Examination of Witnesses (Questions 240-259)
LORD WHITTY,
MR PAUL
ELLIOTT AND
MR JIM
DIXON
WEDNESDAY 10 JULY 2002
240. You have got a new Department and I am
a tomato grower, a lettuce producer, a fruit man and I am saying
to you, "Minister, what is new DEFRA going to do for our
industry that hasn't been done before? Where is the gain from
DEFRA in having you looking after our industry? What are you going
to do for us?"
(Lord Whitty) With respect, that is exactly the wrong
question that I have been telling farmers and growers who have
been in the old relationship they should get away from, so I do
not want to bring horticulture into asking me that question. What
the Government owes to horticulture is to recognise its important
position mainly in the rural economy and to ensure that the context,
the framework in which it operates does not operate to its disadvantage.
There are issues relating to regulation and issues relating to
taxation which I think we need to look at in relation to horticulture.
We have made a temporary arrangement, for example in relation
to the Climate Change Levy, which has protected horticulture to
some extent and we need to recognise the rather special nature
of the way horticulture operates, but we are not going to tell
horticulture that there is a whole new tranche of subsidies for
you or a whole new area of government intervention which is going
to move you further away from the market rather than the rather
good relationship with the markets that you have. Because it is
a competitive industry and parts of it are subject to quite severe
competition from the rest of Europe, horticulture has probably
suffered as much, if not more, than other parts of agriculture
with the decline of the euro against the pound recently. That
is a particularly difficult economic situation but not one I can
address directly except by improving the framework in which they
operate.
241. I would find it helpful if subsequently,
Lord Whitty you might like to flesh out on a piece of paper with
more specificity some of the areas you mentioned. You have been
kind enough to identify areas where you feel more should be done
by your Department and I would be quite interested to know how
that agenda is going to be taken forward. I was very interested
in your comment where you alluded to the overall economic performance
of horticulture because one of the criticisms that has been put
to us in the context of this particular inquiry has been for example
the CLA told us there was no sign in your new Department's vision
of the recognition of the importance that profitable farming plays
in a thriving countryside. Would you care to respond to that challenge?
Should you revise your vision to give greater prominence to the
question of profitable agriculture in the same way that you allude
to the need for horticulture to be economically successful?
(Lord Whitty) I would have thought that all our pronouncements
on the sustainability of agriculture address that. Every time
I address a farming audience which might be sceptical in the same
way that your question implies, I say that economic sustainability
means profitability means money back into farming. That dimension
of sustainability subsumes the need to get farming in the long-term
back to a profitable situation.
242. If that is what you have been saying to
farmers, then perhaps the National Farmers' Union remain to be
persuaded. They told us they were deeply concerned about DEFRA's
failure to give proper weight to the future of farming. They coupled
that with comments about the slow response to the Policy Commission.
I will come on to that as a separate subject because I think it
has enmeshed itself in the announcement of the mid-term review
and I would like to take those two items together. Have you you
had any feedback from the NFU about this particular subject because
that is what they have told us? You think you have convinced them
that farming is a high priority for DEFRA but they are telling
us it is not.
(Lord Whitty) Let me say it is, but it is profitable
farming which is operating within a new context and one which
some members of the NFU do not fully accept. The NFU operates
like most trade associations and trade unions in a way which has
both a sophisticated dimension and a crude dimension. The crude
dimension is quite often the one that gets in the papers which
is effectively saying we need to be profitable, we are not profitable
now and therefore government give us more money. As I was saying
earlier, that is not the kind of relationship we can have let
alone want to have with the agriculture sector. A lot of questions
from farmers, including from representatives of farmers, is along
those lines. The more sophisticated version of that does chime
better with what the government is thinking which is we need more
money back into farming, we need a larger share of the value of
the food chain going back to primary producers one way and another,
we need to ensure that the structure of farming is closer to the
market and closer to what the ultimate consumer is prepared to
pay for, all of which, as you will know, are strong themes of
the Curry Report as is profitability a strong team of the Curry
Report, and we have clearly endorsed that objective.
243. You have been carrying out a further consultation.
I know you have travelled the country to take the views of farmers
about the Commission. Just so we can get some idea in terms of
your future activities, when do you expect DEFRA will give some
kind of definitive statement on Curry and will that definitive
statement contain a work programme so that we can identify with
those bits of the Commission's findings that you wish to be associated
with as a Department, how you are going to take that forward or
will that agenda be identified by some kind of resource manpower
implications? This inquiry is concerned about your future and
your activities and it would be nice to be able to say, "This
is what DEFRA say about Curry and this is how they are going it
achieve it." Will your response be as comprehensive as that?
