Memorandum submitted by the Royal Society
for the Protection of Birds (A23)
1. SUMMARY
1.1 Public policy for the agriculture industry
has to meet diverse aims—farming should provide adequate
supplies of safe, healthy affordable food, protect and enhance
wildlife, support diverse and attractive landscapes, and contribute
to a thriving rural economy.
1.2 The long-term prospect for agricultural
production subsidies and quotas is abolition. They will not disappear
overnight but rather will be gradually phased out through a series
of CAP reforms over the next 10 years, driven by both external
(world trade) and internal (EU enlargement, consumer and environmental)
concerns.
1.3 To achieve better stewardship of agricultural
land there needs to be (a) a minimum environmental standard for
farming and (b) public recognition and support for the wider benefits
of the farmed landscape. These objectives can both be delivered
through a combination of regulation, incentives, advice and market
mechanisms.
1.4 Reductions in production subsidies will
bring farmers closer to the market place. Therefore, alternative
income sources will, for some farmers, become increasingly important.
Public support for the wider benefits delivered by farming will
be needed if these benefits are to continue to be provided and
farm businesses remain viable.
1.5 Overall, the most important recommendations
for the Committee to consider are:
(a) the Government should continue to press
for further reductions in production subsidies and for increases
in funding or Rural Development Regulation measures;
(b) the Government should press for compulsory
modulation at the mid-term review of the CAP in 2003;
(c) the UK agriculture authorities should
define and enforce a minimum environmental standard for agriculture;
(d) the Government should review the provision
of existing advisory services for farmers and implement a simple,
effective, integrated service to create a one-stop shop;
(e) providing the right framework of incentives,
advice and training measures will be critical in successfully
taking forward the changes demanded of the farming industry; and
(f) economic analysis of the impact of reductions
in production subsidies (ie the potential winners and losers)
would inform policy development and identify problems.
2. INTRODUCTION
2.1 The RSPB is Europe's largest wildlife
charity with over one million members. We manage one of the largest
conservation estates in the UK, covering more than 100,000 hectares.
Sixty of our reserves are farmed, with around 170 tenant farmers,
200 employees and a turnover of £4-6 million. In 2000, we
acquired a 180-hectare arable farm in Cambridgeshire where we
are running a research and development programme.
2.2 We have a long history of working on
agriculture at both UK and EU levels and, more recently, have
developed our expertise on global agricultural trade issues. The
RSPB is the UK partner of BirdLife International—a global
partnership of conservation organisations. BirdLife has identified
the impact of agriculture as a high priority environmental issue
and seeks fundamental reform of the Common Agricultural Policy.
3. WHAT ARE
THE PROSPECTS
FOR PRODUCTION
SUBSIDIES AND
QUOTAS, AGAINST
THE BACKDROP
OF WORLD
TRADE LIBERALISATION
AND THE
MID-TERM
REVIEW OF
THE AGENDA
2000 REFORM OF
THE CAP?
3.1 The RSPB sees the long-term prospect
for production subsidies and quotas as abolition. We do not believe
that production subsidies and quotas will disappear overnight
but rather will be gradually phased out through a series of CAP
reforms over the next 10 years, driven by both external (world
trade) and internal (EU enlargement, consumer and environmental)
concerns. The RSPB recommends that:
1. The Government should continue to press
for further reductions in production subsidies and for recognition
of non-trade concerns through domestic support;
2. Reductions in production subsidies should
be replaced with support for environmental and rural development
measures;
3. The environmental benefits of set-aside
should be captured through agri-environment schemes when set-aside
is abolished and specific measures should be considered to help
those farmers worst affected by the removal of quotas;
4. Emergency aid measures should be available
for use during exceptionally adverse market conditions;
5. The Government should press for compulsory
modulation at the mid-term review of the CAP in 2003; and
6. The Government should bid for a greater
share of the existing EU budget for the Rural Development Regulation
at the mid-term review of the CAP.
3.2 External pressures for change: the implications
of the Doha trade negotiations. At the recent World Trade talks
in Doha, the EU agreed to consider the abolition of agricultural
export subsidies. The deal commits member countries to negotiate
on major reductions in agricultural support and protection as
part of a new Trade Round. This is a significant agreement given
previous tense negotiations between the EU, US and Cairns Group
trading blocs on issues such as export subsidies and market access
issues.
