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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 226-ii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE ENVIRONMENT, FOOD AND RURAL AFFAIRS COMMITTEE
Implementation of CAP Reform in the UK
Wednesday 21 January 2004 SIR BEN GILL and MR MARTIN HAWORTH Evidence heard in Public Questions 134 - 182
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Environment, Food and Rural Affairs Committee on Wednesday 21 January 2004 Members present Mr Michael Jack, in the Chair Mr Colin Breed Mr David Drew Mr Mark Lazarowicz Mr David Lepper Mr Austin Mitchell Diana Organ Joan Ruddock Alan Simpson David Taylor Paddy Tipping Mr Bill Wiggin ________________ Memorandum submitted by the National Farmers' Union Examination of Witnesses Witnesses: Sir Ben Gill, President and Mr Martin Haworth, Director of Policy, National Farmers' Union, examined. Q1 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 I know 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 simply 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. Q2 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 voluntarily 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. Q3 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 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 more 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. Q4 Chairman: Can we look briefly before our vote comes at the sectoral changes, when I look 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. We have 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. Q5 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. Q6 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 any 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. Q7 Mr Wiggin: I think we know the answer to this but it is the reasons I am concerned with, which option for implementing the single farm payment is favoured by the NFU and why? That is the bit that we are really look for. Sir Ben Gill: You may have seen in my statement I made yesterday forming my quarterly National Council meeting we took a very clear vote on Monday and it was 60 in favour of the historic payment, four against and for the record four abstained. Q8 Mr Wiggin: I would like to pick you up, you have not answered why which was the key question? Sir Ben Gill: I was getting round to that. To be honest when you look at the options, originally we started with historic only and then the regional averaging came in. There is no simple solution, there is no one solution whether it is historic, regional averaging or hybrid version that solves the problems. If you look, basically they are two extremes regional averaging and historic. There are benefits from regional averaging but there are big down sides, equally with historic there are some problems there with the supported sector. Many have added to that the problems of the inter regnum issues and said that the inter regnum issues to which the changed farming patterns between the base period and the starting point are a problem by themselves that would be addressed if you gave everybody the same amount of money, but they are not intrinsically a problem consistent with historic they are a problem because the out-turn was not consistent with the proposals that we have made, which would have meant that the rights were determined by the average in the base period but payable to the person in occupation or farming the land at the start that would have occupied that. It seems from recent dialogues and statements from the Commission as recently as last Friday the Commission are seeking to mitigate these effects. If the wording can be tightened up, which we believe is possible, then all of those who have sold on land will not be able by devious schemes dreamed up by certain professional advisers, who shall remain nameless, to try and draw back the rights from those who sold them, never expecting they were going to have a right again. That being the case those rights will pass on very easily to the person who is farming today. Chairman: We will he adjourn for a minimum of ten minutes, we will be as quick as possible. The Committee suspended from 4.03 pm to 4.13 pm for a division in the House
Q9 Mr Wiggin: Under the historic option how many farms will be calling on the national reserve to address problems caused by changes in the structure since the start of the reference period? How could the new regulations have been better designed to reduce the administrative problem? Sir Ben Gill: It is impossible to give any estimate of the number of farms because it involves a complex of not just the farms that have changed ownership but changed farming arrangements. It could be very significant, depending on how creative or not other people involved can be. How can it be addressed? It can be addressed by first of all ensuring that individuals who disposed of their farming interests during the reference period or between the reference period and the start date are not by devious ways allowed to try and claim eligibility for the base premium, although they would not be able to claim the premium itself, hence it is held in abeyance for three years until it is confiscated and paid. Given there is a finite area of land in the country then that would ensure that there is a maximum amount of land that will be redistributed and passed on to the people who are farming the land of the day. Given the statement by the Commission in the regulation proposed last Friday they tend to prioritise those people for the national reserve that should help a long way. We would have preferred a simpler system that we put forward together with the CLA and the TFA to the Government and hence to the Commission, as I said earlier, whereby the entitlement was created in the base period but was paid to the person farming it on 15 May in the period to which the reforms start. Q10 Mr Wiggin: Earlier when you talked about the historic solution can you do anything for producers growing unsupported crops? Sir Ben Gill: I have spent more time on this particular issue since the proposals came out about a year ago now trying to find a way through this problem. We export a number of options and I did in April last year have discussions with Commissioner Franz Fischler on the concept of what we call a positive and a negative