Memorandum submitted by the National Beef
Association
NOTES ON ALLOCATION OF DECOUPLED ENTITLEMENT
1. The National Beef Association is a UK-wide
organisation representing beef farmers in England, Northern Ireland,
Scotland and Wales. It appreciates being able to present its written
views on the advantages of historic allocation of entitlement
over hybrid allocation in both general, and in English, terms
for consideration by Select Committee members.
2. Accompanying this letter we have included
copies of letters sent to Lord Whitty on 11 January (Annex A)
in which we put forward our position on entitlement allocation
in England and to Mrs Beckett on 14 January (Annex B) in which
we further explain our views.
3. Also attached in is a copy of a letter
sent by our Scottish chairman to the convenor of the Environment
and Rural Development Committee of the Scottish Parliament on
22 January (Annex C), a copy of the submission by NBA Northern
Ireland on CAP reform to the Department of Agriculture on 16 January
(Annex D), and a copy of our submission to Defra on CAP reform
in England on 10 October 2003 (Annex E). The latter two files
are comparatively large but the passages relevant to the historic/hybrid
debate are under appropriate headings.
4. We are worried that Defra is straying
unnecessarily from the pure, and relatively simple, line laid
down by European Farm Commissioner, Franz Fischler, when he first
put forward his plans to create a completely new agricultural
support system.
5. Our interpretation of Mr Fischler's plans,
and it has since been confirmed many times by the man himself,
was the establishment of a system in which farmers were allowed
to wean themselves from their subsidy junkie condition by receiving
support payments that were no longer dependent on the ownership
of an animal or crops grown on land.
6. We are aware of his preference for historic
allocation of entitlement because of his stated aim that Single
Income Payment should be installed as compensation for income
cuts and not as a means of transferring money between agricultural
sectors.
7. We also believe Mr Fischler designed
decoupled payment because he saw it as a means of ensuring delivery
of the support he knew would be necessary to help a farmer convert
his business from one dependent on coupled subsidy to one that
became economically and environmentally sustainable—and
knew that historic allocation meant more of the support payment
was likely to stick in the recipient's hands than had been the
case under the coupled subsidy system in which animals and land
qualifying for coupled payments acquired additional cost.
8. When CAP reform was being negotiated
Defra was one of Mr Fischler's most ardent supporters and when
the negotiations closed almost exactly a year ago its representatives
were firmly wedded to the pure (and simple) Fischler line.
9. Much to their surprise full decoupling,
which was seen then as radical, was quickly and almost universally
accepted by farmers who almost immediately saw it as an opportunity
to cast off their subsidy strait-jacket (the complications of
qualifying for coupled subsidy imprisoned their management) and
get off the spike of farming at maximum stocking levels that had
impaled them by making it almost impossible to manage their businesses
unless they worked every Sunday and gave up holidays too.
10. We have no doubt that this willingness
to meet the challenge of decoupling was based on the assumption
that SIP allocation would be historic and therefore feel that
if Defra introduces a hybrid with stepped reduction to a fully
area based system in anything less than 10 years it will be regarded
by the majority of livestock farmers, and as far as we can see
cereal growers too, as an act of betrayal which will sour the
relationship between agriculture and government at a time when
Defra is trying to promote a partnership.
11. Defra's shift from the simple Fischler
model to its current pro-hybrid position is a huge puzzle to us.
In its original consultation paper on CAP reform in May 2003 it
dismissed the possibility of area based allocation by saying to
consultees it would be a waste of time advocating it.
12. These comments were backed by conversations
over the summer period with officials who openly described area
allocation as having "violent capacity for de-stablisation"
and German contemplation of a stepped hybrid as "absolutely
crazy".
13. Somewhere along the line the music has
changed. These same officials are now earnestly promoting the
virtues of the hybrid instead and comments on area/hybrid allocation
were invited in the October consultation paper—although
compared with current volume levels the enthusiasm, even then,
appeared relatively restrained.
14. It is our view that it the change of
mood can only have been directed by Ministers and Lord Whitty,
presumably with the consent of Mrs Beckett, did indicate to us
in November that he felt obliged to consider the hybrid option
seriously because he was worried about a successor being faced
with public perception difficulties over historic payment that
could have been avoided.
15. Lord Whitty repeated these comments
publicly, with additional firmness, at the Oxford Farming Conference
and did not, as he had said to us previously, give any indication
that he was simply testing our arguments by playing devil's advocate.
16. It may be that Defra Ministers are troubled
at the possibility of being challenged by large landowners on
human rights grounds if control of entitlement remains exclusive
to producers—as Mr Fischler would like it to be.
