Memorandum submitted by H R Oliver-Bellasis
IMPLEMENTATION OF CAP REFORM IN THE UK
1. BACKGROUND
Exact information about the detailed interpretation
for the implementation of CAP reform has been very difficult to
extract from Defra. The Defra Consultation July '03 invited answers
to similar questions, where even the definitions of key words
and principles were not defined. Thus, the answers to this Committee's
questions are less than easy.
2. COMMITTEE
QUESTIONS
(a) Following what principles and by
what method the UK should implement the proposals contained in
the regulations formally adopted at the Council Meeting in September
'03?
i. The principles should be:
1. To ensure that the industry is still able
to manage the majority of land to enhance biodiversity and countryside,
whilst growing saleable crops.
2. To maximise the value of money spent.
3. To simplify the compliance system.
4. To minimise administration.
ii. That requires actions from policy makers
of how the land will be defined and where that may differ from
the current IACS system. Will the eligible land definition remain
the same, when semi-natural habitat is becoming more important;
bearing in mind any payment will necessarily be countryside and
environment, not crop or hectare focussed?
iii. Will livestock regimes be simplified
and be included with arable? Will those livestock regimes be phased?
Will all hectares be in or out (permanent pasture/temporary grass,
semi-natural and other habitats, dikes, and other ineligible hectares
under current scheme)?
iv. There is a real dilemma, as the two
possible routes—Historical payment or Single Regional Payment
will undoubtedly create winners, losers and induce bitterness
and acrimony—potentially leading to wrong decisions; eg
the NFU representing farmers across the land has backed the former,
whilst failing to articulate the obvious negatives—landlord
tenant issues, continuing the complex administration, disadvantaging
horticultural producers (to name but a few). The advantages are
that experts believe that there will be fewer losers. The single
regional payment is much more simple. There is a real risk with
decoupled payments, that enthusiasm particularly for livestock
(cattle and sheep), will wane. This will disadvantage huge areas
of less good/marginal land. In the uplands "overgrazing"
may rapidly change to "undergrazing" which will be much
more difficult to manage.
(b) What impact implementation will
have on the agricultural sector, particularly taking account of
approaches to CAP reform in other European Union Member States?
i. This question is virtually impossible
to answer in any way ahead of the rules in all Member States being
announced. I do not have access to that information. However,
the general level of care and attention demonstrated by other
Member States for their agricultural sector is very different
to the attitude in this country—(UK Government's Department—Defra).
Defra fails to demonstrate an understanding of the industry, in
any detail, judging by statements from its Ministers, over the
last few months. When Ministers trumpet significant increases
in profitability against the backdrop of the last five very difficult
years with no reference to the still hazardous financial position
of the industry; it does not inspire confidence. Socrates wisely
wrote all those years ago: "He, who aspires to Statesmanship
must first understand grain"—does she?). It is about
the need for home supply. When Socrates wrote those words, they
were made in support of the need for a navy to protect grain boats
from abroad being able to deliver.
The current proposals may risk land becoming
derelict or at best used in a very different way. The cost of
the reclamation of that abandoned land for cropping again is huge,
as is demonstrated after the Second World War. If this policy
driven "wilderness-isation" happens the landscape will
change dramatically.
(c) What progress has been made in
implementing the proposals made by the Policy Commission on the
Future of Farming and Food, and how that work meshes with wider
reform of the CAP?
i. If asked that question any farmer would
pause and might observe "not much that I can see". Efforts
have been made at two ends of the system—the niche supply
end, where an ordinary commodity has had value added and is sold
to a customer. If this called reconnecting with the customer fine
but it is not possible for most commodity producers. The other
end is co-operation eg the setting up of EFFP; it has published
a clear strategy? There is much cynicism amongst the executives
of farmer-controlled businesses as to its value. Then, there is
the Food Chain Centre set up as part of IGD; one might be surprised,
if that shows any benefit to the producer, as it is directly under
the shadow of and supported by the retailers. They have not even
managed to deliver any reasonable compliance with the Code of
Practice for Retailer Buying, which they signed. Buyers continue
to intimidate, squeeze and use comparable prices, which are not
comparable from around the world to force prices down. The stark
fact is that the UK is a high cost producer across most products
and until such areas as air freight and wage comparisons are compared
or costed realistically, the industry has no chance of competing.
Our cost structures are at odds with global competition. (Argentinean/Brazilian
beef or Kenya vegetables are good examples). The only conclusion
that can be drawn is that the Treasury drives the agenda and they
see us as a twilight industry to be driven into darkness, as swiftly
as possible. We are losing skills in the industry such that any
move to a less intensive system will be put at risk for lack of
skills. That will accelerate after the implementation of the current
reforms.
(d) and how that work meshes with wider
reform of the CAP?
There is little evidence of any connection between
the Policy Commission and wider reform of the CAP. It is not clear
that even Ministers know precisely how these regulations will
operate. It is unlikely that crops will be grown, if the grower
has no market; so, in that sense, they will have forced farmers
to get closer to their customers. The Business Advice offered
to farmers is valuable, but is dependent on other delivery mechanisms
(planners) for on-farm strategy to change. There is no evidence
that the health issues raised in the report will be advanced by
the outcome of either CAP reform or actions by the Policy Commission.
The Policy Commission highlighted the value of support to the
industry, but there is a real possibility that with the EU modulation
and its Financial Discipline measure added to the regulation allowing
Member States to levy monies via modulation to provide a fund
for special support (eg National Envelope) that current levels
of payment can be diminished—some say halved in five years;
this would catapult the industry into terminal crisis. It is not
clear if the Policy Commission has continued to emphasise this
difficulty to the Government and in particular the Treasury. It
will likely be good fortune not strategy if the efforts of the
Policy have meshed with CAP reform.
CONCLUSIONS
There is evidence to suggest that questions
asked by the Select Committee are difficult, if not impossible
to answer by the deadline set. If the Committee wishes to influence
the policy, they may be too late and if they wish to comment on
the measures for implementation—they are too early! The
only thing that is certain is that these proposals will change
agriculture and the countryside at a stroke and to a greater extent
than any policy change in the last 40 years.
H R Oliver-Bellasis
December 2003
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