list. That has not been deemed appropriate for a variety of reasons that I was not party to in discussions but we have ended up with a negative list which I think for many is seen to be giving the best of both worlds. Essentially if you look at the unsupported sector I think the sector that really gives most concern is the exposure of growers who are under requirement on annual contracts say for freezing who have lost their negotiating right because they have no ability to say, if you will not give me a price I will go back into cereals because they are at a disadvantage without them. We would like there to be some ability to address that issue if one decides they wish to go out of unsupported crops for a determined period to have been eligible, assuming the land was eligible and registered under the IACS regime to do so, to have done so and have had some recognition of the national reserve. The national reserve will be limited and whether or not there will be an ability in there to avail of that sort of option is somewhat speculative. Q11 Mr Wiggin: That is really your wish list. What you are saying is it sounds nice but it is not available, is it? There is not any facility to support somebody in the position you just described at this stage. Sir Ben Gill: There is not at this stage it just depends on how the Government chooses to prioritise matters once it has made the first decision on what methodology has been adopted for the payment of the historic payment. Q12 Mr Wiggin: There is another problem that essentially the thinking behind the change is that the money should be more environmentally driven and therefore the historic option does not really address what the ministers who put this together actually wanted. Sir Ben Gill: I do not believe that is the case. I believe the payment is essentially an economic instrument, the environmental option will come under Pillar II measures. Yes, there is to be a gradual increase in redistribution from Pillar I to Pillar II as the modulation rate increases in wider Europe from 3% to 4% to 5%. It is likely, however, that the Government will take advantage of the national derogation and choose to implement a higher rate in the United Kingdom on the back of plans that were agreed and proposed two or three years ago at the start of last plan with the Treasury and with the Commission which could result in a United Kingdom modulation rate approaching 10% or somewhere of that order, I am purely speculating, and it could well grade up over time, which will put us at a disadvantage. That will allow the money to go into the environmental schemes, particularly the so-called entry level scheme that is currently under trial. Q13 Mr Wiggin: Why do you believe the greater scope for trade and entitlement is a positive feature that the historic option offers? Sir Ben Gill: I was not aware that it was a positive feature in reality. If we have put that in our statement I must review what we said. Q14 Mr Wiggin: Page 18, paragraph 17. Sir Ben Gill: Let me see. Q15 Mr Wiggin: Why do we not come back to it. Sir Ben Gill: I will get an answer in a second. What we need to have, and I am guessing now, the context was that would allow the redistribution between those who had gone out of business and those who are in business, paragraph 17. I see the point it is making there. The particular point there is that if you go for a regional averaging payment system because everybody has got it so it is not trading per se it will tend to be capitalised in the land of value and hence will move to the landlord because he has it anyway and it will be in the rental feature therefore or in the capital value. It was a clear intention laid down by Commissioner Fischler when he changed his outline from the proposals that came out in the summer of 2002 to the formal proposals year ago that he moved away from being attached to the landowner to the farmer, and that is a fundamental principle. Q16 Chairman: The Committee has received evidence to indicate, if I have understood it correctly, that there is some work being done by some land agents to make future renewals of leases, for example rental agreements, subject to them having contracted to them the payment by whatever route is ultimately decided. Have you picked up any intelligence about actions of land agents like that? Sir Ben Gill: I did refer a few minutes ago to the behaviour of certain groups of individuals and the methodologies they are suggesting might be implemented to avail of access to monies that we do not believe are rightfully theirs. I think their attempts in the future will be fundamentally undermined by the reality in that the market place will determine the more so you go down the historic route because then if you determine the land rentals it will on the basis of the economic earning capacity from the market place and the not the payment itself which will be attributable and payable to the working farmer. Q17 Mr Drew: Thank you, Chairman. Can I pull in a sense the two areas we have been questioning you upon together and look at the politics of this, with the best will in the world you have handed the Government a hospital pass here, it was hoping you would come up as a compromise with the CLA and TFA that we saw last week and you have come down on the side of the TFA, is there any compromises? We are going to look at the hybrid in a minute so I do want to go into that in terms of detail. Lord Larry Whitty goes to Oxford and people want answers, he is sat on the fence and has come up with this wonderful idea of a dynamic hybrid largely because he thinks if the three organisations could possibly move towards one another, TFA are saying historic or we do not talk to you, CLA are saying if you do not go towards some regional payment we are out of the equation and we are looking to the NFU for this wonderful role of political compromise and you have not done it, what do you tell Larry Whitty now? Sir Ben Gill: I therefore deduce that I have failed my country! Mr Drew: It is a bit like the Government over top up fees. You know, we are looking for an historic compromise! Q18 Mr Breed: Total failure! Sir Ben Gill: I can now rest assured I shall go out on a real low. Thank you for that. Q19 Mr Drew: That might even be taken back! Sir Ben Gill: I could make comparisons, but I will not. Can I just