APPENDIX 13
Memorandum submitted by the Countryside
Alliance (A15)
1. INTRODUCTION
The Countryside Alliance welcomes the opportunity
to submit evidence to the Environment, Food and Rural Affairs
Committee on "The Future of UK Agriculture: Farming Beyond
Subsidies".
The Alliance believes that the future of an
economic and socially sustainable countryside (and, as a consequence,
its environment and landscape) must be based upon the sustainable
and profitable use of the land. The problem is that farm production
has been defined, and rewarded, too narrowly, and is trapped in
the historic anachronism of production subsidy for a limited range
of agricultural products.
Our proposals advocate the full range of activities
for which a farm has potential—crops, environment, non-food
products, employment, landscape, tourism etc. being part of a
whole farm approach to business planning and general support.
We believe in moving away from production subsidy
towards rural development by investment and growth in farm-based
businesses. Agriculture and farming are NOT the same thing.
The Countryside Alliance campaigns for rural
livelihoods. We define that as the way people earn their livings,
their community, and the environment in which they live and work,
and the way of life they choose to adopt. We have around 100,000
full members (35 per cent of which are involved in farming) with
a further 250,000 associated members through affiliated organisations.
Even before the current foot and mouth outbreak
farming was in the midst of its worst crisis since the Second
World War. Future prospects are bleak and morale is low. The average
farm income has dropped 72 per cent between 1995 and 2000. Foot
and mouth disease has exacerbated this situation further. A recent
Deloitte and Touche farming survey found that the average profit
for a 500 acre family farm, plunged from £80,000 at the peak
in 1995-96 to £8,000 in 2000, to £2,400 in 2001. Farmers
are leaving the industry with little young blood entering the
system. In the UK as a whole, 40,000 farmers and farm workers
have left the industry in the past two years. In 1997 the average
age of the principal farmer was 58 and two thirds of farmers are
over 50.
The Countryside Alliance vision for rural Britain
Rural areas have over time become less economically
and socially viable, and this has had a detrimental impact on
the environment. The Countryside Alliance campaigns to promote
and enhance rural livelihoods and communities, and believes the
vitality of rural economies and societies needs to be restored,
with the farming sector as a key element in achieving this. The
Countryside Alliance advocates the principles of sustainable development;
however, we strongly believe that if the environment is to be
protected and enhanced, it needs to be regarded as a natural resource
that local communities have ownership of and receive benefit from.
The Countryside Alliance urges the Government
and the devolved authorities to promote the following:
(a) Economically Viable Rural Areas
(i) A profitable, healthy and diverse
farming sector with long-term prospects.
(ii) A vibrant tourism and recreation
sector, which depends in part on farmers and their land management
skills. The current foot and mouth crisis has demonstrated the
inter-dependence of the tourism and agricultural sectors. Farmers
need to receive benefit from the tourism industry eg through the
provision of accommodation, food, biodiversity, hiking trails
and country sports.
(iii) To achieve these aims, the rural
economy needs to operate in an environment which is free from
excessive regulation and red tape. Regulation needs to be sensitive
to the small scale, sole trader operations that dominate the rural/economic
landscape. This only serves to dampen the vibrancy of rural economies.
(iv) A viable and profitable service
industry supported by the agricultural and tourism sectors.
(b) Socially Viable Rural Areas
(i) Farmers need to produce food that
is for consumption and that has the full confidence of society
as a whole, both rural and urban.
(ii) The countryside as an asset for
everyone to appreciate and enjoy.
(iii) A sense of community must be achieved
once more in those areas where it has diminished. The social structure
must be enhanced, bonded together in the participation of a common
economy. Rural communities must become dynamic and active once
more.
(iv) Future development of the agricultural
sector and rural communities must ensure the retention of young
people. The average age of a farmer is 58. This is not sustainable
if there is to be a long-term future for agriculture. Measures
need to be introduced in order to encourage young people back
into the industry.
(v) It is also important to recognise
that agriculture is a way of life for farmers and often the farming
activity is more important to them than the economic return. Many
farmers are diversifying into activities to ensure they can continue
farming. Many farmers are willing to suffer a degree of financial
loss. This situation is unique to farming.
(vi) It is important that all rural communities
retain their own identity and culture. This is important for community
cohesion as well as serving as a useful marketing tool to promote
English food and tourism.
