, because that does not produce a lot of environmental, well, it produces a different sort of environment, because it has cherry trees and wallflowers. I think it comes back to the point I made earlier. There is an assumption somehow that every piece of agricultural land has got to be producing environmental goods. I do not think we want that many.

  Chairman: Professor McInerney, thank you very much for coming. I am delighted that we have had a few sort of slightly perhaps heretical moments, that is very refreshing, because I was also beginning to get a little bit anxious about this, the great green tide sort of sweeping over things, and thinking that, agriculture, at the end of the day, people have got to make some money producing food, because schemes which are all based on income foregone are not actually going to help very much. I am also terribly anxious about this definition of a "public" you keep talking about; the public turns out, in practice, to be small lobby groups, by and large, who can articulate their point of view. And so one of the questions we keep asking for is if the Government will just actually try to define what it means by "public goods", and starting by defining both the public and the goods which we are talking about. You have helped us a lot along that road today. As I said to the other witnesses, if there is something you wish you had said and have not, let us know; if you have said it, it is too late to unsay it. But we are very grateful indeed both for your written submission and for your evidence this morning. Thank you.

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