go back and remind the Committee that the basis of the reform was to decouple the payment. Whatever route you take to allocate it, it is inevitably artificial, but you have to have some bench mark within which to locate that payment lest you affect or exacerbate the tensions that will inevitably come about from the frictional change that has to be developed in the farming industry. So the logic, which was the logic originally put forward by Commissioner Fischler, is that you use the historic basis. It was only late on in the negotiations, principally at the request of Germany, who had their own peculiar political raison d'etre, which you may want to question me on if you wish. I will leave that until later. Q20 Chairman: The language or the pronunciation! Sir Ben Gill: Thank you, Chairman. The concept of regional averaging came into play. As for where other organisations are, we are in the business of representing to our members what we think the present kinds of options are, articulating them and asking for their response. We will do that faithfully, and we have come to that conclusion. I think the point that Lord Whitty is making is somewhat different to the position of the Country Land Owners and Businesses Association. They have sought a compromise which actually delivered the worst of both worlds. From the dialogue I have had with Lord Whitty it would suggest his primary concern is that you start with historic, but how do you justify that bench mark in a period of X years down the road when four or five years end. That is a very different concern from the concern that preoccupied the land owners, who have been obviously focused, and understandably so, on seeking to devise a system that minimised the redistribution but still had significant redistribution and allowed them at the same time to claim the value of the money back into the land owners' pockets. I think it would be rather ironic if the current Government chose to evolve a system that benefited the landlords rather than the working farmers. Q21 Mr Drew: Some of us would be surprised, but that is a statement on the internal Labour Party policies. Can I tease out from you so that we have got a very clear picture: if historic wins, do you think that the winning side will not get as much as it thinks it might get out of this, so there is a possible compromise in the sense that the losing side will not be losing as much as it anticipates it will be getting, or not getting out of this? Sir Ben Gill: I would prefer not to look upon it as a winning or a losing side, I would prefer to look upon it as finding a solution that goes through and delivers the objectives of the reform. Obviously, if the Government chooses to go down the historic version, then we would immediately, indeed we have done some preparation, seek to analyse how we can mitigate the problems that have not been resolved by the historic version, or the interregnum issues that would still need to be resolved, by looking at how they can be best categorised and then addressed. There is some preliminary work that we have done in trying to draw that together, but obviously we cannot take it further until the final decision is taken by the Government. Q22 Mr Breed: Can I try to build on that? You said earlier on, in fact, that both historic and regional averages had pros and cons, although you indicated that historic had more pros than cons and the reverse of the other. Why therefore is the NFU so antagonistic towards the whole process of a hybrid in that sense, because I think David was trying to point to the fact that we are trying to get to some sort of compromise, but you seem to be as equally against any hybrid alternative as you are against regional averages? Sir Ben Gill: Before I specifically answer the question, I think it almost falls into the parallel of those who sought to compromise in the reform proposal. We have the camps for decoupling, the camps against decoupling, so the brilliant person came up with, "Let us do partial recoupling." That is the compromise. I think, increasingly, when people looked at it, although they originally thought, "This is a brilliant option", they have come to recognise it as the worst of both worlds, and you get the best of none and the worst of both. I fear that with many of the hybrids that have been put about this is the case. You will, for example, with the hybrid system that has been purported - I think it is HARC - you still have the problems that the payment will essentially be capitalised into the landlord's ownership. Furthermore, even with the minimal redistribution that is conceptualised in that hypothetical solution, you are going to see significant redistribution of the payments still in the livestock sector but in the arable sector as well, because the estimates are that within the acreage of arable crops in the United Kingdom the unsupported sector, together with the area of crop land that is currently counted as forage - I am thinking of cereals that are used for silage - amounts to something in excess of 14%, and we believe there is another significant area of land which will be used, say, on dairy farms, who are not subject to HARC's amount and have not been claiming down for growing maize or fodder beet, which would logically, because they are both arable crops, be able to claim the arable premium. In the HARC system, because you have a differential between the arable payment, the area payment and the livestock, of course everybody would be seeking to get into the arable payment as much as possible and with the big reservoir of so-called temporary grass land and with no record on many dairy farms, pure dairy farms, or, indeed, pure sheep farms, I could see there would be great difficulty in identifying which land was arable and which was not in those base periods, in the relevant period. Q23 Mr Breed: So you do not believe that there is any hybrid model that you could think of which is preferable to any other? In fact, the whole concept of a hybrid is pure fudge. It has been seen to fail in the past, because we have tried to get these compromises, and therefore this is such an important moment in time that they have to have a more purist rather than compromised situation. Therefore you would not actually consider any hybrid model as being preferable to another? Sir Ben Gill: To