(Lord Whitty) I intend it to be. The process to which
you refer is not so much a process of new-found consultation because
the Commission themselves went in for a pretty hefty consultation
process. We have said that we support the broad strategy of Curry
with one or two qualifications. We will try to engage the sectors
at regional and national level in the delivery of the Curry consultation
process rather than to re-open all of the issues but, nevertheless,
some of them need to be defined a bit more and in particular we
need, before we reach that definitive statement, to take on board,
frankly, the amount the money we are going to get out of the SR
2002 and what is the likely outcome or at least the general direction
of the European proposals on the mid-term review. We need those
two things out of the way before we can produce a definitive report.
The timescale of the definitive strategy will be in the autumn
and it will, I hope and believe, contain assessable and measurable
items of how far we can progress down that road taking on board
Curry's recommendations.
244. Does not the Commission imply two things.
Firstly, with Herr Fischler's proposals it is quite clear that
the politics of the German elections are going to slow up any
meaningful discussion about these particular matters. His proposals
contain quite a substantially different model of modulation plus
degressivity from the proposals in Curry but they travel a parallel
route. Does that effectively mean that what your report in the
autumn is going to do is it will pick out the bits you can associate
yourself with now and leave the central part of Curry on ice until
some time in the future when the Community comes to a decision
about the Fischler mid-term review?
(Lord Whitty) I do not think it is quite as either/or
as that. Of course, the difficulties in negotiations are substantial
and elections are always a bit of an inconvenience in this process,
but Commissioner Fischler and the Danish Presidency are aiming
to get political agreement by the end of year on this package.
Okay, we can be slightly sceptical about that but we are certainly
working with them to try to make sure we do get to that by the
end of the year. There will be details which will have to be sorted
out beyond that but we will by the time we produce our strategy
be pretty clear how far Fischler's initial proposals are likely
to get.
Chairman
245. I just want to clarify this. Even assuming
that, let's say, in the Spending Review you get whatever amount
of money you are going to get, you could not really announce in
the autumn, could you, a Curry package with a ten per cent level
of modulation for example, without knowing what the outcome of
the Fischler negotiations would be because, as Michael says, they
are pushing in the same direction but with different mechanisms.
You could not ask farmers to deliver a ten per cent modulation
if then they are going to be faced with the conversion of their
support into a fixed sum which then becomes degressive with a
cut-off point to it. The timings just do not work, do they? It
is not an approach, it is saying in terms of the coincidence of
the two negotiations, you could not deliver Curry until the Fischler
thing has been cleared and that has got to be the first consideration?
(Lord Whitty) There are issues of timing and issues
of precisely how that dimension of the Curry package and the Fischler
package actually work. Both Curry and Fischler are looking at
a period, roughly speaking, two years hence before this new process
operates. There is a question of whether it is a compulsory modulation,
as proposed by Fischler, or a unilateral modulation, as recommended
by Curry, and to some extent as we have already taken the decision
to go down that road. The likelihood of the Fischler proposal
coming out will partly determine the timing as to some extent,
no doubt, will the Spending Review. Whether or not we go down
the compulsory modulation or unilateral modulation route is a
second order question. Providing we go down the unilateral road,
we will produce greater flexibility for how we use the modulated
money than is currently the situation. If we do that we do not
necessarily need the compulsory modulation as proposed by Fischler.
Either way we would be moving money through some sort of modulation
propose away from the first pillar to the second pillar. The precise
terms of that may not be yet clear in the middle of the autumn
but at least the general direction will be clear.
Mr Jack
246. What are you going to do to enable us all
to understand more clearly both the effects of Curry and Fischler
in terms of what I would describe as the winners and losers' game
because in different parts of agriculture and different parts
of the United Kingdom some people are going to have to give up
something and other people are potentially, in the case of pillar
two projects, going to be the gainers and all so far we have had
are what I call broad brush, global assessments on the impact
on UK farming as a whole. It would be very interesting to know
in more detail how these proposals are going to affect different
parts of the country and, going beyond the current subsidised
sector of agriculture, which will be, by definition, the losers
because they will give up something and which people in subsidised
or non-subsidised rural development will be the winners. Are you
going to provide us as a Department with some meaningful analysis
so that we can get to grips with the implications for the UK of
the Fischler proposals particularly?