The devil is, of course, in the detail and already
differences in opinion of what this text actually commits countries
to are emerging. However, the agreement does lay the ground for
further reductions in production subsidies in future. Talks are
due to be concluded in January 2005, although many anticipate
they will take longer. This could have some bearing on how quickly
the EU moves to pre-empt the outcomes of trade negotiations by
reforming its domestic policy. Many commentators, including RSPB,
believe that further substantive reforms of the CAP will not take
place before 2006.
3.3 Trade liberalisation from an environmental
perspective
Price supports in the EU have encouraged intensive,
high input agricultural systems as farmers have striven for higher
yields. This has caused huge environmental damage. For example,
high yields are closely correlated with farmland bird declines
in the EU.
The RSPB advocates the outright abolition of
price supports to align EU prices of agricultural commodities
with the world market. This would enable all export subsidies,
intervention buying and supply controls to be abolished. Price
supports should be phased out by reducing support prices for key
commodities towards world market prices over a five-year period,
and replaced with a series of non commodity-specific area payments,
agri-environment schemes and rural development measures.
Trade liberalisation in itself will not solve
all of the problems caused by the CAP. A move to world market
prices would solve some of the problems relating to trade and
market management. It may have some environmental benefits (in
some instances encouraging extensification, and possibly making
environmental schemes more cost effective) but it will also have
disadvantages (reducing the profitability and competitiveness
of many enterprises, forcing farm amalgamation and reducing spending
on environmental management). Therefore, other forms of support
that are less trade distorting and less environmentally damaging
should replace price supports.
Quotas and set-aside, while introduced predominantly
for supply control reasons, have had environmental and social
benefits. These benefits should therefore be captured under a
reformed system of support. The environmental benefits of set-aside
should be captured by dedicated environmental schemes, while the
social impacts of removing quota can be addressed through measures
designed to help smaller farms (eg through positive forms of modulation,
special schemes targeted at the needs of smaller farms and measures
to encourage new entrants to the industry). Well-targeted schemes
of this type would be more effective in addressing environmental
and social concerns.
There is a good case for emergency aid measures
to support agriculture during exceptionally adverse market conditions.
While we reject the idea that the EU should routinely manage market
prices to keep them above world market levels, the nature of agricultural
commodity markets is such that prices and incomes can crash to
very low levels when supply is unusually strong. Such conditions
can have significant adverse impacts on the countryside and rural
communities by driving farmers out of business. We therefore believe
that the EU should retain measures to ameliorate these impacts.
These could include emergency state aids, or measures to encourage
farmers to take out insurance or trade in derivatives. Alternatively,
the EU could maintain an intervention, system to ensure minimum
prices for key commodities, but set intervention prices well below
the world market, thus becoming a buyer in exceptional circumstances.
This area needs further research. The cost of emergency intervention
measures of this type would be significantly less than the 11
billion euros the EU currently spends on market support.
The EU should not be obliged to provide direct
compensation for cuts in support prices. However, we do believe
that public financial support for agriculture is justified, and
we set out proposals below for a reformed system of support. Producers
of commodities such as milk and sugar beet, who rely most heavily
on price supports at present, will be most affected by price cuts,
but will become eligible for new direct payments, which can be
phased in as price supports are reduced.
3.4 Mid-term review of the Agenda 2000 reform
of the CAP
We understand that the mid-term review of the
Agenda 2000 reform of the CAP in 2003 is likely to result in limited
reforms to the CAP. The exact nature of any proposals is likely
to be influenced by the political map of the EU and the perceived
appetite of key Member States for change. The outcome of the French
elections in May 2002 will, for example, have a major bearing
on how radical the Commission's proposals will look.
Modulation provides a key opportunity for the
EU. Under current rules, Member States can, on a voluntary basis,
opt to reduce production subsidies by up to 20 per cent and use
the money saved, match-funded from national budgets, to fund "accompanying
measures"[1].