say I would not consider them would be incorrect. I have spent a long time considering them and looking at variations and trying to find solutions and our economists under Martin have worked very hard to try and find ways through this, but to date nobody has provided a solution that will best address those four principles. Shall I repeat them just to keep them fresh: simplification, minimal redistribution, market focus, payment to the working, the practising, farmer. The problem with any degree of hybrid is that you are losing the ability to pay to the working farmer and you are affording significant redistribution from the start. Q24 Mr Breed: If we cannot commence with a hybrid system, supposing you started with an historic system which then was reviewed fairly swiftly, perhaps four or five years? Sir Ben Gill: I think, and have said publicly, that I recognise that, once the system has bedded in, there will be a need to review how the payments are being made and whether or not there needs to be some reassessment of that; but I am also anxious to point out that I believe there will be, because of the market place working with a degree of freedom, a redistribution of the absolute levels of payments because land does change hands, and that degree of land, the amount of land that changes hands in the first year or two, will be enhanced because there is a pent up demand because people have not been transferring land in normal quantities in the last 18 months. Furthermore, because of the flexibilities that will be delivered by decoupling, I think there will be more land changing hands anyway because it will facilitate the younger farmer coming in. That being the case, there will be an averaging of the payments, which in itself will be affected by the increasing numbers of modulation, the potential inclusion or introduction of financial disciplines, which always, when they are on a percentage basis, will deduct more from the bigger levels of payment than the smaller ones. But, I think, even given those points, it is perfectly reasonable to say we should review that, but we should review that, I think importantly, from a European base. A concern I have is that we will do something in Britain that creates a complex system which is out of synchronisation with others in Europe. The absolute perversity would be that if we in Briton, who I would like to think would be accepted to have been the champions of decoupling, end up with a complex system, while others such as France and Ireland, who were officially significantly opposed, end up with a simplistic system that they can benefit from because they have gone down the historic route. That really would be most ironic and particularly infuriating for myself. Q25 Chairman: Just to build on from that, we have a system at the moment where by the introduction of these changes you have a certain amount of repatriation of the CAP to Member States who can sustain some of the existing mechanisms or go to the most extreme or pure - depending on which word you like - version of modulation and decoupling which the United Kingdom appears to have gone down. Are you saying that in the future you want to see the whole of Europe converge to a single model? Sir Ben Gill: I suspect we will find that others in Europe who have chosen to go down the partial decoupling route - I presume that is what you are referring to - will see the error of their ways. For example, if France chooses to partially decouple cereals, I can see and I am well aware that the cereal farmers will be up in arms that they have copped the bureaucracy of repeated IACS applications and all the rigmarole and bureaucracy that goes with that, while we in Britain have not. There would be other sides to it, particularly in the beef sector, where it will take longer for the benefits of the proper market to come through, and that is to be regretted. I made the point at the time of the settlement that I felt that the options of recoupling or partial decoupling had gone far too far, but, as a means to an end, we had to accept it. Q26 Mr Wiggin: I am grateful for the list of the four principles you used. It is about the fourth one that I have difficulty. If you are looking at hybrids, redistributing money to the farmers, which I think is what you said, it does present presumably quite a lot of the problems that you have when looking at the difficulties in choosing the perfect hybrid. The reason I am bringing this up - and I have nothing against farmers - but I understood the intention was to make this a more environmentally sensitive payment. Therefore the question as to whether or not the farmer gets the money is not necessarily one of the four principles that perhaps you might be addressing. I do not have any objection to the fact the farmer gets the money, but I think we have to be very careful about why you have included that. Mr Haworth: Yes. I think it is a mistake to say that these are environmental payments. These were conceived by the Commission as being payments which were a continuation of the compensation which farmers were given for various price cuts, and in the Commission's first idea they only had the idea of a historic system. It was because of the pressure from a couple of Member States, i.e. Germany and Denmark, that they introduced this regional approach, but if the intention had been to make these entirely environmental payments, there would have been, of course, a logic to make them average and indeed equal across the whole of Europe. That indeed is what has happened with our old hill payments. That is a precise analogy, where we used to have headage payments and they moved to being at a flat rate on a hectare basis; but that was not the intention of this reform and I think it is a mistake to think it was the intention. It is true that the payments have conditions imposed on them which are environmental, but from that you cannot reach the conclusion that these are meant to be payments for environmental management. Sir Ben Gill: I think there is a further point that we should not lose sight of. The various sectors are at a different stage of evolution, and we must not lose sight of the fact that the dairy sector is only going through the basic reform that other sectors have gone through earlier with compensated price cuts. So that is part of the whole