(vii) Healthy vibrant communities should
support a system of viable shops and services. This should include
local food production and local food outlets.
(c ) Environmentally Viable Rural Areas
(i) The countryside is the most important
rural asset. Farming, tourism and the rural economy as a whole
depend on it. Its management and well-being are therefore of utmost
importance.
(ii) Rural communities need to develop
a sense of ownership of the local environment, and develop the
vision to find new ways of obtaining a return from it. This is
an important step in the maintenance of a sustainable environment.
The externalities of these public goods need to become internalised.
Country sports and watershed management are good examples of achieving
this aim.
(iii) The agricultural industry has to
become more environmentally responsible if this sector has a long-term
future. The consumer is increasingly demanding this. The decline
of biodiversity in recent decades needs to be reversed.
2. THE PROSPECTS
FOR PRODUCTION
SUBSIDIES AND
QUOTAS, AGAINST
THE BACKDROP
OF WORLD
TRADE LIBERALISATION
AND THE
MID-TERM
REVIEW OF
THE AGENDA
2000 REFORM OF
THE CAP.
The Countryside Alliance believes the Common
Agricultural Policy in its current form no longer serves the interest
of the UK or its farmers. There is a gradual shift in the public's
expectations and the priorities for rural policy in the UK. The
foot and mouth crisis has highlighted the interdependence of the
agricultural, land management and tourism sectors of the rural
economy. The Common Agricultural Policy (CAP) needs to reflect
this. In its current state it does not. The current system is
unsustainable.
The Alliance believes the following are particular
problems of CAP.
(a) Production related subsidies have resulted
in the over production of a limited range of agricultural produce,
often for which there is no market.
(b) Production related subsidies have buffered
farmers from market forces and they have, as a consequence, become
out of touch with consumer demand.
(c ) The system of production related subsidy
has meant that farmers tend to plan their business on a year-by-year
basis maximising CAP subsidies for that particular year. Not only
does this discourage farmers from finding out what the consumer
actually wants but also from seeking new markets it prevents long-term
business planning.
(d) Over production has, in some areas, resulted
in environmental degradation.
(e) The CAP runs counter to the progression
of expanding the EU.
(f) It also runs counter to creating fairer
international markets, where local trade has the opportunity to
flourish.
MEDIUM TO
LONG TERM
OBJECTIVES
The Alliance believes the CAP should be reformed
as a matter of urgent Government priority, as the current system
is doing the UK farming sector a disservice. With the continuation
of the World Trade Organisation talks and the expansion of the
European Union to the East (most notably, the inclusion of Poland),
the radical reform of CAP is inevitable.
(a) Reduction of Production-based Subsidies
The Alliance recognises the current over-dependence
on production-based subsidies and advocates the removal of production-based
subsidies. However, we also recognise that the swift removal of
all production-based subsidies would mean many farmers facing
financial ruin. This is especially true for the small family farmer
who is so crucial to the fabric of the countryside, both socially
and environmentally. However, when the New Zealand Government
did just this during the 1980s, only 8 per cent of farmers went
out of business. It can be argued that these would have gone out
of business in any case. The Alliance believes that market distorting
production based subsidies need to be fully phased out by 2015.
This would give farm businesses sufficient time to adjust to new
conditions and react to new opportunities.
Farmers need to become more realistic towards
production-based subsidies in that they will be reduced significantly
in future rounds of CAP reform. Farmers need to start exploring
ways of becoming less reliant on production-based subsidies so
minimising impact when subsidies are reduced. This will also give
those farmers a competitive advantage once subsidies are phased
out.
(b) Greater emphasis on non-production based
subsidies
The Countryside Alliance advocates the removal
of market distorting subsidies ie the elimination of the Amber
Box category of subsidies, which is inline with the long-term
goals of WTO. With farmers over-reliant on production-based subsidies,
the Alliance advocates a shift towards non-production based investment
so that those farms currently unviable without these subsidies
receive a form of income support. The Alliance understands the
USA will be pushing this issue hard during the next round of WTO
talks as a result of 11 September. The UK Government needs to
be aware of this because we suspect this will simply create the
same market distorting effects as production subsidies. Our proposals
will not.
