APPENDIX 8
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 (http://www.nfu.ca/feb17-brief.htm). Back
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