and indicates and supports the concept that the whole of pillar one is that the economic instrument, albeit with cross-compliance, but cross-compliance set at the level of legal need and good agricultural practice, which we need to be doing anyway, which is saying, "We are going to check you are doing it if you are going to get paid", and the environmental payment should come from pillar two. A separate argument - and it picks up on a point that, I think, Mr Breed was just referring to - was that over time the movement from pillar one to pillar two may well increase beyond the parameters set in the reform documents. There is a body of opinion that that could well be significant over time as we move on, because that money could well be used very much to the benefit of helping improve the infrastructural needs that you, Chairman, were talking about at the start of getting into helping businesses develop themselves and giving the training necessary. You could hypothecate a case, if that were done effectively and efficiently, which regrettably the current arrangement does not permit, but if it were done effectively and efficiently, you could get into not a vicious circle downwards but a virtual circle upwards because you improve the market returns, that liberates more money to help you improve the structures which then further helps you in the world situation to which we are to become increasingly exposed. Q27 Mr Wiggin: Can I follow on with the other point you made, which is that you would hope these changes will see younger farmers coming in? Is there not a risk that these payments will be a barrier, because new people will not get them and therefore you will again have a two-tier pricing system? Sir Ben Gill: No, I do not think that is necessarily the case. It is quite possible in one scenario that farmer A decides, "I want to take life a bit easier, but I want to live on the farm. So I have got to do the cross-compliance, I have got to a schedule to show that is happening and so will allow young Joe here to come and farm my land, and he may only pay a nominal rent, or I may pay him £5 an acre, say, in recognition of the fact that I will be deriving the premium payment for doing that." So you are paying him to do the cross-compliance for you, which allows him to focus on the market place. That is a fundamental possibility. It comes to back to the point the Chairman made at the start. On what basis should you determine your economic activity? You should determine it solely on the market place. For those who talk about the problems of buying a right to further underline this point, I cannot conceive that if somebody goes into a business outright why they would want to buy the right? What are you doing? If you have got a sum of money that you would need to have to buy the right, all you are doing is buying a right to a discounted cash flow, actually a very uncertain discounted cash flow because you do not know how long it is going to be time-limited, you do not know the levels of modulation and financial discipline or any other deductions that may come about. I suggest you might be far more secure taking that capital sum and investing it with an appropriate financial institution to give you an income stream, or, indeed, in more land or a different business. Q28 Mr Mitchell: What system for the single farm payment are the other parts of the UK likely to chose? Mr Haworth: As far as we know, in Scotland they have not made a decision yet but have indicated very firmly that they will adopt an historic approach. In Wales, again they have not made an announcement. We believe they are not likely to do that until mid February, but the minister Carwyn Jones has publicly said several times that he personally favours the historic approach and would need to be persuaded, with very strong arguments, to take any other approach. In Ulster there seems to be a general consensus in favour of a very complicated hybrid system. We do not need to go into the details of that, but it is important to understand the reasons why they are in favour of that. Of course, Ben has been going on all along that one of the problems with the hybrid system, or any regional averaging system, is that it takes away the money from the tenant and gives it to the landlord. Of course in Ulster they do not have landlords and tenants because of Gladstone's reforms in the nineteenth century, so there is no class of landlord and no class of tenant. What there is is a number of people who rent land informally for a less than a year, the conacre system. An historic system would have a great difficulty in dealing with that because it is very complicated to work out who was farming the land in any given period. So the regional approach in their case is an easier one and they have adopted a very complicated hybrid system, but that is done, I would have to say, on the basis of pretty near 100% consensus amongst all the parties in Northern Ireland. In England, well, we know the situation. The rest of Europe, you also ask? As I mentioned before, in the negotiations we know, and we have always known, that Denmark and Germany were attracted by a regional averaging system. Those are the two countries that have declared that they will do that. In Germany it is again an enormously complicated system. It would involve going to a total averaging system on the arable side straight away, going to a partially average system on the livestock side and gradually phasing in a totally average system; but it will be done over a long period of time and, crucially, it will done on a regional basis, on a lender basis, so each of the individual German lenders will have their own system. In order to reach that agreement between the federal ministry and the regional governments, they had to accept that the there would be a mechanism in place to prevent a redistribution of more than 5% plus or minus between each of the lend. So you have there a recipe for a fantastically complicated system. Denmark again is, I suppose, more parallel to Northern Ireland. There is a consensus in favour of a hybrid model, but that hybrid model also involves only part of the decoupling in some sectors, notably in the beef sector, so it is not a totally decoupled system. The other thing about Denmark which differentiates it from England, and is also true, by