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

Examination of Witnesses (Questions 560-573)



  560. What conclusions have you reached?

  (Ms Walters) One example is that we should not be in the business of producing wheat; we have been hitherto. It can be produced more cheaply in other parts of the world so why try and do something like that.

  561. That is very interesting because many of our arable producers might argue that with world prices they could survive. We are roughly about there now and clearly by some mechanism some are hanging in there. You have drawn a very interesting conclusion that in a world of farming without subsidies cereal production would not be for you.

  (Ms Walters) Not unless we can prove that we can add value to it. If we were just producing it as a commodity without any differentiation between what was being grown in East Anglia and what was being grown more cheaply in the Ukraine and shipped more cheaply from the Ukraine into the UK, then yes I think our conclusion would be it is not an area we should stay in.

  562. Some farmers have suggested alternative Pillar 2 money is a crutch on which they can lean if money from Pillar 1 gets reduced. You say rather challengingly in your evidence: "However we do not believe that agri-environment payments should be seen as compensatory payments for the phasing out of production subsidies." That is pretty strong stuff. What you are saying is from your standpoint no subsidy full stop and if we stay in farming we bear the cost of the environmental requirements that might be being put upon us by DEFRA and outside agencies. Is that a summary of your position?

  (Ms Walters) Can I add a subsequent sentence to the one you have quoted. What I would say is yes that is true. We do not want a situation where, day one, production subsidies and cheques cease, day two, farmers receive the same amount of money in a cheque but for something slightly different. What we are saying is that there needs to be a fundamental review. Farmers should look at themselves and wonder what they are doing and why they are doing it. If we are saying that food producers should not be subsidised we are saying at the same time that there is a very legitimate role for farmers as land managers but it is not just as simple, as ending one form of subsidy and substituting it with another one.

  563. Given the Chairman's earlier comments about the pound/euro situation, we could see quite a dangerous long-term scenario because if we were trading disadvantageously in currency terms, if the farmers had gone through the process you describe and decided a large amount of the stuff they could not be in in a subsidy-free world and you are saying that environmental payment should not be a subsidy, I cannot quite see how we are going to develop a mechanism to pay them to do something even if it is only land management?

  (Ms Walters) Yes, we will come out of some areas, but at the same time we are a mixed farmer and maintaining some kind of balanced portfolio is very important.

  564. What do you think you are good enough to stay in in a world without subsidy?

  (Ms Walters) I think we have to face up to the reality that subsidies are going to come to an end.

  565. I agreed with that but the question I asked you is what do you think from Farmcare's point of view you are feeling confident about? You are having to make long-term decisions. In the next decade goodness knows what could happen. What do you feel confident about at this moment to say we should be putting our eggs into these various baskets? You have given an indication of cereals where there is an element of doubt but what about other areas?

  (Ms Walters) Horticulture.

  566. That is not subsidised at the moment so that is not a problem.

  (Ms Walters) A subsidised area? I am afraid I will have to come back.

  567. It would be very interesting to know because this gets to the heart of what we are about. Can I ask Kevin for an overview of UK farming. What do you think are the strengths and weaknesses that have to be examined against the background of reducing the level of subsidy?

  (Mr Hawkins) For a start I do not see this as being a transfer from one pocket to another of the same amount of money. Quite clearly what goes into Pillar 2 will be substantially less than what is in Pillar 1. Secondly, if Pillar 2 is supposed to be about protecting the environment one can see a situation where there will be rather more beneficiaries of Pillar 2 payments in those areas of the country, the West and the North West, where, arguably, environmental damage from farming has been considerably smaller than in some of the big eastern counties where I think you will find the largest number of farmers who are willing to or are able to compete under a different regime. I come back to the problem of size relative to European competitors both of farming and of processing because if we do not grow—and perhaps the collaboration board has some role to play in this—the size of our farms and reduce the cost base by one means or another, then I think we are not going to be competitive in a whole range of commodity markets and, frankly, the only answer I can see to your question as of now is a lot of British farming would be into premium products, into products where there is a defensible position and where they are not exposed to a lot of very low-cost commodity producers, particularly once the EU is enlarged.

Mr Drew

  568. Can we build on that point. To get larger units you have got to get greater co-operation. I will ask Katharine initially, why does this country not recognise the value of not just co-operation but co-operatives?

