House of Commons - Environment, Food and Rural Affairs

Select Committee on Environment, Food and Rural Affairs Seventeenth Report

3 Impact of enlargement on agriculture in the UK

34. Having considered the broader context of how enlargement affects the agricultural situation in the NMS, we turn our attention to the impact of enlargement on agriculture in the UK and the limited areas in which the Department for Environment, Food and Rural Affairs is able to play an influencing role. In particular, we focussed on the opportunities and threats presented to the UK's agricultural and food sector by an expanded EU.

Opportunities

Trade in quality products

35. According to the NFU, UK producers should be well placed to satisfy rising demand for value-added and premium products, as prosperity in the NMS increases. Poultry meat, cheese and other luxury dairy products stand out as areas of opportunity, since the NMS will not be able to supply their own rising consumption of these particular products for some years. Producers in other EU countries will, of course, also be competing with us for these potentially lucrative markets.[44]

36. In his evidence, the Minister for Farming, Food and Sustainable Energy confirmed that the UK was already exporting products to the NMS, "everything from prime British meat through to Scotch Whisky".[45] He also explained that the major promoter of exports was Food From Britain, a non-departmental public body established under the Agricultural Marketing Act 1983. While Food From Britain had been allocated extra funds, none of this was earmarked to target specifically the markets of the NMS.[46]

37. The NFU encouraged the UK authorities to look at the way in which other countries had developed export opportunities. It also suggested that more could be done to promote UK produce in the NMS, through closer co-operation between Food From Britain and the diplomatic representatives located in the NMS.[47]

Investment

38. In the retail sector, Tesco has moved quickly to establish itself in the NMS and is already the biggest food retailer in Poland and Hungary.[48] During our visit, it was clear that Tesco was keen to develop local supply chains, working with local producers in Poland and Hungary.[49] These types of initiatives could have an important effect in improving the quality of food production in the NMS and may eventually lead to the creation of export opportunities for them.

39. Other examples of UK investment were provided during the course of the inquiry;[50] however, there was a feeling that other countries had been more proactive in seeking out opportunities.[51] The Government should do more to identify investment opportunities and encourage exports of UK farm produce to the NMS. Specific funds should be allocated to target these new market opportunities, with improved trading relationships facilitated by UK embassies.

Labour supply

40. Hidden unemployment in CEEC agriculture provides a potential source of migrants to the rest of the EU. Since the UK was one of the few countries to allow almost completely free movement of labour from the day of enlargement, there may be a significant impact on the UK market for casual agricultural labour.

41. Prior to accession, the Seasonal Agricultural Workers Scheme (SAWS) had provided legal access to short-term farm employment for many CEEC nationals. Now that these employment opportunities are no longer constrained to solely agricultural activities, migrants from the NMS may be attracted to other sectors such as domestic services or construction. Developments of this kind are of particular importance to the horticultural sector, where labour accounts for up to 65% of production costs.[52]

42. Further research is required in order to obtain a clearer picture of the effects of enlargement on the UK agricultural labour market. As has been noted in previous inquiries, it is particularly important that migrants from the NMS (and elsewhere) are protected from exploitation by unscrupulous gangmasters.[53]

Threats

Competition

43. Competitive pressure is likely to build over time, as agriculture in the NMS benefits from investment and restructuring. In some sectors, however, UK farmers could face more immediate competition. The Minister cited the fruit sector as an example, explaining that the threat to the UK might not be seen directly in the form of imports from the NMS, but from a trade displacement effect, with UK exports being undercut by cheaper produce.[54] UK competitiveness would also be adversely affected if the euro were to depreciate against the pound.[55]

Food safety

44. Concerns were expressed regarding the permeability of the new eastern border of the EU, which now stretches from Estonia down to Slovenia. The FDF stressed the need for vigilance against fraud and the threat of illegal imports reaching the UK market, having come through the new EU border and across the NMS. This was particularly important with respect to consumer confidence in food; the worse case scenario was a repeat of the crisis caused by the foot and mouth outbreak.[56]

Reduced rural development funds

45. The size and share-out of the budget for rural development for the financial perspective 2007-13 is currently under review. Arguments have focussed on the proportion of the budget that will go to the NMS, given that many longer-standing EU members are having to cut back on spending.

46. The Minister did his best to allay fears that the expansion of the EU would threaten the UK's share of rural funding. While he accepted that enlargement would result in a significant reduction in the amount of EU structural monies going into most regions of the UK, he was optimistic about the possibility of securing a fairer share of the rural development budget.[57]

47. Most of the evidence we heard tended to focus on the positive aspects of enlargement, rather than the negative, although other minor threats were also touched on. Overall, we consider that enlargement represents more of a challenge than a threat to the UK farmer.

44 National Farmers' Union, EU Enlargement: The Challenge for British Farming, (London, 2004), p 1 Back

45 Q 165 Back

46 Qq 174, 176-177, 185 [Mr Lawrence] Back

47 Q 82 Back

48 Qq 179, 184 Back

49 Qq 123, 179 Back

50 Ev 125 Back

51 Q 182 Back

52 National Farmers' Union, EU Enlargement: The Challenge for British Farming, (London, 2004), p 16 Back

53 See Environment, Food and Rural Affairs Committee, Fourteenth Report of Session 2002-03, Gangmasters, HC 691; and Environment, Food and Rural Affairs Committee, Eighth Report of Session 2003-04, Gangmasters (follow up), HC 455, paras 29-30. Back

54 Q 166 Back

55 Ev 70 Back