the way, of Northern Ireland, is that there is a very, very small area of unsupported crops in Denmark. So it is not such a big issue in Denmark as it is in England, this area of unsupported crops. That is also true of Ulster. In the rest of Europe all the other countries as far as we are aware, but in most cases they have not made a firm and final declaration, will adopt the historic approach. If you look at the ten new Member countries, the ones that are going to come in in May of this year, eight of them will immediately go to a totally regional approach. Two of them at the moment have already set in train the mechanism to start paying individual payments, so it looks likely that those two countries will start off on something like an historic approach but very quickly move to a regional approach. Again, it is not surprising that that is the decision of those new Member States because, of course, they never had any direct payments, so it would be strange if they adopted an historic approach given that they historically never had any payments. So that is the situation. Q29 Joan Ruddock: I think at one point Ben said it would be rather disastrous if the UK was out of synch, other countries adopting simplistic methods and we developing a very complex method. We have obviously just heard some more suggestions and comparisons with Germany, Denmark and the UK. How do you think the different implementation decisions could actually affect UK producers? In which of the sectors will we be disadvantaged, do you predict, and how? Mr Haworth: I think that is very, very complicated. Suppose England were to adopt a regional average approach and suppose most of our competitors had an historic approach, then it would follow that there would be some sectors that would find themselves in England at a competitive disadvantage and some at a competitive advantage. It would vary from sector to sector. If we, for example, had a regional average and if we took a hybrid such as the hybrid favoured by the CLA, it would mean we would immediately give a lot of money to potato growers who previously had no support whatsoever. Therefore you would have an immediate competitive distortion between potato growers in England and Wales, if they had a different system, and Ireland and France. Vice versa, our cereal farmers would find themselves disadvantaged against their main competitors, which are the French. Equally, the beef sector would be one of the sectors that would lose out under an averaging system. You would find that beef farmers in England would be at a disadvantage compared to Scotland, who plainly are not going to go on an average system, and also against Wales, France and Ireland, who would be our main competitors. So there would be swings and roundabouts, but it is those competitive disadvantages, or advantages and disadvantages, that we feel mean that it would be better for England to adopt the system which most of the rest of Europe is going to adopt; and if we are going to move eventually to a different system, maybe a regional average system, that should be done at a regional level. I am picking up the point that Ben made earlier. Q30 Joan Ruddock: You say that some are advantaged and some are disadvantaged. In terms of the big picture of UK agriculture, what kind of balance is there between disadvantage and advantage? Sir Ben Gill: I think you would say that the advantage is spread very thinly and so is very minimal, but in some of the cases we could see a serious disadvantage. The sectors that currently receive the highest level of hectarage payment, and hence historic payment, would be the beef sector and also the dairy sector as it slowly graded up into the decoupled payment system. For example, the dairy sector is scheduled to receive in total - I think it is 3.5p per litre compensation. So if you have a stocking rate of, say, two cows per hectare at, say, 7,000 litres, that is 14,000 litres per hectare, 3.5p per litre, that is going to work out at about just under £500 per hectare. That is quite a significant variation from the payments received, say, in the arable sector, which is about half of that. What you would find is that the people who would suffer would be the entrepreneurial young farmers - the people who have developed their businesses, expanded it, they have a bigger quota, they are more intensive - and they would suffer quite significantly. That would then be spread. So the benefits would be obviously those unsupported sectors, the fruit and vegetable sector, but also the sugar beet sector, because there is no reform of the sugar beet sector at all at the moment. I am a sugar beet grower; I would benefit. In fact, because I am also a sheep farmer as well as a cereal farmer, net I would benefit by going down the regional averaging system; but I believe it is morally wrong because I do not see the right of affording me additional remuneration when I have done nothing new. I just do not see it is right. I feel that quite strongly. I make that point to the Government: how do you justify, on the basis of what we are doing, simply to make you feel a little bit more comfortable, that you are going to give me more money? I cannot see that is right. Q31 Joan Ruddock: You have both indicated that there would be problems with the four countries in the UK adopting different methods. Is that more significant or less significant than how England compares with other European states? Sir Ben Gill: I think on balance it is more significant, although it depends on the sector and it depends where your major competitors are. In beef it would be very significant with the Republic of Ireland, but it would be also significant with Scotland and Wales. In cereals, obviously the Republic of Ireland would not be a major factor; neither would Wales and Scotland, but France would be the major competition, not forgetting that they will have a lower level of modulation anyway. So there will be a significant availability of extra resource going elsewhere into the industry and not available within the area of the arable sector to help go through the transit period. Q32 Joan Ruddock: Do you think there is any prospect of the four countries in the UK coming to some agreement? Sir Ben Gill: I think in terms of Northern Ireland, no, because they have the separate tenure arrangements