Some Member States, including the UK and France, have adopted
modulation but the majority has not. The mid-term review may look
at whether modulation should be compulsory for all Member States
to adopt. This policy would have a number of benefits including
reducing production subsidies, sending a clear statement to trading
partners about the EU's intentions, increasing funding for agri-environment
schemes and helping to tackle many of the environmental problems
associated with current farming systems. However, there are also
implications for farm incomes if compulsory modulation is pursued
and further economic analysis into its likely effects is required.
The mid-term review is also an opportunity for
the UK to bid for an increased share of the Rural Development
Regulation (RDR) budget. Due to historically low spending on rural
development measures, the UK was allocated a low share of the
RDR budget under Agenda 2000. Securing a greater share of funding
would allow the UK to enhance and broaden the scope of the schemes
it operates under its Rural Development Plans.
4. HOW CAN
BETTER STEWARDSHIP
OF AGRICULTURAL
LAND BE
PROMOTED?
4.1 Better stewardship of agricultural land
will require (a) a minimum environmental standard for farming
and (b) public recognition and support for the wider benefits
of the farmed landscape. These can be delivered through a combination
of regulation, incentives, advice and market mechanisms. The RSPB
recommends that:
(1) The UK agriculture authorities should
define and enforce a minimum environmental standard for agriculture;
(2) Every farm should be required to have
a farm audit to assess whether this standard is being met or should
be a member of a recognised farm assurance scheme;
(3) A whole farm business and environmental
plan should be the entry point to all environmental and rural
development schemes;
(4) The range of agri-environment and rural
development schemes should be reviewed and expanded to ensure
there are options that will be attractive to a range of farmers;
(5) The provision of advisory services for
farmers should be reviewed and a simple, effective, integrated
service put in place;
(6) The Government should provide short-term
assistance to help farmers develop marketing and processing skills
and expand the range of quality, branded foods.
4.2 A minimum environmental standard for farming
A minimum environmental standard for farming
should be established as a priority. This should cover soil, air
and water protection (drawing on key elements of the current voluntary
Codes of Good Agricultural Practice) and basic protection for
biodiversity. Each farm would be required to conduct a farm audit
to assess its compliance with the minimum standard. If farm assurance
schemes and the farm audit worked to the same standard, membership
of an assurance scheme could remove the need for an audit. The
standard could be enforced through legislation, by using cross
compliance to link it to receipt of direct payments or placing
conditions on access to other schemes or grants.
It is likely that a number of UK farms, as they
currently operate, would not meet such an environmental standard.
Farmers failing to meet the standard should be given a defined
period of time to comply with the standard before action is taken
eg legal action or withdrawal of subsidy. It is likely that some
initial Government assistance would be needed in the form of capital
grants eg for pollution control infrastructure.
4.3 Recognition and support for the wider
public benefits of the farmed landscape
Post-war public policy defined agriculture as
a method of producing food and fibre. However, its role has always
been much wider than this. Agriculture's other functions, of providing
food and habitat for farmland biodiversity, shaping and characterising
the landscape, managing the basic resources of soil and water,
and providing the basis for rural social infrastructure, have
only recently been recognised as major public benefits.
These public benefits have been delivered as
a by-product of farming systems for centuries. In the last 50
years, rapid developments in agriculture have undermined these
benefits. Recently, declines in the environmental deliverables
of farming have been matched by declines in the relative quality
of life for farmers (in terms of income, hours, and social isolation),
the number of jobs the industry provides, and in consumer confidence
in agricultural products. Delivering public benefits—which
the market would not otherwise provide—is a clear case for
public intervention. We believe that ongoing public support for
farming—delivered through a reformed CAP—is necessary
to support the kind of multi-functional farming which society
increasingly demands.
4.4 Model for future CAP support
The RSPB proposes a model for future CAP support
arranged in two levels (see Table 1). Level 1 would comprise a
basic flat-rate area payment, for which most farms would qualify,
subject to meeting a minimum environmental standard and making
a basic contribution to rural development. Level 2 would comprise
a series of environmental and rural development measures, similar
to those available under the current Rural Development Regulation,
but with much enhanced levels of funding. Member States would
be able to develop and implement their own schemes, in line with
criteria set out in EU legislation. Level 2 would reward the positive
management and creation of basic farmed features, such as hedges,
ditches, walls, ponds and field margins. It would also encourage
the management and creation of particular habitats, such as heathland,
native woodlands, wetlands, meadows and environmental set-aside
of arable land. Rural development support, including processing
and marketing schemes, business development grants and training
measures would also be available under Level 2.