17. Certainly even a fraction of area based
allocation within a hybrid would close down almost every opportunity
for a tenant farmer to sell his entitlement—which effectively
puts control of its movement in the hands of the landowner and
why hybrids are being supported so heavily by the CLBA.
18. However we cannot understand why Defra
would be so troubled by this because milk quota allocation in
1984 was challenged by landowners on the same grounds but still
remains firmly in the hands of the farmer who milks the cows.
19. It may be, as we said in our letter
to him, that Lord Whitty (and the Secretary of State) are being
influenced by environmentalists—although we once again we
feel the arguments put forward by the RSPB (for example) are too
simple and ignore the negative influence of the maintenance of
current high land costs to agriculture instead of the opportunity
to at least ease them that historic allocation almost certainly
offers.
(A baseline in NBA thinking is that UK agriculture
can only respond successfully to decoupling if it can make itself
more efficient, despite its high land, labour and regulation costs,
so it is more competitive internationally.
At the same time it is imperative that UK agriculture
increases its market revenues by selling higher quality food for
more money and we are therefore disappointed at the thought that
higher land costs will persist as a result of hybrid allocation.)
20. Certainly we feel there is a distinct
danger that the foibles of a Minister (we do not know which one)
will be translated into a harmful national policy and wish to
do everything we can to persuade the government to take a more
longsighted position.
21. One of our greatest fears is therefore
that Defra will impose a hybrid in an effort to solve a problem
that may never be created.
22. Another is that it will create additional
problems by introducing the hybrid itself. Our firm belief that
the simplicity and purity of full decoupling and historic allocation
of SIP is important for UK agriculture and that hybrid allocation
will re-introduce complications of the fully coupled type we had
thought we had seen the back of.
23. Hybrids come in infinite form but they
type which introduces stepped annual transfer from historic to
full hybrid would be a persistent barrier to straight line planning,
those which have different area based rates in SDA, LFA and lowland
area (which Defra is considering so it can avoid putting a payment
of £200 per hectare on North of England grouse moors) would
introduce complications we can only guess at, and if Scotland
and Wales enjoy historic allocation at the same time as England
endures a hybrid yet another layer of complication will be complete.
24. Hybrid allocation could bring other
unexpected results. We know for example that the Department of
Agriculture in Northern Ireland has for its own special reasons
put its weight behind a permanent 80% historic/20% area based
hybrid with no further transfer from historic to area.
25. It has told us, after consulting at
least twice with the European Commission, that 20% flat rate element
within a hybrid is the least the Commission will accept.
26. However a conversation with a senior
Defra official just yesterday revealed that its interpretation
was that a flat rate element of at least 25% was necessary for
a hybrid and that permanent fixing of these proportions was not
acceptable because there would eventually have to be total transfer
between historic and flat rate.
27. Can it be that the Department in Northern
Ireland talks to different Commission officials than Defra or
could it be that even the Commission currently has no firm idea
of what is possible with hybrids and what is not?
28. Our own view is that fundamental administrative
uncertainty over the form a hybrid can take is yet another reason
why all hybrids must be avoided.
(Historic allocation is not perfect but at least
its impact is predictable and transparent.)
29. Nevertheless the latest indication from
Defra officials is that Lord Whitty appears ready to impose a
hybrid, that the announcement is most likely to be at the NFU
annual meeting on 17 February (although you may be interested
to note it might be six days earlier), and that there will then
be a consultation period to consider the hybrid options that Defra
will put before the English industry.
30. While we would welcome an opportunity
to influence the installation of the least damaging hybrid (should
that be the only option) we would still regret the further delay
in the CAP reform implementation timetable that would be the inevitable
result of extended consultation.
31. Time is slipping by, the details of
cross-compliance have still to be considered, and Defra's original
promise that farmers would have a detailed outline of the new
CAP framework in their possession by June appears in real danger
of being broken.
32. It may be that Lord Whitty and other
Defra Ministers are still undecided (certainly the TFA believes
that he is) and the NBA would be grateful if, after considering
all the evidence put before it the Select Committee accepts that
hybrid allocation is unnecessary, it could make its views clear
to him because this could tip the balance.
33. We must also add, although this is made
clear in the accompanying email files, that because the beef sector
was the most heavily dependent on coupled subsidy it would suffer
the most damage through hybrid allocation.
34. In our view this would not only undermine
the opportunities that are already opening up to develop post-BSE
markets for UK beef but deprive Defra and environmental specialists
of the cattle they will certainly need to achieve their ambitions
for landscape management and environmental protection—which
is why we are so opposed to it.
National Beef Association
January 2004
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