which are fundamentally different, and they have a totally different balance, being essentially based on grass land economy. I think there is a very clear possibility that the three home countries, England, Wales and Scotland, could agree, but it would have to be on one solution only, and that would be historic. Q33 Chairman: What is your latest estimate as to when some formal announcement is going to be made on this? Sir Ben Gill: Thank you for the question, Chairman. I would hope that we could have a decision as soon as possible, but bearing mind it needs to have gone through all the processes to ensure that unforeseen circumstances have been anticipated, I would have every expectation that it could be available within the next 27 days. Q34 Chairman: I admire the precision of the envelope with which we can now surround ourselves on this, and we look forward to the twenty-seventh day. Sir Ben Gill: The twenty-seventh day, Chairman, is the 17th February. Q35 Chairman: Indeed. It sounds very interesting. I want to move on to the issue of the national envelope and deductions. I wanted, first of all, to ask you a methodological question about the basis upon which the various deductions, if there is a national envelope, will be made and the modulated payments. If a farmer has, for example, £1,000, or £100, for the sake of ease of calculation, and there was an envelope which it is suggested could have a maximum deduction of 10%, would the 10% be deducted from the £100 or would it be in terms of modulation: do you start with 3%, 4%, 5%? Let us say you got down to 95. Do you knock the 10% off the 95? How does it work? Mr Haworth: The modulation comes first and then the national envelope comes after that. Q36 Chairman: The deduction is on the amount that you arrive at after the preceding deductions have taken place? Mr Haworth: Yes. Q37 Chairman: That is how it works? Sir Ben Gill: As currently construed. Q38 Chairman: I am grateful for that. In your evidence in paragraph 29 you say, "The administration of the national envelope appears horrendously complicated." I would just like to say, before complexity sets in, have we any idea what the UK Government would do with its national envelope if it exercises that option? Mr Haworth: The British Government has - it is very complicated saying things like "British Government" because this is an English issue. Q39 Chairman: Let us stick with the English and Welsh! Mr Haworth: No, because England and Wales is different. These will be made at a devolved level. The Government, let me put it like that, has asked an independent group of consultants to come up with some ideas. I think they have come up with a first set of ideas - I think there are about ten - that if there were to be a national envelope, these are some of the things that could be used. I cannot remember off the top of my head what they all are, but the two which, were there to be a national envelope, would seem to be the most likely or most favoured would be something like a scheme to help extensive beef production in some form or another - whether that would be across the whole country or whether it would be targeted on specific areas would be second-tier questions - and the second would be a scheme to in some way aid or help organic production. Those seem the most likely. Q40 Chairman: Forgive me, because I am still grappling with the complexity of this, but my understanding of the way the envelope worked was that you had to spend the money that you took from a sector within the sector. So how do you like the idea almost of a rob Peter to pay Paul policy? Sir Ben Gill: I do not like the idea of robbing Peter to pay Paul. I believe that the concept of national envelope was introduced into the negotiations in June in Luxembourg, as an interim stage to try and find consensus instead of partial decoupling. It did not transpire that it was sufficient to buy over those voters who wanted partial decoupling and should have been removed from the final script because it is a concept that is fundamentally flawed. It is, in effect, nothing other than a means to partially decouple - to recouple - but it is a partial decoupling concept. It is the same. It was interesting that I saw a paper given by the Scottish Agriculture Cultures who had studied in detail the wisdom of one of the two options that Mr Haworth has just referred to, which is the beef sector, that you top-slice all the beef payments by 10% and then pay it back to a suckler cow, a payment in the form of a suckler cow premium. Their conclusion was very clear. It was a waste of time, money and resources. It would have no pertinent effect on the business decision taken by the farmer, it would just create a bureaucracy to deduct the money and then reapply it to the farmer with all the constraints that would have to be put in place. I come back to another point that I have repeatedly made, which we did not include in a fundamental principle but I think has always been our objective. We have agonised how you go from A to B for a long time, and maybe you can find some partial elements, but we have come to the conclusion that the best way is cold Turkey. Go there the whole hog and keep the payments steady to give some people comfort for a period of time, recognising that that will have to be reviewed at a period to be determined. Q41 Chairman: In your evidence in paragraph 31 you have added up the deductions to a possible grand total of 23%. Could you give us a breakdown as to how that number was arrived at? If it is difficult now, drop us a note. Mr Haworth: Yes. Well, we are just looking here. We know that there is bound to be a national reserve, and that has to be made by deductions from everyone's payments, and that is likely to be up to 3%, but 3% is the maximum it could be. There is modulation which has now been introduced on a compulsory European basis that starts at 3% and rises to 5% in the European basis, but there is also the possibility of a national modulation. We in the UK are the only country in Europe who now has a national modulation. It is currently at the level of 3.5% in the UK. It will automatically rise to 4.5% next year, but there was an agreement made that if a government had decided schemes which required funding through national modulation and those were in place by 2005, then they could