(Lord Whitty) We will obviously provide a degree of
greater analysis than has been possible so far, but the problem
about doing it in the way you describe is that there are swings
and roundabouts for individuals as well as whole groups. Farmers
who currently are receiving substantial subsidies for production,
whether it is sheep or grain, if they adapt their methods as appropriate,
they might be losers on that front but gainers on another front
so you are not necessarily saying there are whole groups or geographical
areas of sectors of agriculture which will be winners or losers.
It depends how good and effective particular farmers and particular
quarters of land management are.
247. Are you going to be producing any kind
of discussion because a document crossed my desk—and I forget
immediately who sent it I think it was Harper Adams Agricultural
College—which tried to assess the impact on a series of
case studies and, quite rightly, they picked up on the point you
just picked up on that farmers may adjust their cropping mix to
take into account a new set of circumstances. These are major
changes. Are you going to be doing anything in terms of the request
you made for officials to guide you about the line to take when
you go to the Council? To negotiate this you are going to have
a picture as to these various matrices of movement and impact.
Is that something you are going to prepare and is DEFRA planning
to make it public so we can get a better understanding of both
the modulation impact out of Curry and indeed the similar proposals
out of Fischler?
(Lord Whitty) Clearly part of the Ministers' briefing
as they go into these negotiations will be the differential economic
impacts and differential environmental impacts of different potential
mixes of the Fischler package. This will be a moving programme
during the negotiations, so I suspect that is not document which
will be very meaningful to anybody who is not directly involved
in the process. Certainly there are economic assessments going
on as from today when we got the detail of Fischler as to how
that would impact on different sectors of agriculture, and there
will be different views from different sectors. There may be different
views from different parts of the United Kingdom as to what the
balance of advantage is. In broad brush terms then that will be
communicated. If you are asking will every dot and comma of the
shifts in negotiations be reflected back in a public document,
that would be quite damaging to us in negotiation terms and probably
impossible to do. At the end of the process there should be something
that indicates, "Okay, that is the package we expect to see
and that is the impact we expect to see on British farming."
Chairman
248. It will be important for policy because
there are some large dairy farms which will find themselves within
that 300,000 euro ceiling which at the moment would not be counted
towards it. The policies themselves might need changing.
(Lord Whitty) I have indicated some hesitations about
that particular aspect should that choose to be the position in
two minutes' time.
Mr Borrow
249. During the evidence that the Committee
have got on this report we seem to have received two batches of
ideas. We have had comment from the CLA and from the farmers saying
the new DEFRA is ignoring farming and Michael Jack referred to
that. We have had a number of other organisations that have made
a comment and if I read a quote from CPRE, which is typical of
many we have received, it says, "This will be a particular
challenge given the cultural `inertia' that appeared endemic in
the former MAFF and the dominance of staff, in terms of numbers
and resources, focused on the agricultural sector." There
seems to be from many organisations the perception that DEFRA
has not really changed from the old MAFF with another brand name
focused on agriculture, yet from some of the farming lobby perception
the new DEFRA is very new and is ignoring farming. What do you
think is the correct perception for the Committee to arrive at
at this point in time?
(Lord Whitty) I think the correct perception is that
if they both feel that at this point in the process then clearly
we are taking a fairly balanced approach to this. The fact that
none of them see quite where we are getting to means that the
process is relatively new. I read the whole of the CPRE evidence
to you and glanced at it and it did start out by staying there
was a clear sense of direction from the top but their concern
was that this not reflected through the organisation as a whole,
which I think is fair. I think it is also true that a lot of farming
elements do not relate easily to a department which is no longer
a department for farming. I think the more progressive amongst
the farmers recognise that was not possible to maintain in any
case and it is situation to which they are going to have to adapt.
As to the internal culture, there are structural and superstructural
lags no doubt but we have given for the ministerial and management
board level a pretty clear sense of direction. We want that broader
department. We want those who are very heavily involved and focused
on agriculture to take a broader view. We also want those in other
parts of the Department to recognise the importance of farming
in delivering our broader objectives.
Mr Mitchell
250. People are getting fed up with the Common
Agricultural Policy because every party at every election promises
fundamental reforms of the Common Agricultural Policy and nothing
ever happens. I just wonder what DEFRA's position is. Does it
have a fall-back position or an alternative approach which can
be urged on Europe because each time we get even a moderate reform
from the Commission, like Agenda 2000, it is promptly vetoed by
Chirac at the Berlin Summit and then this morning on Radio 4 I
wakened up to Commissioner Fischler proposing a quite sensible
reform package and then somebody with a French accent coming on
saying, "It is a load of rubbish and it will not work,"
and we are clearly back in cancellation mode again. Here we are
mutely hanging on with no alternatives of our own, sitting there
awaiting the outcome of these struggles in which sense and reform
have always lost out in the past.
