Examination of Witnesses (Questions 134-139)
SIR BEN
GILL AND
MR MARTIN
HAWORTH
21 JANUARY 2004
Q134 Chairman: Thank you very much for
coming. Just before I welcome our witnesses can I give a bit of
housekeeping information, at roundabout 4 o'clock there will be
a vote and for those who are unfamiliar with our proceedings we
will leave but we will be back within about ten minutes to continue
the session. May I particularly welcome Sir Ben Gill, the current
but retiring President of the National Farmers' Union and Martin
Haworth, who is Director of Policy. This is the Sir Ben Gill valedictory
session and judging by the packed numbers behind you you are as
popular a draw as ever from the first to the now sadly last time
you will be coming before this Committee. I am sure that all our
predecessor committees and their members would like at this juncture
to put on record our sincere thanks for the very considerable
amount of co-operation, information, evidence, guidance and sometimes
criticism you have given to the Committee. I take this opportunity,
whatever you move on to, to wish you well. Given your particular
involvement in European farming matters and I know an area of
great expertise and interest during your time both before and
now subsequently in terms of your presidency of the National Farmers'
Union it is very appropriate you should come before the Committee
to discuss what has turned out not just to be a mid-term review
but a fundamental re-think of the way that the current Common
Agricultural Policy operates and for farmers it will present some
very significant challenges from a world which they have got to
know to a world they are going to have to get to know. Can I ask
you the simple question, how do you think that United Kingdom
farmers, particularly those that you represent in England and
Wales, are going to react to decoupling?
Sir Ben Gill: Thank you for those
kind words, Chairman. I hope the criticism has not been too defamatory.
I did recently have another debate with a member of the Committee
in another place in the country where we came not quite to blows,
verbal blows, but it was an enjoyable occasion. Decoupling presents
enormous opportunities, it is something that we have promoted
within the NFU for the last decade since we produced the Real
Choices Report, the working group which I chaired. How are they
going to respond? They are going to do it with some degree of
caution and concern because I think there is still a degree or
lack of realisation of what it means. There is confusion, particularly
within the dairy sector, because there are those who are advising
because intervention prices will drop gradually over three years
so therefore prices must drop. That is not the case necessarily
at all. You have seen it elsewhere when intervention prices have
been cut, notably in the beef sector, and prices did not drop.
It is a matter of focusing in the market place and ensuring the
prices are determined from the market place in a logical and organised
way. This will require farmers to recognise that individually
they are insignificant in size to the bigger companies that control
the food chain, the retail sector and the catering sector and
the need for the majority of them, not all of them because there
will be individuals with niche markets who can benefit from the
new surroundings, but in general they will have to work together
with a degree of vigour and integrity and employing the best management
team to guide them to take advantage of this new situation. In
general as I go round the country British farmers are raring to
go as long as the guiding principles of decoupling are followed:
Simplification, minimal redistribution between sectors and individuals,
payment to the working farmer and not to landlords and fourthly,
and particularly critical, is that we have a system that can allow
them to focus critically and crucially on the market place.
Q135 Chairman: You know as well as I
do that there are some farmers amongst the most astute business
people in the country, they have their finger on the pulse, they
look at the world grain market, they operate at a level of sophistication
which would enable them to survive almost in any business environment
but there are others who are fighting hard to survive. We have
just come through one of the most difficult periods of farming;
my surmise is that they will not have fully focused on all that
you said. What kind of schemes either through the National Farmers'
Union, Tenant Farmers or indeed with Defra are going to have to
be put in place to enable your enthusiasm for the message and
the change to become a positive reality for farmers of all kinds?
Sir Ben Gill: That is a critical
point to make. People confuse the concept of co-operation in the
broadest terms of farmers working together in the abstract with
what is actually the case in the real world. I have been a long-term
advocate of co-operation but co-operation per se does not
deliver results, co-operation with bad management is worse than
private companies with bad management because it gives false hope.
One of the aspects where we desperately need to do a lot of work,
where we need a lot of resource and help is in the development
of that expertise to supply, support and manage those groups that
we need to build on, as others have already done elsewhere in
Europe to their quite clear benefit and we need to do it here.
The problems are deepened by the fact that we have this historic
reality that we have not drawn down over the years, we have talked
about this before in this Committee, the European funds that have
been available. Whereas we are facing higher modulation France,
for example, had to stop modulation when it was voluntary because
they could not spend the money because they already had five times
as much pro rata as we have to help them with these structural
issues. Very real, very focused and they need to be developed.
