Issues raised by the 'broad and shallow scheme'
162. The suggestion that there should be a 'broad and shallow'
environmental scheme attracted a lot of support amongst our witnesses
- first, as described above, from a number of environmental groups,
and second from some of the groups representing farmers. But it
is important that this proposal should be subject to rigorous
analysis. The following issues immediately arise:
· how do we determine what is wanted - agreement
on what are 'public goods' is far from universal? Will public
access be part and parcel of the scheme? Is biodiversity the key,
or better water management, or reduced inputs? A single, simple
scheme requires a single, simple goal or package of goals, but
the more the scheme seeks to apply to local circumstances and
local needs the more complex it inevitably becomes, both in definition
and in monitoring.
· lack of understanding of the degree to which
improvements are needed - is the objective of a 'broad and shallow
scheme' to improve to a particular standard, or to maintain the
current situation? If the purpose of the scheme is to maintain
current standards, how will the scheme avoid paying farmers for
what they are already doing?
· how, then, do we make sure we have got value for money?
If the scheme endorses broadly best current practice are we really
getting value for money for precious little incremental improvement?
If the aim is to obtain sustained higher standards, how do we
price them and should they continue to be funded or eventually
be required as part of normal practice?
· how central should the focus on agriculture in the
rural economy be? Establishing a 'broad and shallow scheme' would
mean that funding would continue to be channelled through agriculture,
making little acknowledgement of the role that other parts of
the rural economy can make to improving the environment and delivering
other public goods.
· the meaning of 'whole farm' - is it intended that the
net impact of the farm will be what is assessed? In which case,
might it be possible for a farm to have 'poor' practices on 95
per cent of the holding, with environmentally beneficial practices
on the remainder, and still qualify under the 'broad and shallow
· assessment - if evaluation of each farm is to be carried
out 'remotely' how will compliance be ensured?
· future developments - what account does the 'broad
and shallow scheme' take of legal and statutory requirements likely
to be placed on all farmers in the future, such as under the Water
Framework Directive and nitrates regulations?
· how does the programme fit in with developments in
the European Union, notably the Mid-Term Review proposals, which
share some characteristics with the 'broad and shallow scheme'?
163. Most importantly, although there is currently a consensus
amongst farmers and environmentalists about the need for a 'broad
and shallow scheme', there are clear differences between their
expectations of what such a scheme will involve and will deliver.
It appeared from their evidence that the farming groups saw the
'broad and shallow scheme' as simply a way of replacing current
subsidies and direct payments with a more politically acceptable
alternative, whereas it seemed that the environmental groups were
expecting farmers to deliver real changes in order to qualify
for such a scheme. For example, the Country Land and Business
Association said that under existing co-financing arrangements
any switch of funds from Pillar I to Pillar II "has to be
match funded" and "that means more money for the rural
economy": the result would be "to switch the policy
to a more desirable set of arrangements".
At the same time, the National Trust told us that the rationale
behind the 'broad and shallow scheme' was "to reward positive
environmental management, including existing high environmental
value; to facilitate a change in attitude and behaviour, so farmers
view environmental management as a core not optional part of the
farm business; to make the transition towards paying for and delivering
public goods as core products of farming; and to guide good business
practice and incentivise low risk farming systems".
It said that the core aim of the broad and shallow scheme should
be "to put the environment at the heart of each farming business".
164. We have considerable concerns about the 'broad and shallow
scheme' proposed by the Policy Commission on the Future of Farming
and Food. We need particular reassurance that the introduction
of a 'broad and shallow scheme', open to all farmers, will not
mean that farming ends up no more able to respond to its marketplace
than it is now. The introduction of a broader definition of the
role of agriculture in the rural economy should not blur the continuing
need for farmers to produce food and other crops which consumers
want. Moreover, we are concerned that the gradual dismantling
of Pillar I of the CAP to allow the creation of a new edifice
- Pillar II - does not simply transfer bricks from one monolithic
structure to another. Given the widespread support for Pillar
II measures from non-agricultural non-governmental organisations,
and the increasing support from within the farming industry, we
fear that Pillar II could over time become as insensitive to the
need for change as Pillar I. Pillar II measures must be constructed
in such a way as to be consistent with and support, if possible,
165. The Policy Commission set out to make recommendations
on the basis of the current level of public support going to farmers.
Given the relatively brief time it was given to report in this
was perhaps inevitable. However, it is not clear that the cost
of providing agri-environmental 'goods' will, or should, be exactly
the same as the existing costs of supporting agriculture. In shaping
its response to the Policy Commission we wish to see the Government
set out clearly what it means by 'public goods' and how it assesses
the demand for them, and their costs, as well as the role that
the marketplace and regulation should play in their delivery.
166. However, if a decision is taken that something can only be
delivered as a result of Government intervention, an assessment
needs to be made over whether the outcome can be achieved through
one-off payments rather than on-going payments. If the 'broad
and shallow scheme' is supposed to 'save' agriculture then it
is in danger of providing support which substitutes itself, in
part, for the marketplace. If it is set at a minimalist level
it is difficult to see how it will represent real 'public good'
value for money or make a real difference to farm income. We therefore
believe that the approach to achieving good farming practice suggested
by the Environment Agency - one-off or short-term payments in
order to obtain particular improvements which are then maintained
through regulation - be thoroughly evaluated alongside the proposed
'broad and shallow scheme'. However, we recognise that increased
permanent regulation can be as much a barrier to market concentration
as subsidies. Such an approach is, we believe, entirely compatible
with the proposals relating to cross-compliance made by Commissioner
Fischler in the Mid-Term Review.
167. There is an important issue about how payments to farmers
are best allocated. Direct payments based on the farm itself or
paid direct to the producer are administratively simple. But if
entitlement to payment, or the right to hold a quota, is attached
to the individual farm, then it is likely to become consolidated
in the price of the land. Farmers seeking to rent or buy land
will as a result face higher costs. In contrast if payments or
benefits are attached to the producer, as with milk quota in the
United Kingdom, then a person who no longer produces any milk
may receive a revenue simply by selling quota. Thus the attainment
of environmental goals may best be achieved by a third, relatively
costly method: by paying directly for the delivery of environmental
168. We are concerned that a flat-rate area payment under the
'broad and shallow scheme' must not be regarded as a payment to
farmers to meet the cross-compliance standards that are already
required under European regulations on CAP direct payments - and
also those standards which will be required in future. Cross-compliance
rules could form the bottom tier of an environmental scheme without
the costs and whole-farm audit requirements of the 'broad and
169. Like the Policy Commission we are, though, in favour of the
existing 'deep and narrow schemes', such as the Countryside Stewardship
Scheme. Much of farming is already conducted properly, but environmental
improvement remains necessary and desirable and may be economically
advantageous. We recommend that existing agri-environmental
schemes are simplified, making it as easy as possible for farmers
to benefit from them.
170. The Government has said that it will conduct trials of
the 'broad and shallow scheme' before the full project is 'rolled
out'. These trials really must be attempts to see if the project
delivers value for money, environmental gains, easier administration,
and the ability to be flexible as circumstances change. The Government
must make clear that one of the consequences of the trials could
be to abandon the project as failing on the above counts.