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


Memorandum submitted by the Countryside Alliance (A15)


  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.


  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.


  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.


  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


Modulation per cent

  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


Modulation per cent

  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.


  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.



    (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.


    (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

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