  (Ms Walters) Historically we have got too hung up with legal structures and legal definitions and lost sight of co-operation as a tool for better mutual understanding and for closer working relationships, by actually focusing in on the economy of scale issues. We farm one per cent of the land that is farmed in the UK. You have got huge organisations providing the machinery, the fertilisers, the inputs, you have got huge retailers on the other side. I think what we need to do is build trust and confidence amongst farmers so that they become much more adept at working together at a practical level.

  569. Your colleagues?

  (Mr Hughes) Basically our insular nature as a nation. We do not like to co-operate. We always think we can do it best and if we co-operate with somebody else is he going to nick my ideas?

  570. Is that pointedly aimed at farmers?

  (Mr Hughes) Yes.

  (Ms Walters) Also, for too long, we have seen our competitor as the person down the road who is farming but not the person halfway round the world, and that will have to change.

  (Mr Hawkins) There may be something in the cultural explanation but I prefer to look at economic drivers and facilitators. I think over the years a lot of farmers have not had the incentive and no great pressure to collaborate. There has always been a chance of making money on your own, for whatever reason. I think the subsidy reason has entrenched that attitude. If the troubles and tribulations of the last five years, with the general collapse in farming incomes and a lot of farmers going out of business, have not concentrated a few minds, I would be surprised. Secondly, if the prospect of CAP reform does not concentrate minds even more and make the case for collaboration more appealing, again I would be very surprised. I think the other thing, which is a point made earlier, is that even had farmers been in a more collaborative mood than they have traditionally been, UK competition law would have stepped in to prevent the emergence of a lot of the big combinations and the market share concentrations we see in, say, Denmark and the Netherlands. It is no good giving farmers incentives to collaborate if you do not change the law which allows them to collaborate or prevents them collaborating at the moment. That applies as much to processors as it does to farmers.

  571. Can I look at the other side of this now. Are you interested or worried by the notion of ethical consumption because, as has happened with the Co-operative Bank in the marking out of a different territory, there is a customer concern for animal welfare and environmental concerns. I know you are going to say that the consumer will sign up to petitions outside and as soon as they get into your stores they will buy on price and they will buy on ease and convenience. How much of a role do you have in re-educating the consumer, as happened in banking and some other areas? I start with Katharine because it is an easy question for her.

  (Ms Walters) It is less easy than you might imagine and I might disappoint here. Ethical banking is very different from food consumption. Food consumption happens in a much more diverse way, purchasing a much wider range of products. I think animal welfare, organics, use of inputs are issues to some people but not issues to the majority of customers at all. Clearly we have a role in terms of providing information to consumers so that they can make a choice about what they buy, but in no way do we limit choice to either ethical or non-ethical.

  572. Simon?

  (Mr Hughes) It is very difficult to teach or train or reform customers in picking packets off our shelves. We do respond to their comments and queries as and when they happen. Really that is about it, I am afraid. There is no more education than that.

  573. Kevin?

  (Mr Hawkins) I think we could probably make more effort than we do to inform—I do not like to use the word educate—those customers, minority though they may be, of the issues that they are genuinely interested in. Again quoting IGD research, a lot of the focus among the small minority who are interested is about hygiene in the supply chain, animal welfare, conditions under which animals are reared, what they are being fed, how much pesticide is being sprayed on produce, and so on. I always draw an analogy with dieting and healthy heating. A lot more people are interested in dieting and healthy eating than they are in the conditions in which livestock is reared in terms of weighing them in customer importance, but the level of interest on the part of a lot of customers in what we put on the label of "healthy products" is extremely limited. Our own research shows that one in four customers never look at the label to start with, apart from best before date or the use by date. Most of the others who actually look at labels have difficulty understanding the terminology on those labels, particularly when it relates to recommended daily amounts, how much you should eat, what the constituent parts are, and so on. There is an awful lot of scope for us to communicate to customers who are interested, in language that they understand and I do not mean playing down to them but in plain, ordinary terms some basic information about the issues that they are interested in, assuming that we know that. I think we have got a fairly good idea what they are interested in. There is some progress to be made but I am not under-estimating the complexity or hoping for quick results because we will not get them.

  Chairman: There are one or two things I think you are going to let us have. If there is anything you would have liked to have said, please do not hesitate to let us have it. We may well want to come back to you for one or two bits of further information. Thank you very much. We are very grateful to you indeed.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 30 April 2002