APPENDIX 7
Memorandum submitted by the Countryside
Agency (A9)
1. The Countryside Agency leads with expertise
about the rural economy and the place of farming within it, as
part of our role as countryside "champion". We commission
research, encourage demonstration projects such as "Eat the
View", and also draw on the experience of nine wide scale
Land Management Initiatives, designed specifically to give pointers
to future CAP reform. We welcome this Inquiry.
2. UK agriculture is in difficulty. Profits
have hit new lows. Over 40,000 jobs have been lost in the last
two years alone and the commercial climate remains very difficult.
In addition, parts of the country have been ravaged by foot and
mouth disease. In some of the worst hit areas it might spell the
end of much traditional livestock farming. The switch to more
intensive farming on larger units has been associated with environmental
damage; but lack of profits may result in further damaging change
as farmers do all they can to stay competitive with each other
and with overseas production. Confidence in farming as a business
is suffering. Forty per cent of farms sold recently were not to
people who wanted to farm, but to those looking for a country
home with an attractive environment.
3. The results threaten the wider rural
economy as well as animal welfare and the environment. Foot and
mouth disease has shown how much rural tourism depends on the
health of agriculture. Many small businesses have suffered losses
and may face closure, including many not obviously linked to farming.
4. People expect land managers to deliver
good quality, safe and reasonably priced food without compromising
animal welfare. And they look for food to come from an attractive
and accessible countryside with diverse wildlife which can deliver
economic benefits for other businesses, especially tourism. They
want land managers to play a responsible role in reducing flooding
risk...and much more. But land managers cannot deliver against
those expectations as matters stand.
5. The taxpayer is getting poor value for
the £3 billion per annum[4]
spent on EU and other agricultural support. Farming remains vital
to the livelihood of many rural communities and the conservation
of our cultural and environmental heritage, and yet little public
money is devoted to securing those goals.
6. In short, land managers and farmers cannot
deliver against public expectations within the framework of current
agricultural policy. Nor will they be able to deliver without
fundamental reforms of policy.
7. Earlier this year, we published A
Strategy for Sustainable Land Management in England as our
contribution to fresh thinking about future directions for agriculture,
and more recently we submitted evidence to the Policy Commission
on the Future of Farming and Food. Copies of both documents are
enclosed [not printed]. We draw from them in this evidence.
8. In response to the questions posed in
this Inquiry, the Countryside Agency supports a progressive reduction
in production related subsidies and quotas. We see this as prerequisite
for a new financial framework for farmers which would enable them
to respond better to new opportunities and to achieve better stewardship
of agricultural land.
Our vision for sustainable land management
9. Our vision for sustainable land management
is one in which a sustainable, competitive and diverse food and
farming sector is just one part. We would like to see a countryside
where:
— prosperous land based industries
produce high quality food and other products which people value;
— a wide range of rural businesses
and services operate on and off the farm;
— the workforce is skilled and valued;
— the basic resources of soil and water
are conserved effectively and degraded elements have been improved;
— the character and diversity of the
landscape and settlements are valued and protected, and degraded
parts are restored;
— native wildlife is flourishing;
— historic sites are conserved and
used sensitively;
— local communities are vibrant and
socially inclusive;
— visitors are encouraged to enjoy
the countryside;
— society supports public investment
in land management.
10. The goal is profitable land-based sector
which works for the people who are employed in it, the communities
in which they live and the people who visit the countryside and
support it. It must retain, first and foremost, the responsibility
for creating and maintaining the diverse character which is the
essence of the English Countryside.
11. Food and farming policy has been dominated
for half a century by a goal of increased productivity. There
were good reasons for this view in the post-war world of rationing,
but policy change is now overdue.
12. The agricultural industry is an important
producer of many products the nation need but it is no longer
expected to feed the nation. Global trade, rising living standards,
and consumer expectations have led to different priorities, with
food being drawn from world suppliers and with our home acres
being used for more than agricultural production alone. Public
aspirations have become increasingly focused on multifunctional
land management rather than farming productivity, where food production
remains a primary objective but others are important too.
13. Moves towards multifunctional land management
and an associated integrated policy framework have already begun
through the welcome publication of a Rural White Paper in 2000.
We have contributed to the subsequent debate as in our Strategy
for sustainable land management in England we seek:
— multi-functionality from land management,
so that land management delivers a wide range of benefits beyond
food and fibre production;
— sustainability, in other words management
which contributes to economic objectives and to environmental
and social objectives too;
— integration of land management into
the wider rural economy;
— subsidiarity, with land management
activity reflecting regional and local needs and aspirations.
