Letter to the Committee Chairman from Professor Allan Buckwell, Country Land and Business Association (A50(a))
The CLA is looking forward to giving oral evidence to the Committee's enquiry on "Farming without subsidies", next week. We shall be represented by Mark Thomasin-Foster, Chairman of CLA's Agriculture and Rural Economy policy committee and myself.
Mr Thomasin-Foster farms in Essex, both arable and livestock. He leads the CLA's representations in Brussels. He has been actively involved in UK policy and was a member of the Council of English Nature, and was Chairman of the National FWAG for a number of years. I will know some members of the Committee from my days as an adviser, and I am looking forward to meeting newer members. Since I joined the CLA from Wye College two years ago, my responsibilities in CLA, and as Chairman of the Policy Group of the European Landowning Organisation have kept me in contact with a number of advisers to Commissioner Fischler, and with the Commissioner himself.
We see the Committee's enquiry against the background of the recent Policy Commission's report—the "Curry Report"—on Farming and Food. Although that Commission recommended an eventual abolition of all CAP production support, our focus has been on the more realistically attainable (in the foreseeable future) recommendations concerning "modulation" (which we prefer to call redirection) of support, the establishment of a "broad and shallow" agri-environmental scheme (which we prefer to call Broad Application Stewardship Scheme) and complementary recommendations to restore profitability in farming.
In our view, as representatives of farming and other rural businesses managing upwards of 60 per cent of the rural land area of England and Wales and generating jobs and incomes in the countryside, the most important recommendations of the Curry Report for Government and public policy are:
— Match-funding. The UK Government must commit itself to match fund fully any transfer of funds from production subsidies (Pillar 1 of the CAP) to rural development, including agri-environment (Pillar 2). In addition, we believe that the Government must press for further modulation to be applied across the whole EU. The UK industry would not find it possible to remain competitive if it were required to absorb a further, unilateral, cut of 5.5 per cent of Pillar 1 payments in 2004 as suggested by Curry. A longer timetable, in line with likely decisions at EU level, could be possible.
— Broad Application Stewardship Scheme. The UK Government should commit itself to introducing a broadly accessible base-level agri-environment scheme, available to all producers, with a much lower level of bureaucracy than the existing Stewardship and ESA schemes.
— Competition policy: a clear statement should be made by Government, backed by changes in legislation through the Enterprise Bill as necessary, to the Competition Commission, to reassure producers and primary food processors that initiatives to collaborate in marketing would not attract preventative measures from the Commission.
— Red tape: an annual assessment of the compliance costs for farming and other rural businesses of regulation. CLA would go further, and recommend the Environment Agency and other regulators to make explicit commitments to shift the whole culture of regulatory control away from rigid adherence to inflexible regulations—that are neither reasonable for small businesses nor the best way to meet the public interest—to a risk based approach, to encourage a practical and committed approach by the business itself to delivering the objectives of the regulation.
— Safety net: There must be a strong recognition of the need to have in place private and public mechanism to help the industry better deal with the volatility caused by currency and market fluctuations, animal and plant diseases and extreme climate events. It is plain that the US does not expect all such risk management to be shouldered alone by individual farmers. The EU Spanish Presidency is correct to try and push this higher in the agenda. This issue is under-played in the Curry report.
— Taxation of rural businesses: changes in the tax regime to encourage diversification of farming businesses within the tenanted farming sector. Again, CLA would go further. One of the main themes of the Curry Report is that the move towards a vibrant, multi-faceted rural economy must be facilitated. Within the sphere of tax this means removing the barriers that discourage diversification and entrepreneurship and encouraging re-investment of income and capital within farming and other businesses. Those fiscal barriers that discourage this process should be removed for all rural businesses and not just the tenanted sector. A piecemeal approach of altering one piece of tenancy legislation—the 1995 Act—would be of too limited help. Indeed, alterations to tenancy legislation (which is one part of the Curry recommendations on tax) will probably not be the best way to address the economic problems being suffered by tenants—and many other producers—following the disasters of BSE, low prices, an unfavourable exchange rate and FMD, and there is a great danger of creating new fiscal barriers by this approach. The "whole farm" approach must be widened to the "whole rural business" approach.
— Energy crops: reductions in the rates of duty on bio-fuels, to complement support for growing energy crops. In addition, CLA advocates changes to the new energy trading arrangements (NETA), which are discouraging purchasers of energy from looking to energy crops to fulfil their needs. The danger is that in a few years' time there will be no indigenous renewable energy supply industry of any size to meet the demands of power generators, who will then turn to imported energy crop suppliers to meet their needs. A valuable opportunity for diversification and for improving the carbon balances of UK land management, to help mitigate climate change, will have been lost.
— Planning policy: further flexibility in the planning system as it relates to jobs and appropriate housing in the countryside. CLA supports the recommendations, and would be very concerned to see any re-tightening of PPG7, which was improved only in 2001, or on initiatives to bring much needed affordable and other appropriate new housing to help the rural economy to sustain viable communities.
— English Collaborative and Food Chain Centre: CLA supports both these recommendations, which could encourage greater collaboration and share good practice on positive initiatives to secure a fairer return in the market to producers and primary processors from quality products.
CLA believes that the Curry recommendations represent a valuable opportunity, not to be missed, to deliver major benefits to the public from farming and other rural businesses, in terms of landscape management, greater biodiversity and natural resource protection. If adopted across the European Union, they would shift the CAP from being a policy to reward production to a policy to reward the products that the public wants to buy, through its governments. But CLA also supports Sir Don Curry in his conclusion that the recommendations of the report should not be "cherry picked". British farming has an enormous amount to offer consumers, the environment, the national economy and local communities. But it can make that contribution only if it is profitable. The recommendations of the report that promote profitability—in particular the last seven of those highlighted above, plus agri-environment if it were given a profit element—are every bit as important to the future of farming and to wider public benefit as the recommendation that snatches the headlines, to change the direction of CAP support.
We would be pleased to amplify our thinking on these and other points.
2 May 2002
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