(c ) Shift from Pillar I to Pillar II
One of the most welcomed aspects of the Agenda
2000 round of CAP reform was the creation of the Rural Development
Regulation (RDR)—the Second Pillar of CAP. For the first
time the RDR brought together nine previous measures which dealt
with issues such as Less Favoured Areas, agri-environment programmes,
afforestation schemes, early retirement programmes, farm modernisation,
process and marketing etc. The RDR required each member state
to draw up a single integrated rural development plan. Each devolved
state of the United Kingdom drew up its own plan. The England
Rural Development Programme (ERDP) was approved by Brussels in
October 2000. The RDR was welcomed as a new approach to the planning
and delivery of agri-environment and rural development schemes.
The distribution of resources of the RDR for
each member state is based on historical spending commitments.
As a result of the low levels of spending historically, the UK
will receive only 3.5 per cent of total EU allocation (
154 million) between 2000-06. This compares with
16.1 per cent for Germany, 17.5 per cent for France, 10.6 per
cent for Spain and 7.3 per cent for Ireland.
The foot and mouth crisis has demonstrated the
importance of farming to other industries such as tourism and
recreation. Although the importance of farming in terms of GDP
has declined, the additional public goods supplied by farmers,
such as landscape value, biodiversity and recreational amenity
are enormous. The Alliance advocates a multi-functional farming
sector where farmers still focus on their core activity of food
production but also receive an income from meeting social and
environmental expectations. For those public goods for which there
is no market, the farmer should receive payment from the Government
or EU. It must also be noted that although markets for some public
goods, for example flood alleviation or carbon management services,
are not in existence every effort needs to be made to create markets
for these products. In other words, we turn a public goods burden
into a direct benefit for the profitability of a farm-based business.
With the reduction in production-based subsidies
farmers need the skills and tools to develop new products, add
value to existing products and explore new markets. These schemes
are currently funded under the RDR.
The Countryside Alliance strongly advocates
a shift away from Pillar I (production subsidies) to Pillar II—rural
development, although what scope there is for this during the
mid-term review of CAP is unsure.
HOW MANY
OF THESE
OBJECTIVES CAN
BE REALISED
IN SHORT
TO MEDIUM
TERM
In response to the Policy Commission of the
Future of Farming and Food and at the request of Sir Don Curry,
the Alliance has produced a package of measures which go some
way to achieving the objectives set out above in the short and
medium term (Annex 1, 2 and 3).
All long-term aims are all subject to future
rounds of CAP reform and WTO talks but with differing vested interests
of Member States, progress will inevitably be slow. The Alliance's
package will facilitate progress in all areas, on the condition
it is used in its entirety. These measures we outline use a facility
created as a consequence of Agenda 2000 CAP reform that allows
member states a greater flexibility in the reorientation subsidies
towards the RDR if they so wished. This facility is termed modulation.
At present Member States are allowed to "modulate"
(ie reduce) direct aid payments by anything up to 20 per cent.
This "top slicing" of payments to individual farmers
is redirected in to RDR schemes in that member state. This is
an optional facility and to date only France, Portugal and the
UK have taken it up. Under EU rules, member states must match
fund this modulated money from national budgets.
While it means more money is redirected into
the RDR schemes (in England—the England Rural Development
Programme), it also means farmers take a cut in their subsidy
pay cheques. With farming incomes in the UK at an all time low,
a further reduction in farm income through modulation has not
been welcome.
With this factor in mind, the former MAFF introduced
a low percentage of modulation and throughout the budget period
of the ERDP will be gradually increased from 0 per cent in 2000
to 4.5 per cent in 2006 (see Table 1).
Table 1
INCREASE IN THE RATE OF MODULATION OVER THE
ERDP BUDGET PERIOD
| Year | 2000
| 2001 | 2002
| 2003 | 2004
| 2005 | 2006
|
| Modulation per cent | 0%
| 2.5% | 3.0%
| 3.5% | 3.5%
| 4.5% | 4.5%
|
From the outset, the Alliance has supported the ERDP, however
we believe the time is now right for the Government to take the
next step and undertake a higher rate of modulation. Like France,
we recommend the Government adopt the full allowance of 20 per
cent.
