Examination of Witnesses (Questions 380-394)
8 MARCH 2004
LORD WHITTY
AND MR
ANDREW SLADE
Q380 Mr Jack: So you do not know what
the impact is going to be of the policy you have adopted on SDAs?
Lord Whitty: We know what the
overall effects will be but we do not know, and we have not got
the modelling, what the effect will be in individual sectors.
Indeed when I was referring earlier to the earlier modelling,
the redistribution would have actually greatly benefited, disproportionately
benefited, the SDA area. We have now moved away from that to put
the SDA area—
Q381 Mr Jack: Mr Wiggin expressed joy
at the fact there was still a chance for you to consider these
matters and decide what you were going to do. How are you going
to decide what you are going to do when you do not know what the
effect is you want to respond to?
Lord Whitty: There are two different
effects. One is the effect of not having a differentiation, the
other is, is there an alternative differentiation which would
be less distorting. If there is an alternative differentiation,
is that acceptable in terms of the rules which were agreed last
June?
Q382 Mr Jack: It sounds to me as if you
have been giving a little thought to these less distorting and
alternative methods, perhaps you would like to share your thinking
with the Committee on this?
Lord Whitty: I would not at the
moment. The issue is, if you are going to use any differentiation
it has to be one which is established legally to the satisfaction
of the Commission. The most obvious such differentiation is the
SDA, there is not a very obvious alternative. That is a dilemma
we have. Wherever you draw the boundary, there will be anomalies
either side of the boundary. I regret this particular farmer would
appear to be particularly suffering from that because he has an
immediate comparable operation down the hill, but there will undoubtedly
be—and we are talking about a period of eights years' adaptation—changes
in structure of ownership to adapt to the new situation. But there
will be some downsides. Some of those downsides, as I said to
Mr Tipping earlier, could be addressed by the introduction of
environmental schemes which would benefit people who were still
grazing cattle or sheep.
Q383 Mr Jack: You are actively looking
at all of these options?
Lord Whitty: Yes.
Q384 Mr Jack: When do you think you might
be able to come to some conclusions?
Lord Whitty: There are a lot of
aspects of this policy on which we need further consideration:
the nature of cross-compliance, for example, on which we will
be consulting. There are others on which we have to wait for the
final definition by the EU rules which we are not now expecting
for another couple of months. That takes us to at least May and
probably June before we can finally indicate the total structure
of this package.
Q385 Mr Jack: It sounds like what I call
the "ministerial summer" when you might just be able
to say something further about this.
Lord Whitty: Roughly that order
of timescale.
Q386 Mr Jack: Finally in terms of the
differentials, because the same radio interview compared and contrasted
the Scotland, Wales, England situation, which Mr Wiggin addressed
earlier, are you worried at all about quota migration from England
to Scotland? Again some of the differentials, farm versus farm
of similar size, are quite substantial, and Scottish farmers might
be busy plundering our quota. Are you not worried about that?
Lord Whitty: They can buy the
quota if there is quota on the market, but I go back to my earlier
point, that in a decoupled system the Scottish farmer will be
getting the money on the basis of his land. There is no particular
point, unless he can make a profit out of it, acquiring additional
quota. If there is profit to be made out of it, then the English
farmer will be faced with exactly that same situation and no doubt
will not wish to sell him the quota, or at least sell it at a
rather inflated price. So I do not think there will be a general
migration of quota, but there is a situation where that obviously
could happen, and because of the psychology of the different methods
of payment it is possible there will be some slight tendency in
that direction, but I do not think it is a very rational economic
one.
Q387 Chairman: What we have been trying
to tease out is in a sense this industry is being driven towards
greater efficiency and it is going to be driven towards greater
efficiency up the food chain whether we like it or not, and there
may be some things we will have to say in our report about that,
but at the same time that producer, potentially from what we are
hearing, is possibly going to be moving in a slightly different
direction away from greater efficiency if the numbers are to be
believed. I think the one thing which surprised me was the notion
that there is a neutral effect in terms of the SDAs when in effect
we do not really know that yet because the numbers have not yet
been calculated. You may want to come back to us in terms of additional
evidence to help us tease out what implication that is going to
have, but I will say no more.
Lord Whitty: I did not say there
would be a neutral effect in the SDA, what I said was the amount
of money which is currently within the SDA would remain within
the SDA, it would clearly be redistributed in a somewhat different
way.
Chairman: It is not going from the SDA
into other areas, so I would take that to be a neutral effect.
Within the SDAs there will be some redistribution but that obviously
needs to be talked through quite carefully.
Q388 Mr Wiggin: In your answer to Mr
Jack you talked about agriculture based on the support it can
receive, what I am unhappy about is that in my first question
I think I pointed out how you would drive farmers essentially
to farm more intensively in severely disadvantaged areas, and
there is a danger of course they will simply give up and then
we lose the environmental benefit, because if the SDAs are at
such a disadvantage then their land value will also fall, so you
will hit them twice, not only with a lower flat rate payment but
also with a drop in their land value. I am very worried about
that. You also mentioned moorland, and my particular area and
the area we were talking about in Derbyshire are clearly not moorland,
so the legal definition of SDA which you were talking about clearly
does not apply in a uniform way, and perhaps that is also worth
having a look at.
Lord Whitty: The SDA includes
all moorland.
Q389 Mr Wiggin: It is moorland and highland,
is it not?
Lord Whitty: Yes, it includes
lots of other areas which are not moorland.
Mr Wiggin: That is the danger, that people
tend to think of it as moorland and it is clearly not. Thank you.
Q390 Chairman: We have now finished our
questions. There were two bits of evidence which we wished to
have back in terms of supplementary written evidence. There were
Mr Jack's two points, firstly in terms of helping us to understand
how the Forum operates and the terms of reference, even though
there are no formal terms of reference it would be useful to know
what the operating system is. Then the second issue is where are
we with regard to some of the negotiations on the actual figures.
We could do with some dates but also some understanding of what
is likely to be happening over the next few months. Is that something
you could provide us with?
Lord Whitty: I am not sure what
you mean by "negotiations".
Chairman: People are coming to you asking
you to look again at some of the aspects of this. "Negotiation"
is maybe too strong a word, "discussion" perhaps, as
to how that will take effect.
Q391 Mr Jack: If you could include what
I call the mechanical working-out of the numbers to illustrate
the points you were making, so I can personally properly understand,
compare and contrast between SDA and non-SDA areas? Perhaps you
could put a little model in for us which would certainly help
me.
Lord Whitty: I think we can do
modelling to that extent.
Mr Jack: Thank you.
Q392 Chairman: Thank you for your evidence.
I am sure you will read it. I do not need to say that you cannot
undo what you have so far done but there may be additional points.
Lord Whitty: Indeed. Thank you
very much.
Q393 Chairman: If I can ask everyone
to leave because we are now going to try and make some sense of
what form our report is going to take.
Lord Whitty: Good luck!
Q394 Chairman: All I would say is we
need every bit of good luck to make sense of it. If people would
not mind having their discussions outside because we will have
to struggle on a bit longer.
Lord Whitty: Thank you.
| 