4.5 Farm audits and whole-farm plans
Farm audits and whole-farm plans would be an
important part of this system. All farmers would be required to
commission a farm audit as a condition for receiving CAP payments.
Farmers seeking support under Level 2 would be required to commission
a whole-farm conservation and business plan. Ideally, farmers
would seek advice and commission a plan before they were able
to benefit from new schemes. However, because of the practical
difficulties of providing plans for so many farmers, it would
be necessary to phase this process in and to prioritise large
farms. Farmers applying to enter major new schemes, particularly
those that are more specialised or difficult to implement, could
be required to commission such a plan before their application
was accepted. Financial support would be provided to meet the
costs of producing the plan.
Table 1: Proposed System of Agricultural
Support in the UK and EU
| Level | Eligibility
| Form of Payment | Requirement
|
| 1 | All farmers and farmland eligible, subject to meeting environmental standard
| Flat rate area payment | Meeting environmental standard—eg codes of good agricultural practice, avoid overgrazing, pollution prevention, no damage to features/habitats, compliance with legislation (eg water framework directive). Farm audit
|
| 2 | Some schemes should be available to all farmers. Some schemes likely to apply to particular areas according to environmental/economic/social criteria
| Combination of area payments, capital payments, grants
| Whole farm plan
Positive management of features such as hedges, walls, ditches, field margins, stubbles
Restoration/re-creation of features
Support for training and basic rural development measures
Manage/restore/re-create habitats such as heathland, reedbeds, wetlands, native woodlands, environmental set-aside
Undertake rural development projects (processing/marketing, new business initiatives, tourism projects etc)
Support for farming practices which have environmental benefits eg spring-sown cereals, mixed cropping, extensive grazing, pesticide and fertiliser reductions
Special habitat improvement/management and rural development projects in particular areas
|
4.6 Role of advice
There is a need for a simpler, more effective and integrated
advisory service for farmers if better stewardship of agricultural
land is to be promoted and new support measures are to be delivered
successfully. The current problem is not a lack of advisory services
for farmers but rather that they are fragmented and present a
confusing picture. Farmers are often uncertain as to where to
turn for help on environmental or farm business matters. The idea
of a "one-stop shop" for advice has been suggested by
a number of organisations in the past but has largely not been
acted on by government. The best example of this kind of service
to date is the Bowland Initiative in Lancashire, funded by MAFF
as a pilot project in co-operation with Lancashire County Council.
The main criticism of this project has been the high overhead
costs of delivering such a service. We accept the Bowland Initiative
might represent a "Rolls Royce" service but consider
that it is a model from which important lessons can be learned.
A more streamlined service based on the existing Rural Development
Service, the Farm Business Advisory Service and other advice providers
should be considered for the future.
4.7 Role of the market
The market has a role in helping to encourage and promote
countryside stewardship. The best current example is that of organic
farming, where premium prices for organic food reward the farmer
for environmentally sensitive practices. Conventional farmers
who adopt wildlife-friendly farming practices could also benefit
through food prices if food were labelled appropriately. For example,
1p on a loaf of bread would add £20 to the price of a tonne
of wheat while 1p on a pint of beer would add £60 per tonne
of barley. These premiums would, in turn, pay for field margins
at £70 per 100m or conservation headlands at £170/ha
which would benefit the environment. The extent to which consumers
are prepared to pay higher prices for food produced in more sustainable
ways is open to question although as demonstrated above, price
rises need not be high to benefit farmers and the environment.
Meanwhile, the market for organic food continues to grow with
retail sales expected to reach £1 billion within a year or
two. While the development of such markets for food must be taken
forward largely by industry and private enterprise, there is an
important pump-priming role for government in helping to provide
skills and capital grants for infrastructure.