Instead of it being applied at a flat rate across all farms,
we propose it be applied progressively whereby those farm businesses
receiving higher subsidy payments would have a higher percentage
of their receipts modulated. The rate of modulation would also
be increased gradually until the full rate is achieved by 2007
(see Table 2). The Countryside Alliance therefore proposes a system
of "accelerated" or "progressive" progressive
modulation, the objective is to support change but at a realistic
pace which enables farm businesses to survive and change themselves.
Table 2
INCREASES IN THE RATE OF MODULATION AS PROPOSED BY THE
COUNTRYSIDE ALLIANCE
| Year | 2001 |
2002 | 2003
| 2004 | 2005
| 2006 | 2007
|
| Modulation per cent | 2.5%
| 5% | 7.5%
| 10% | 12.5%
| 15% | 20%
|
To ensure farmers are able to improve the profitability of
their farm from Pillar II activities, the Alliance has proposed
a system whereby the modulated money stays on the farm provided
each farm takes on rural development responsibilities. The Countryside
Alliance has proposed the radical restructuring of the rural development/agri-environment
schemes into a single scheme that is applicable to ALL farms into
the form of an English Land Management Contracts (LMC). It would
be similar to that already introduced in France. In order for
the modulated money to stay on the farm it would be compulsory
for the farmer to enter into a LMC. The aim of the LMC system
is to identify local problems and needs (environmental, social
and economic) and pay the farmer to provide local solutions.
EU rules state that modulation must be matched pound for
pound by the Treasury. Therefore, a second stream of funding (the
UK Treasury) would be made available to which all farmers can
apply, to top-up the funding for their LMC. The UK Treasury must
guarantee this second stream of funds if the modulation and LMC
package is to work.
We propose that these funds will be used selectively depending
on the need of the farmer and the commitments undertaken within
his contract. It may be the case that a small farmer may have
a small amount of money from modulation to enter into a LMC but
wants to undertake a large project. He/she could then apply for
a much larger grant from this second stream of money. Those farmers
currently receiving no direct payments from the EU would also
be actively encouraged to enter into a LMC. This would be funded
from the UK Treasury. Preferential treatment would be given to
groups of farmers forming their own co-operatives and entering
into group contracts. Grants would only be provided to land management
businesses (such as farms) or institutions and would be related
to identified land holdings.
In conclusion, we believe modulation is a vital tool to encourage
farmers away from subsidies. There is a strong possibility that
one of the outcomes of the mid-term review will be the compulsory
take up of modulation by all member states so it is important
the UK Government takes a lead on this. If this prediction is
correct then early adoption of modulation will increase the competitiveness
of UK farmers.
3. HOW BETTER
STEWARDSHIP OF
AGRICULTURAL LAND
CAN BE
PRODUCED
The Alliance believes that if better stewardship of agricultural
land is to be achieved, conditions need to be created to allow
for the protection and enhancement of the environment by ensuring
that farmers and local communities have ownership of, and receive
benefit from it.
(a) Streamlining of current rural development schemes
In England, there are a vast array of stewardship and agri-environmental
schemes in place, many of which are complicated, expensive to
administer and not applicable to all farms. The Alliance believes
that the current schemes under the ERDP need to be streamlined
and replaced with one scheme, that is easy to administer, flexible
and adaptable enough to apply to all types of farms. We are a
strong supporter of the Welsh agri-environmental scheme—Tir
Gofal, which adopts a whole farm approach. We believe such a scheme
would be more attractive to farmers and land managers in England.
Any future reform of the agri-environmental schemes should
consider the option of rewarding farmers for achieving their environmental
goals and not just paying them for the process of improving the
environment on their farms. For example, a farmer managing his
land to encourage the nesting lapwings should get a bonus payment
for each extra pair of lapwings he encourages to nest on his land.
This serves to encourage the farmers to take an interest in the
environmental status of his farms, further benefiting wildlife.
It is important that farmers embarking on any scheme are
paid swiftly for their environmental work.
(b) Developing Markets for Public Goods Supplied by Farmers
Farmers supply a whole array of public goods the importance
of which has been clearly demonstrated during the recent foot
and mouth outbreak. Without farmers and their land management
skills society would not have the countryside it appreciates and
enjoys. The Alliance believes that farmers need to be recognised
for the service they provide to society and be rewarded for it.
If the farmer is receiving benefit from these public goods then
he/she has the added incentive to preserve and enhance the environment.