14. The nation still needs to invest in
agriculture, but for new purposes. Of these, the most important
is the multifunctional management of land. As well as supplying
food and non-food products for processing, farming can provide
wider public benefits-access, landscape, wildlife, flood control
etc. The supply of these benefits underpins an integrated rural
economy, directly supporting businesses in the countryside. Such
public benefits often lie outside formal market mechanisms but
their combined value far exceeds the contribution of agricultural
production to the gross domestic product.
15. It is these wider benefits flowing from
a healthy and prosperous agricultural industry that justify continued
intervention (using taxpayers' money) by the EU and the Government
in agricultural policy.
THE COMMON
AGRICULTURAL POLICY
16. By far the most dominant and influential
funding support for land management is through the Common Agricultural
Policy (CAP). Reforms of the CAP in 1992 and more recently under
Agenda 2000 have reduced markets subsidies for many of the main
agricultural commodities in a move to reduce EU prices and bring
them closer to world market prices. Farmers receive partial compensation
for these changes in the form of increased direct payments. Part
of the CAP budget is now used to fund the new Rural Development
Regulation (RDR), the so called "second pillar" of the
CAP. This includes measures designed to improve environmental
management of farm landscapes and habitats, provide support for
forestry and hill farming, encourage better marketing and processing
of agricultural products, encourage rural enterprise and offer
training opportunities.
17. The EU budget for the RDR is fixed until
2006 but the Agenda 2000 reforms allow individual Member States
to increase their RDR budget by applying "modulation".
This means allowing Member States to redirect up to 20 per cent
of CAP commodity support payments into the RDR budget. However,
such money may only be used on certain of the RDR measures—the
agri-environment schemes support in Less Favoured Areas and afforestation
of farmland. So far only the UK and France are applying modulation
although others such as Germany and Portugal are preparing to.
Each country is pursuing a different approach in terms of what
is modulated and how it is redistributed. Other countries such
as Sweden and Austria see no need to modulate since rural development
and agri-environmental measures already apply over most of their
farmland areas. In the UK, the money raised by modulation will
rise to 4.5 per cent of support payments by 2006 and is matched
with new Exchequer money.
18. The measures under the Rural Development
Regulation have been widely welcomed. However, they represent
only the start of the process of reorienting CAP payments away
from production related support towards environmental management
and rural development.
19. Political pressure for further change
in the CAP is coming from three main directions:
— the World Trade Organisation (WTO)—the
removal of barriers of free trade is likely to have a significant
impact on agriculture across Europe. The current system of commodity
payments is seen as trade distorting, and the EU is under considerable
pressure from other WTO members to change. Despite the lack of
progress over a new agriculture agreement at the 1999 Seattle
Ministerial conference, agricultural negotiations have begun.
These are likely to lead to further commitments to improve market
access and reduce domestic and export subsidies. The EU has already
undertaken to negotiate towards such commitments;
— European Commodity enlargement—the
future accession countries, from Poland to Romania, have large,
relatively undeveloped agricultural sectors. The budgetary consequences
of subsidising all the farmers in an enlarged European Community
(up to 12 new Member States) in the same way as the EU 15 farmers
are currently supported would be very costly;
— Changing consumer/public perceptions—there
is increasing recognition that public subsidies need to provide
demonstrable public benefits. The public value placed on farming,
based on historic food security needs and the large numbers employed
in the industry no longer carries the same weight it once did.
The special status and support given to farming, compared with
other industries, is being questioned as is the basis of the support
system. Production-related support is costly and contributes to
environmental damage, while keeping the costs to European consumers
of some products above world prices. The system also lacks transparency.
20. The direction of change is clear. Production
related support will be reduced over time and there is likely
to be an increase in the EU money available for measures under
the Rural Development Regulation. The issue is the pace of change
and the extent to which the budget for the Rural Development Regulation
will be expanded.
CHANGES BEING
SOUGHT BY
THE COUNTRYSIDE
AGENCY
21. The Rural Development Regulation—translated
in England into the England Rural Development Programme (ERDP)—has
provided an opportunity to use CAP funds to help bring about beneficial
change in rural areas. This is a welcome development but the proportion
of total funds allocated to the ERDP is small. We see the need
for greater investment in diversification and other rural development
activity in agri-environment schemes open to all farmers and land
managers across England.[5]
22. In the short term (and within the framework
of the current regulations), we take the view that the Government
should make greater use of its powers to:
— appply any modulation to increase
the budget (and match-funding) for the ERDP beyond that planned
by 2006, by increasing modulation towards the 20 per cent allowed
by EU rules; under current plans, modulation rises to 4.5 per
cent. by 2004;
— expand the range of activity allowed
under the ERDP to include, for instance, more support to sustain
the environment in Less Favoured Areas and for forestry on farmland.