(Lord Whitty) I think there are two, possibly three,
changes in the situation which are going to make a complete French
veto of these propositions very difficult. The first is that the
looming prospect of enlargement is going to put a serious strain
on the Common Agricultural Policy as is. The budget cannot sustain
simply transferring the Common Agricultural Policy to Poland and
other countries in its present form. At roughly the same time
they are going to have to try to reach agreement on CAP reform,
they are going to have to take a decision on enlargement. You
cannot have compatible decisions—you can but not on such
a big issue as that at a European level. The second is within
the WTO although there are elements in Europe using the United
States' Farm Bill, which is pretty much a disaster for those who
want a more liberalised world trade, as an excuse for saying liberalised
agricultural trade is never going to happen. I do not believe
that to be the case and the Americans will be committed to liberalising
trade and you have got to have a WTO trade negotiation pretty
much advanced during the course of this year and that will involve
a removal of production-related subsidies. Part of what Fischler
is about is to take the kind of subsidies which the EU give at
the moment, which will be out of compliance with the WTO, into
an area of general support for rural areas, which would not be
out of compliance with the WTO, quite apart from the need to reduce
the total burden. Those two are huge issues which we are coming
up against the rocks on. The third is that, despite President
Chirac's position in the French elections and so on, across Europe
and across political parties in Europe there is a view that the
electorate will not sustain much longer the direct subsidy of
farmers and that in the long term, if we are to continue to support
the farming industry in land management, it has to be on a much
broader basis than has been the position in the past and not a
subsidy for production. That probably applies more in the Northern
European states than the Southern European states but even in
states like Italy and Portugal there is some recognition of that
direction as well. That will not click in as soon as the other
two but it is an important perspective on the views of the other
Member States as well as the UK. Therefore I think the situation
is qualitatively different. I would accept, however, the issue
is how fast but I do not think the issue is any longer what is
the direction. The direction will be along the lines that Fischler
is proposing although some of the details will be argued about.
Hopefully, from the British point of view, certainly from the
DEFRA point of view, a significant amount of that will be achieved
through the mid-term review. If it is not in the mid-term review
it will be in 2006 and it will be more complicated to do it then
because of enlargement. That is the direction; it is only the
question of pace with which that is the produced. So there has
been a sea change over the last 20 years. It is the nicest thing
I have ever heard Mr Fischler say about the European Commission.
251. That is right—and I hope it is—but
it does mean that our negotiating position is essentially Fischler's.
We do not have an alternative or a fall-back position. We are
not proposing to up the ante by putting forward a strong alternative
or mobilising, for instance, consumers across the Community against
this monstrosity.
(Lord Whitty) If you are saying do we have a complete
plan B if this completely stalled—and my last answer said
it will not be stalled; it may slow down compared to what we would
like but it will not stall—part of plan B in any case is
the Curry Commission. Even within the present mechanisms (very
marginally adjusted) of the Common Agricultural Policy we can
do a lot and that is what Curry was telling us we could do, and
therefore we do in that sense have a plan B, But plan B is in
the same direction as plan A.
252. Let me move on to the other monstrosity,
the Common Fisheries Policy and DEFRA gives us platitudes on that.
It says "a reformed Common Fisheries Policy giving a sustainable
future for our fishing is a key concern", which is right
on, passionate stuff but what progress has been made with building
up alliances with other states to reform the CFP in the way we
like it to go, which is often very different to where Spain would
like it to go or even Denmark would like it to go?
(Lord Whitty) I think the proposals on the CFP review
were to a large extent in the direction in which we would wish
to move and they were of course blown out of the water by the
Spanish Presidency. Before they got to that point there was a
majority, probably not quite a QMV but a majority of Member States
supporting that view and it was only the Spanish Presidency that
stopped something like that being adopted. We have had recent
discussions with the Danish Presidency and although there are
respects in which the Danish fishing interests are not quite the
same, in general the Danish Presidency want to try and resolve
this one and I think therefore we are still on course, if not
exactly on time, in producing a fairly fundamental reform of the
fisheries regime as well. It is, as you are only too well aware,
one of the substantial disaster areas of the management of the
EU and we put a high priority on getting it cleared up, regrettably
too late for many British fisherman and some fish stocks. It is
something we do give big attention to.
253. The worry would be again while we have
got devout wishes we do not have a clear alternative set of proposals
and just as fishing now seems to be relegated to a minor part
of DEFRA's interests and preoccupations so when it comes to the
British Government's preoccupations it is an even smaller and
less important thing and one on which the Government is always
inclined to make concessions to gain ground in other areas. Whether
it is asylum speakers or an argument over regulations, fishing
is always the card that is sacrificed.
