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


Memorandum submitted by Manydown Company (A10)

  I attach my evidence to the Committee. The Witness is Managing Director of a family Company growing cereals for seed, malting barley under contract, herbage seed, timber and cattle, sheep and chickens into its own butcher's shop. The Company employs 25 individuals.

  The Company's land has been sensitively farmed and has been at the forefront of environmental research for 20 years. Such that prescriptions designed on the farm are now part of both Countryside Stewardship and Arable Stewardship. Manydown was also a LEAF Demonstration Farm and was one of the few commercial LINK farms.

  The writer is happy to give oral evidence if required.

  1.  Background

  All disciplines of agriculture in the UK have been unprofitable for at least four years. Profitability is defined as generating sufficient surplus to provide a reasonable living for the employers and employees and capital to invest in the business to maintain the ability to compete.

  There are a number of reasons for this situation:

    —  World situation—few sectors of agriculture worldwide are profitable.

    —  Diseases — BSE, Classical Swine fever, Foot and Mouth disrupting production and trading.

    —  Lack of commitment from HMG to address issues of "food security" in terms of supply and safety.

    —  General regulation—little progress following the "Better Regulation Taskforce".

    —  Out dated EU policies affect farmers' rotations.

    —  Strength of currency and the relation to EU support and world markets.

    —  Poor market structures in the UK—for example the lack of abattoirs for small or private kills.

  2.  The prospects for production subsidies and quotas against the backdrop of world trade liberalisation and the mid term review of Agenda 2000 reform of the CAP?

    (a)  Production subsidies and quotas are NOT the root of the problem that agriculture is facing worldwide[11]. (Annex A [not printed])

    (b)  Even including current levels of support, farm incomes mirror "Depression-era" levels with losses greater than at that time. However, in the 1930s, there was worldwide economic collapse; today, despite 11 September world markets are not in recession, nor were they prior to 11 September. The current farm income crisis is unprecedented in times of relative economic prosperity and full employment.

    (c)  EU support mechanisms need to change, if delivery of countryside goods from landscape to biodiversity is required instead of structural support. Most of the support mechanisms encourage unsustainable crop rotations.

    (d)  Less than 20 per cent of the UK tilled acreage is grade one or two, which represent the most productive or flexible soils. This leaves 80+ per cent of the acreage, which has little chance of sustaining profitability.

    (e)  Since the presence of support is not the cause of the current crisis the debate should be addressing, where the support is most appropriate, both regionally and in which sector. That requires HMG to take a position about how much food is produced in the UK, both as "strategic stock" and necessary for the good of the nation. HMG has engineered agricultural policy (cheap food policy) since 1945, is it reasonable for Government to suddenly expect the industry to design solutions on its own?

    (f)  It is also foolhardy to expect Sir Donald Curry to produce solutions in less than four months.

    (g)  The Council of Agriculture Ministers has demonstrated its dislike of major change or responsible decision making. Over time, this has disadvantaged farmers in the EU.

    (h)  The UK has been further disadvantaged because of the application of the Fontainebleau Agreement. Recent administrations have not taken the countryside or agriculture seriously—eg the current attitude to rhizomania and that effect on UK sugar beat growers or Agrimonetry compensation. Therefore, it is very difficult to suggest support policy changes against that backdrop.

    (j)  There is little doubt that any switch from pillar one to pillar two would make it very difficult to deliver realistic levels of support.

    (k)  If consumers continue to want cheap food, then the farmer will continue to farm less and less sensitively and the ecosystem will suffer.

  3.  How better stewardship of agricultural land can be promoted?

    (a)  An assumption supported by single-issue lobby groups is that farmers have substantially damaged the countryside. Some have, driven on by policies from the EU, endorsed by successive administrations. The solution is to reduce production or put simply become less competitive. Many policy makers and their environmental advisers forget that any crop is a habitat and if it is sterile, that is unhelpful. Semi-natural habitat though important is not sufficient.

    (b)  Incentives with clearly identified objectives should be offered. Success or failure should be monitored and rewarded or penalised. Land managers, who already achieve those objectives, should not be excluded, which they are now.

    (c)  In an ideal world mixed farming systems should be encouraged. Carefully planned cultural rotations should replace "support drive" rotations.

    (d)  Any such policy should be capable of variation to fit regional landscape and biodiversity.

  4.  The opportunities and difficulties faced by agriculture as a result of possible reductions in production subsidies.

    (a)  The payments are support payments not subsidy. Agriculture is supported to some extent in every industrialised country in the world (including New Zealand).

    (b)  If these support payments are reduced, then unit size will increase; numbers employed will decrease. Machinery size will increase. Ability to manage the countryside will diminish, as much of the management requires pairs of hands not machinery. Thus, any reduction in support risks a more intensive system.

    (c)  Land ownership will change and the resulting mix may not be friendly. There will be regional variations. The South will be very different from the North.

    (d)  If farmers aggregate the selling of their commodities, a mechanism must be found to satisfy the OFT and Competitions Commission that that aggregation is legitimate (viz Milk Marque v Arla).

  5.  Conclusion

  It is difficult to imagine a future for Agriculture in the UK without support. Support is different to subsidy. Agriculture across the industrialised world is supported. Agriculture worldwide has been highly profitable for the last few years. This is, in no small part, due to the multi—national influence "the hydraulic squeeze" or pressure from both ends. Agriculture policy must be subject to a real debate. HMG has a real responsibility, as it has chosen to manipulate farming policy since Member States would be delighted, if we were no longer serious players in the market. Food security is a live issue, as is food safety of imported product, even if it is cheaper.

  Suffice it to say that Socrates observed that "He who aspires to Statesmanship must first understand wheat".

  Never before has a crisis hit the countryside of this country in this way. If the resolution is left to "the market" or "public pressure through lobby groups", the outcome will not necessarily be satisfactory.

Hugh Oliver-Bellasis FRAgs

9 December 2001

11   The Farm Crisis, EU subsidies and Agribusinesses Market Power ( Back

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