Memorandum submitted by the Agricultural
Industries Confederation
IMPLEMENTATION OF CAP REFORM IN THE UK
AIC SUBMISSION
1. AIC was formed following the amalgamation
of UKASTA (UK Agricultural Supply Trade Association), the FMA
(Fertiliser Manufacturers Association) and a group of leading
crop protection distributors. The organisation brings together
the key associations representing the agricultural trade and supply
industries. At present AIC has 365 member companies who provide
£6.5 billion worth of inputs into the agricultural industry.
In addition, there are over 1,000 trade assurance members, ranging
from family run businesses to multi-national organisations.
2. AIC has supported the principles behind
the Mid Term Review and therefore the move to decouple subsidies
whilst at the same time moving towards a single farm payment system.
At the same time however we have voiced concerns in our representations
to Defra about the potential impact the changes will have on certain
sectors, particularly when we consider the different implementation
options which member states have, both in terms of partial decoupling
and time delays for implementation.
3. What seems clear at this stage is that
the new arrangements for agricultural support will have a profound
effect on the whole UK agricultural sector. The change to a single
farm payment system is a large step towards the full decoupling
of production from support. It will therefore take some time for
all parts of the industry to adjust to the implications this has
for their own businesses. For this reason we would strongly argue
that the UK should take into account the options available to
Member States for implementation and the likely use which other
countries will make use of these options. We particularly note
that the French are likely to opt for only a partial decoupling
across the whole range of sectors and also likely to take the
full period of time available (ie until 2007) to make the changes
necessary. The UK must therefore recognise the commercial implications
this imbalance is likely to have on the industry and ensure that
issues of competitive disadvantage are not allowed to distort
the true potential of the industry.
4. Whilst we have supported the principle
of the single farm payment (SFP) and its decoupling implications,
we have argued against the Defra proposal to include seed production
aid within the SFP. Firstly the history of seed production aid
is clear that it exists to promote the production of species,
important to the community, which might otherwise not be produced.
We would argue this is particularly pertinent for the UK where
herbage seed production is unlikely to be viable without the incentive
of seed production aid. Its incorporation into the SFP will therefore
offer no opportunity to bring new growers into the sector whilst
rewarding existing growers, whether or not they wish to continue
with the crop. Our concern at such an outcome is that we therefore
see a fall in the production of native species and consequent
implications for biodiversity and the wider sustainability plans
being driven through measures such as countryside stewardship.
5. Implementation must take full account
of the likely impact on the industry, as previously mentioned.
It is widely forecast that the consequences of the reform package
will be a greater volatility in market prices, certainly in the
short to medium term. We have some concerns at the impact of this
volatility and note that whilst direct comparisons may not be
appropriate, the pig industry has been relatively unsuccessful
in removing the huge price and production swings across time—commonly
known as the "pig cycle". This volatility will be driven
in part by the opportunity for producers to give up production
in their own right whilst at the same time retaining the land
through which to validate their SFP. We remain anxious to determine
how many producers will opt out of production and what percentage
of that group will then look to have the land farmed by a neighbour
or other party through a contract farming arrangement which may
or may not involve a rental payment.
6. The impact of the reform package on livestock
production is of particular concern to members of AIC. This is
particularly true of extensive livestock production in upland
areas. Figures produced within the industry forecast a drop of
around 10% over the next decade within the red meat sector. This
is an aggregate figure and disguises the likely scenario that
upland areas will see a fall greater than this whilst lowland
areas will see a small increase in production. Clearly such a
change would have an impact on associated industries and we would
be extremely concerned at the implications for the infrastructure
of the supply industry and its ability to provide an efficient
and effective service to all producers. We believe the issue of
an effective infrastructure, supporting agricultural production,
is of growing importance and must be a central factor in determining
the overall impact of the reform package for the UK agricultural
industry.
7. We believe there is an important linkage
between the proposals and some of the principles developed under
the Policy Commission on the Future of Food and Farming. In some
respects the reform package can be seen as underpinning the proposals
of the Curry Commission but offer also the prospect to extend
beyond this. Crucially we would see the opportunity under the
reform package to develop an effective co-existence policy between
efficient agricultural production and the cross compliance measures
which the EU is keen to promote. To this end we believe the Committee
should give further thought to the recent commentary on the GM
Farm Scale Evaluation trials where reference was made to the intimate
inter-connection between fields and their surrounding semi-natural
habitat and that research is now showing how biodiversity can
be enhanced in arable landscapes by the manipulation of both GM
and conventional farming systems and their adjacent field margins.
8. The comments in the previous paragraph
suggest that there must be a greater emphasis in the future in
pulling together the issues of production and biodiversity. This
would be more effectively managed by a removal of set-aside as
a production control tool and its replacement with measures which
deal more appropriately with the balance between production areas
and the field margins. We believe that pressure should be placed
on the Commission immediately in order that a review of set-aside
can be started straight away.
Agricultural Industries Confederation
December 2003
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