23. In the EU mid-term review of the RDR,
we argue that the Government should press for:
— changes in the Regulation to allow
for more integrated delivery of the full range of measures (for
example funding publicly employed facilitators);
— changes to the (so called) Horizontal
Regulation to allow Member States flexibility in deciding how
money generated from modulation can be spent (ie across the full
range of RDR measures, not just the "accompanying measures",
which is the current position);
— a better deal for the UK in the allocation
of RDR funds from the EU; our current allocation of 3.5 per cent
is based on historically low spending on agri-environment schemes.
24. In the longer term (and ideally as part
of a radical reform of the CAP in 2006), we argue that the Government
should negotiate for fundamental changes to the CAP. The RDR is
too expensive to administer and too flexible to form the principle
measure through which to achieve multifunctional land management
and rural development. It needs to be replaced with a more integrated
rural development policy, giving member states much greater freedom
to set targets, methods of delivery, and levels of payment.
25. The Countryside Agency recognises that
there are likely to be winners and losers from cuts in production
related support and growth in activity under the Rural Development
Regulation, as not all landowners will wish to, or be able to,
take advantage of the various schemes under the Rural Development
Regulation. The schemes are also competitive. We intend to commission
research to explore the effects on farm incomes of increasing
the rate of modulation and of applying the money generated in
different ways.
OTHER MEASURES
TO HELP
THE FARMING
COMMUNITY
26. In parallel with policy change, the
Countryside Agency is pressing for a range of other measures to
help the farmers return to profitability, respond to environmental
concerns and to cope with restructuring.
Help farmers capture more of the value contained
in the food chain
27. The subsidies, price supports and guaranteed
markets associated with the CAP have led to a generation of farmers
who have few tangible links with their ultimate customers. There
is a lengthy food chain between the farm gate and the shopping
trolley, with farmers sharing a greater proportion of the profits
with food manufacturers, transport fleets and retailers.
28. The complexity of the food chain creates
difficulties in moving a greater proportion of its value back
within the farm gate.[6]
In addition, not all farmers will be in a position to add value
to their products "down the chain" and may will continue
to produce and sell basic commodities. However, many have scope
to capture some of that value.
29. We wish to see:
— a growth in market co-operatives,
to help provide a scale of activity that will command greater
strength in negotiating prices and a more effective promotion
of farm products locally or regionally;
— more direct selling to consumers.
Many farmers have always sold produce directly to customers but
there is scope to increase the volume considerably through farm
gate sales, farm shops, food boxes sold in nearby towns, and internet
selling—and through the successful farmers' markets[7],
where there is potential to increase their number, geographic
spread and frequency;
— action by the major retailers. Until
recently the national and international purchasing policies of
the major retailers have had little regard for the importance
of buying locally to the surrounding farming businesses and the
countryside that supports them. Recent moves to widen the choice
of regional and speciality food and drink in supermarkets are
welcome—but more are possible.
Seek support—in expanding the market for
good quality food from a diverse and rich landscape—from
the food processing and catering industries, major retailers and
the public
30. The food and farming industries would
benefit from a greater public understanding of the link between
the food they buy and the countryside they value. We are promoting
this line in our "Eat the View" programme (Box 1).
(1). "Eat the View"
Under this programme we are working to influence
consumers so that they will buy more local products and particularly
products that help reinforce the character of the countryside.
We are supporting the National Association of
Farmers' Markets, the regional food groups, the Farm Retail Association
and projects to develop local food economies; and we are working
to develop links between National Parks and AONBs and products
from their areas and to promote local products as part of the
tourism experience.
31. The growth in farmers' markets, rural
tourism, and other forms of direct contact will improve matters
but the real challenge is to link the choices made in supermarket
shopping or in hurried purchases in a sandwich bar with the future
of the English countryside.
32. The food processing, hospitality, tourism
and catering industries can help address the challenge through
their wholesale food orders. Currently, factors like the price,
freshness or appearance are specified but rarely provenance. Those
industries should make links with a range of different suppliers
so that orders specifying a locality or level of quality would
become the norm. This would enable access to a more segmented
market for producers.[8]
There would also be promotional advantages for those hotels, restaurants
and other businesses which make such local links. The same principles
apply to public procurement practices, although Single Market
rules can cause difficulties.