(Lord Whitty) I do not really accept that. It was
not a negotiation during the Spanish Presidency; the Spanish Presidency
effectively just blocked it. It was not there was a tradeoff or
anything else. Most of the difficulties on the fisheries front
have been within the Fisheries Council itself; they have not been
traded off against other things. I think to some extent the proposed
changes to put fisheries and agriculture together will release
us from that solely fishing interests' determined approach to
fisheries, but it is also true that if we do not get agreement
on fisheries then it is very difficult to see what the direction
of the British fisheries communities will then be because they
are being seriously squeezed at the moment and unless we adopt
a general approach to stocks both the environmental and economic
effects will not be good. When you say it is a small part of DEFRA's
responsibility, in some areas it is a very big part of DEFRA's
responsibility and a very big part of the devolved administrations'
responsibilities as well. Both the communities and the management
of marine resources feature quite large on our agenda.
254. That is true certainly but the worry is
it is being abdicated to the devolved department in Scotland which
is playing a much more active role in defending fishing and supporting
fishing. There was £25 million provided for decommissioning
there compared to £6 million for the fishing industry here,
which is only half as big as the Scottish industry, and indicates
a different sense of proportion and a more strenuous pursuit of
the interests of fishing in Scotland than by DEFRA?
(Lord Whitty) The fisheries industry in Scotland does
loom larger on the political horizon than in England, that is
undoubtedly true, but that does not mean proportionately we do
not take consideration of the interests of fishery communities
and their future. I have seen figures which suggest—and
I cannot quote them directly to you—that the balance of
the sums of money given in Scotland and England are closer than
the 25:6 would suggest because of the nature and age and size
of boats in Scotland compared to England. I would not like to
go much further on that but I will provide you with some information
that I hope sustains that argument. It is certainly true that
fisheries is a bigger political issue in Scotland than it is in
England, that I would accept. What I do not accept is that DEFRA
have lost sight of it.
Mrs Shephard
255. Could we turn to the question of food.
The British Retail Consortium said: "The importance DEFRA
placed on the promotion of a competitive and integrated supply
chain which is responsive to the needs of consumers is welcome."
Talking of platitudes, I wonder what you think that means?
(Lord Whitty) It probably means more or less what
it says, that the food industry, at least most of the food chain
is in a competitive situation, both in terms of internal structure
and internationally.
256. I am sorry, I just do not understand that
statement.
(Lord Whitty) It means that we want to see it succeed
as a competitive industry and that insofar as there is a government
role in this we will help it to succeed in a competitive sense.
I imagine that was why they welcomed it.
257. How are you going to do that?
(Lord Whitty) There are a number of respects in which
we need to ensure that, for example, regulations adopted in Europe
do not differentially hit the British food sector. There are some
areas of concern in that regard. We provide as far as possible
that the structure of the food industry is a competitive one and
that the export opportunities are given support from the various
Government agencies relating to exports. Really the non agricultural
part of the food industry is a very big employer and a very big
investor and a very big contributor to the GDP but the relationship
between us and most of the food industry is not any different
from the relationship, say, of the DTI with the engineering industry.
We want to see a free market thriving industry which is internationally
competitive and provides what consumers want. That is really all
that means and it is the relationship the industry want with us.
258. It seemed to us, certainly, when we were
taking evidence from other organisations, and in particular the
retailers, that your new organisation, which is to do with the
supply chain, would help educate consumers. Is that your vision?
(Lord Whitty) It is part of it, yes. Part of the Curry
Commission Report is that we should look at the food chain as
a whole and look at inefficiencies and lack of transparency in
the food chain would both help us eliminate economic problems
in it and also ensure that the various stages of the chain could
see what the reality of costs and quality was, and that particularly
involves the consumer. Curry was concerned, very clearly, with
quality indications to the consumer. Sometimes there was confusion
from the various assurance schemes and the various labelling schemes
and it made certain recommendations to try and tidy that up to
the benefit of British produce.
259. When we talked to the retailers they were
quite enthusiastic about consumer surveys that they had done.
They were rather modest about the size of the surveys, in other
words rather modest about whether or not we could take them seriously,
but they tried to tell us that their consumers were overwhelmingly
concerned with supply chain issues rather than price. Would that
be your impression?
(Lord Whitty) I think what the consumers are interested
in is value for money, they are not interested necessarily in
going to the lowest common denominator and the lowest price.
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