We believe that for some public goods (such as biodiversity
and landscape) farmers should be paid for their provision by the
state. However, the Alliance believes that where possible markets
for certain public goods need to be explored and developed. For
example, flood alleviation and watershed management—farmers
provide a service to society by allowing floodwater to be stored
on their land. They should be paid by water companies for providing
this service. By not providing this service flood prevention would
be far more costly further downstream. Examples of other markets
that have potential for expansion include carbon sequestration,
forestry and biofuels.
Country sports is a prime example of achieving land stewardship
without any form of subsidy or cost to the Treasury. The environmental
benefits of country sports (such as hedge laying, woodland planting,
creation of rides, riverbank maintenance, increased numbers of
farmland birds etc) has long been recognised and needs to be promoted
further. We would expect country sports to be included as part
of the farm business plan to benefit under our LMC proposals.
Any future reform of CAP needs to be more effective at internalising
public goods. This needs to include paying for the benefits that
are not currently paid for by consumers, such as biodiversity
and access.
Farmers need to recognise the full potential of their farms,
and the development of a system that rewards farmers for supplying
public goods is a way of achieving better land stewardship.
(c) Land Management Contracts
In conjunction with the Alliance's proposals to increase
the rate of modulation and to ensure that modulated money stays
on the farm, a system of Land Management Contracts (LMC) was proposed.
The Alliance proposes that the current schemes under the ERDP
are replaced by one scheme similar to that adopted by the French.
In order for the modulated money to stay on the farm, the
farmer would have to take up a LMC. Under an LMC the farmer would
complete a sustainable development project encompassing business
development, environmental protection and social benefit. These
contracts still account for food provision, but at the same time,
ensure farmers are able to take up new responsibilities meeting
social expectations on employment, food quality and safety, environmental
protection, and balanced regional development.
Each contract would be based on an overall assessment of
the farm within a local context and the Government would be committed
to helping the initiative financially for a period of at least
five years.
Each local DEFRA office would have to draw up a contract,
relevant to a specific geographical area and comprising a coherent
set of standardised measures. A standard measure would be an action
or set of actions aimed at a common objective. These actions would
be reflected in the contractual requirements of each farmer.
Importantly, within this framework, LMCs enable farmers to
innovate—seeking new market niches, working with others
to promote a product, or finding new ways of preserving existing
jobs or creating new ones.
A farm business should be rewarded for keeping/maintaining
labour not penalised for reducing it. This would ensure there
was no contradiction of one of the objectives of CAP reform, which
is to prepare agriculture for exposure to world markets. Further
details regarding the Alliance's LMC proposals can be found in
Annex 2.
LMCs demand an efficient local Government system with which
to administer them. The Countryside Alliance has set out its recommendations
for delivery in Annex 3.
(d) Raising Farmers' Awareness of Land Stewardship
The Countryside Alliance believes that raising the awareness
of farmers in issues surrounding land stewardship would be enormously
beneficial. Engaging farmers and land managers in issues will
enhance their interest and enthusiasm for managing their land
with stewardship in mind.
4. WHAT ARE
THE OPPORTUNITIES
AND DIFFICULTIES
FACED BY
AGRICULTURE AS
A RESULT
OF POSSIBLE
REDUCTIONS IN
PRODUCTION SUBSIDIES?
Opportunities
(a) It will allow for a greater flexibility for farming
systems.
(b) Farmers will be able to manage farms in accordance
with what the market wants and not to maximise their subsidies.
(c ) Drive costs down for suppliers of agricultural factors
of production.
(d) Re-allocation of money to land management for environmental
benefit.
(e) Encourage extensive as opposed to intensive production.
(f) Reduce base land values.
(g) Make future industrial (particularly) fuel crops more
viable.
(h) Appease WTO partners.
Difficulties
(a) If production-linked subsidy reduction is not universal
across the whole of the EU, competition will be limited and there
will be an increased "uneven playing field" factor.
(b) There is a strong probability that farmers may go
out of food production. This raises issues such as who manages
the land? How should it be managed? Larger farm units? Etc.
(c ) Increased extensive production coupled with less
labour may compromise issues of welfare.
(d) Does not provide solutions to keeping families on
farms and improving farmers' negotiating position in the food
chain—these are the two "killer" issues.
Countryside Alliance
14 December 2001
| 