5. WHAT ARE
THE OPPORTUNITIES
AND DIFFICULTIES
FACED BY
AGRICULTURE AS
A RESULT
OF POSSIBLE
REDUCTIONS IN
PRODUCTION SUBSIDIES?
5.1 Reductions in production subsidies will bring UK
farmers closer to the market place and make them much more dependent
on the price they receive for the food they produce. This will
present both opportunities and threats. Alternative income sources
will, for some farmers, become increasingly important. Public
support for the wider benefits delivered by farming will be needed
if these benefits are to continue to be provided and farm businesses
remain viable. The RSPB recommends that:
(1) the Government should recognise that a period of adjustment
is needed by the farming industry if opportunities are to be grasped
and difficulties overcome;
(2) providing the right framework of incentives, advice
and training measures will be critical in successfully taking
forward the changes demanded of the farming industry;
(3) economic analysis of the impact of reductions in production
subsidies ie the potential winners and losers should be undertaken
to help inform policy development and identify areas where problems
are likely to arise;
(4) the Government should consider the need for an exit
strategy for those farmers who wish to leave the industry but
are unable to for financial reasons and consider the need for
special measures for new entrants.
5.2 Opportunities
In 1999-2000, subsidies for all farm types exceeded net farm
incomes, except in the case of dairy farms in England, where most
subsidies come through price supports. Reductions in these subsidies
will expose farmers to the marketplace and make farm income much
more dependent on the price received for the food or other goods
produced. Production subsidies have largely divorced farmers from
the marketplace and encouraged the majority to focus more on quantity
than quality. Given reductions in production subsidies and the
removal of price support—bringing EU commodity prices in
line with world markets—farmers are likely to pursue a number
of strategies.
Alternative strategies include farmers becoming:
— specialist producers of bulk commodities;
— specialist producers who strive for high quality
and seek to add value to their produce, primarily food but also
other rural products eg timber;
— alternative land users eg energy crops, alternative
crops, flood alleviation; and
All of these functions are important and need to be retained.
Ideally, most farms will combine some or all of these options.
The extent to which these options are pursued will depend on a
number of factors, from the level of public support for activities
such as countryside management, the willingness of consumers to
buy high quality, specialist foods, the farmers' interests and
abilities, land capability, advice provision and so on.
Reductions in production subsidies will force change in an
industry which has become heavily dependent on one single income
stream. While that change will be painful for some, it will also
create new opportunities and could, if handled carefully and with
a period of adjustment, help to revitalise an industry which has
become stuck in a rut. Some farmers will undoubtedly leave the
industry but, with the right framework of incentives and advice,
new entrants could also be attracted by the broader range of opportunities
on offer. The range of businesses and activities within rural
areas is likely to widen, which could lead to rural employment
and boost the rural economy. Overall, there could be a significant
number of benefits for agriculture and rural areas from reductions
in production subsidies.
5.3 Difficulties
While reductions in production subsidies should open up many
new opportunities, it will also present significant difficulties
in the short to medium term. Not least of these will be the impact
on individual farm incomes, given that they are already at perilously
low levels. Cuts in production subsidies, on which farm incomes
are currently heavily dependent, will force some farmers out of
business unless they can quickly develop new income streams. Gradually
phasing in cuts in production subsidies at the same time as increasing
funding for and developing new schemes (eg agri-environment and
rural development programmes) will be critical factors in assisting
the adjustment process.
Clearly, it is not in the public interest to replace one
kind of subsidy dependence with another. The RSPB therefore advocates
the need for farming to become much more responsive to consumer
demands. However, the current farming industry is the product
of the past 30 to 40 years of farming policy (to which farmers
responded highly effectively) and while change is needed, it will
not happen overnight. Many farmers are simply not used to making
the kind of choices and business decisions which will be required
of them in future. Providing farm business advice and training
for farmers and equipping them with new skills will be essential
for many farmers if they are to survive. There will also be those
farmers, often tenant farmers, who wish to leave the industry
but are unable to for financial reasons. The Government should
therefore consider an exit strategy for such farmers whilst also
considering how to encourage new entrants.
14 December 2001
1
The "accompanying measures" include: agri-environment
schemes, Less Favoured Areas, Forestry measures and Early Retirement
Scheme. Back
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