Q136 Chairman: How should farmers regard
the decoupled payment? Will some say, "that is great, they
are going to give me the same money in a different way. All I
have to do is add my income from the crop to the decoupled payment
and bingo I have roughly the same amount of cash". Is that
not good news or should they look at it in a totally different
way, should they be looking at crops as stand-alone profit centres,
the decoupled money for use in other ways of diversifying the
farm? What is your union's line on how to look at this money?
Sir Ben Gill: They should look
upon each operation in isolation of anything else. They should
look at the profitability, or lack of it, at the margin at each
separate enterprise on the business and not incorporate the elements
of the decoupled payment that will pertain to it. That is crucial
because this is multi-focused, only by doing that will the market
really work. If it means that less productive parts of the land
drop out of production then that is a factor in there and that
will be drawn in if and when the market demand rises to bring
that back into production. It could well mean also that the change
that we saw through the late '80s and throughout the '90s of the
incentivisation to go from grassland to arable is reversed on
the moor and marshlands. On my own farm in North Yorkshire where
I have a mixture of reasonable and poor soils I have already started
to incorporate grass much more back into the rotation than I was
doing five or six years ago because I see that drive will come.
Q137 Chairman: Can we look briefly, before
our vote comes, at the sectoral changes. The Commission have done
some work and they talk about a relatively small, 2.7%, decline
in beef but in some evidence which the Committee received from
Dr James Jones, the Head of Farm Management at the Royal Agricultural
College in Cirencester, his comment in his paper to the Committee
said that production is likely to fall substantially. [5]It
is a very different view. In his paper Dr Jones goes on to talk
about the winter wheat and other cereals and gives a more buoyant
picture as far the sheep regime is concerned and gives us a commentary
about dairy and the difficulties they will face, perhaps you might
share with us your thoughts about the sectoral changes?
Sir Ben Gill: Forgive me for being
cynical about economic analysis of the beef sector, I have seen
many and they are notoriously prone to be inaccurate and misguided.
The reality is that very many people keep beef not as a first
or second enterprise but as a third or fourth stream, it is something
which adds on. The profitability or otherwise of that fourth stream
is quite often dependent on the profitability of another sector.
If potatoes have a good time and they have some spare capital
they may be predisposed to buy cattle to feed on reject potatoes.
The profitability margins are very different. It is interesting
to look at the dynamic of how people will react. Interesting was
an observation that was made to me earlier in the year before
the settlement by three farmers, older members of our community,
one from Wales, one from Scotland and one from England.
Q138 Chairman: That sounds like the start
of a good joke.
Sir Ben Gill: Thank you, Chairman.
Each of them told me they looked at the reforms and decided they
were going to reduce their beef production. Each of them without
making any comment gave them to their children, two sons and one
daughter and asked them to read the proposals and tell them what
they thought they would do. In all three cases, this is in the
space of one week, and pure coincidence, the children came back
to their father and said, "this is a marvellous opportunity,
Dad, we will expand the beef sector". The critical factor
as much as anything will be who will start to run the businesses,
will this be an opportunity for father to take a back seat and
for the sons to come in? I think one of the opportunities that
we will see evolve quite quickly is with the decoupling payment
there will be much more opportunities for young, determined farmers
to expand their businesses and for those who want to take an easier
role in life to do so.
Q139 Chairman: The reverse of that activity
is set aside. Some people were a bit surprised to see in a market-driven
change to the CAP you were having an imposed restriction as far
as set aside is concerned. Do you have a feel as to how people
will react as to the amount of land they want to keep in production
as opposed to the amount of land they want to take out in the
form of set aside?
Sir Ben Gill: I think being very
clear on the retention of set aside a requirement within reform
was a fundamental mistake. It is a matter of let us face cold
turkey and get on with this in the new period in which we live.
There is an ability for farmers to grow other products on their
land, the requirement of keeping set aside is a confusion, particularly
for those growing non-food crops, also when the Commission has
had to come in and reduce that 10% set aside to 5%, typical confusion.
The arguments with the officials was that we are concerned about
over-production, this is a nonsense, this is market focus. The
Spanish said very early on when they opposed decoupling they did
not believe you could have decoupling because it meant perhaps
one million hectares of their cereal land would go out of production.
I asked why and they said actually before the CAP it was dry rotation
and it only cropped every three years, only producing two or three
or tonnes per hectare. That land should not be in production,
I do not believe it should, that is logical. Let that come out
at the margin because the nonsense was that you ended up producing
several million tonnes of grain at the margin that was costing
a lot of money to support in the sector and we were all the poorer
for it. I hope what will happen, notwithstanding we have kept
some set aside, is the market will work and if the price drops
set aside will rise, if the market rises set aside will fall.
I hope the Commission will see the error of their ways and remove
that requirement at the earliest opportunity.
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