Encourage new markets that can be supplied from
non-food uses of the land
33. The increased production by farmers
of non-food crops grown for industry and renewable energy has
the advantages of expanding the production of commodities not
dependant on subsidies, and reducing the nation's dependency on
fossil fuels—thereby contributing to Kyoto targets. New
markets are the key.
34. Demand for non-food crops will emerge
when entrepreneurs perceive potential profits in end-products
but demand would be enhanced by a national framework for non-food
crops, which could guide an otherwise host of individual decisions.
This is essentially a task for the Government. National guidance
on matters such as non-fossil fuel obligations and sustainable
development targets are helpful but come without context.[9]
The industry needs broad marketing advice, perhaps backed by
incentives, to determine what should be grown and where, in what
quantity, to what timescale, and within what level of economic
certainty or risk.
Establish new ways of buying public benefits from
farmers that will not be funded through the normal market
35. Generating public benefits is complex,
with support from the public coming through taxes rather than
direct payment. Farmers already produce non-market public benefits
as part of their land management. Considerable progress has been
made in enhancing the landscape and wildlife, protecting historic
features, and providing access with public funding. Subsidies,
grants and formal agri-environment schemes will still play a big
part but other approaches are needed too.
36. We propose a quasi-market system, a
good example of which can be found in the National Forest, where
landowners are invited to tender to create new woodland and other
public benefits. Another early candidate might be flood prevention
plans for towns which include the creation of flood plain water
storage upstream. A similar mechanism could be used for other
benefits—for instance, the creation of new wildlife habitats,
or new access for recreation.
Strengthen business advice and support in the
countryside and focus it on two key audiences: land managers,
and those moving into the countryside to set up new businesses
37. The countryside is changing quickly
and the traditional role of farmers in growing crops and raising
stock might not always match the scope and requirements of wider,
more integrated rural enterprises. Efficient farming demands many
skills but many farmers, while adaptable to a point, would benefit
from advice and training to help them run more broadly based enterprises.[10]
38. This process would not have to start
from scratch. Much is already under way and experience can also
be drawn from the Countryside Agency's Land Management Initiatives,
which are piloting a range of approaches for the better provision
of integrated, whole-farm advice (2).
(2). Land Management Initiatives
Working with farmers, local communities and
others, we are developing a series of area based projects to investigate
the problems faced by land managers. The aim is to research and
demonstrate practical solutions to the challenges of managing
land sustainably so that it produces a wide range of economic,
environmental and social benefits.
Nine projects cover arable areas, the uplands
and lowland pastoral countryside.
While the focus of the LMIs is land management,
as an integral part of the way forward the projects are assessing
the needs of communities beyond the farm gate and are reviewing
the policies, mechanisms and structures necessary to help farmers
and others satisfy these needs.
39. In an industry with an ageing workforce
and a crisis of succession, high quality advice and training is
essential and demands public investment. We propose that:
— farming advice should be based on
an extended capacity of farm business advisers, providing assistance
on development and diversification in the context of whole farm
plans;
— formal training in new skills, which
is often logistically difficult for farmers, should be delivered
through a variety of approaches including flexible programmes,
distance learning, on-farm training and best-practice visits.
CONCLUSION
40. Production related subsidies will be
reduced over time. The challenge is to ensure that the money saved
is retained for the benefit of the countryside through expansion
of the resources available for the measures under the Rural Development
Regulation; and that other measures are in place to help farmers
through what is likely to be a difficult process of adaptation
and restructuring.
Countryside Agency
12 December 2001
4 The figure will be much higher in 2001-02 with the
addition of foot and mouth disease compensation payments. Back
5
Although small in terms of total CAP spend, agricultural and
rural development measures encompassed by the RDR increased from
£1.1 million in 1995-96 to £7.7 million in 1998-99. Back
6
The UK food chain accounts for a gross value added of £56
billion but only £8.2 billion is directly returned to farmers
and producers. Back
7
There are currently over 300 farmers' markets. Back
8
The Countryside Agency is helping to develop environmental standards
that will create a market differentiation and attract a premium
in the market place. This work will reflect the needs of the countryside,
natural resources and society. Back
9
For example, the non-fossil fuel obligation might encourage a
farmer to grow short-rotation coppice, but the Government needs
to provide the security that power stations will be built to burn
it as fuel. Back
10
Such training might include: how to make connections with the
wider local economy; how to diversify on-farm businesses, taking
on new roles and adding value to existing products; how to manage
a farm as a part time enterprise; how to respond to the demand
for wider public benefits from farmland; how to tune business
and marketing skills. Back
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