increase their level of national modulation up to 10% and could continue to do that as long as they needed the extra money to finance the schemes. It is likely, in England at any rate, that that could happen because the Government does intend to introduce a new measure, the entry level scheme, which would require national modulation, possibly about 7.5% in total, so we would then move to a modulation which would be at least 10%. National envelope could be another 10%, so that gives us 23%. Q42 Alan Simpson: When you were answering questions earlier you said that the CAP reform as - I am not sure whether it was yourself or Martin - was designed to be compensation for farmers, not payments in the round. You have also said in your submissions that you see the CAP reform and the sustainable food and farming strategy as being mutually reinforcing. You also said, quite specifically, decoupling will allow producers to focus on real market needs. It will remove the perception that support policies have encouraged unhealthy types of production. I am just an urban hick on this, so you will have to bear with me, but I would like you to spell out for me how exactly you see the decoupling working to reduce chemical inputs, strengthen local and regional markets, deliver fresher produce for people, shorten links between the producer and the consumer and reduce food miles. Those are the sorts of issues that have been critical, from a consumer point of view, about our whole approach to sustainable food. Sir Ben Gill: The problems we have with the existing system is that the complexities of the system have meant that I have had as a farming business to become focused excessively on the constraints of obtaining the various premiums, without which I cannot farm. Can I give you a simple example? I run about 500 breeding ewes. I have to apply for the annual premium on those ewes, which has to be in each year before February 5th. I am then constrained to keep those 500 ewes on my premises, or, if I move them off my premises, I have to notify where there they have gone, for a period of 100 days, which runs to the middle of May. You may say that is a minor inconvenience, but problems can arise. Lambing is a notoriously difficult time where ewes have a propensity to die. You can suddenly find yourself below numbers, you have got problems through no bad management, you have got bad outbreaks of abortion, whatever. There are further points in the market place. Historically, because of certain of the market places, particularly with ethnic markets, there has always been a demand for coal, ewe, beet(?) around Easter. That period of Easter falls right in the middle of that retention period. Just suppose I had a ewe that has a single lamb and she loses her lamb? I am constrained. I cannot sell that lamb. I have to keep it on the farm until May 15 or notify the authorities and lose the premium and everything else that goes with it, which is very complex. I cannot avail myself of a higher market price, and, what is more, you then have a flush of ewes coming on the market post May 15. So the market drops and is depressed. So I am losing out. If you take the beef sector, what happens there? We have a system of premium, I will pick on one of them, which is the beef special premium. The first instalment to be paid is at 8 months, the second at 20 months. There is an encouragement to keep the animals longer, a principle which originates from the Irish concept of aged cattle who would like to keep a third at 30 months. In terms of efficiency, this is remarkably inefficient. To be finished most efficiently is the shortest period of time you can get to a particular weight and confirmation, because every day there is an overhead of the maintenance ration of the animal. Furthermore, because you are keeping it for that second retention period to get that payment, there are sufficient examples of cases where people have retained it through that period, the animal becomes over fat, the final value is devalued by the fact that it has become over fat, so the market place suffers, the farmer suffers, without realising it probably, and everybody is a loser. It has got more costs, less from the market place, just for what? All these factors come together to make us focus on the market place. It is not quite as clear in the arable sector, but nevertheless it will become focused as we move away from the concerns, focusing on the IACS application period. We will have greater flexibility to move the crops as we want, rather than worrying that we have notified the authorities. We can reduce the acreage much more reasonably without worrying at short notice in times of weather extremes, etc. It will be much more focused on saying: "Right, what does the market want? It wants these varieties of wheat or barley", because that will encourage that to develop because it becomes market base focused. Some of this will devolve more automatically from decoupling than others. The livestock examples I have given you are more automatic. The cereal example I will give you actually will become available because market farmers can focus on the market place, but will require implicitly the support of the structures I have talked about of well-run co-operatives, or co-operative type businesses, to encourage and direct the farmer that this is a better way to go in this business. Q43 Alan Simpson: Is this automatically going to strengthen the growth of local regional markets or not? Sir Ben Gill: I think what it will allow is the substantial enthusiasm that I find around the country of many farmers and their wives looking at how they can develop new products and tap into local markets. It will allow them to do so because it gives them the flexibility. If, as the regulation says, you have not changed your farming acreage from one year to another, then you just send in a form ticking the box saying you have not changed, and that is all you need to do. So you can really focus, not on retention periods, not on whether or not you have the right amount of this, that or the other in the plan, but get on with the job in hand, which is marketing; and that is a tremendous fillip. In addition, this will all work together with the other changed dynamics in the market place, but we have that opportunity. Q44 Mr Lepper: Those opportunities are more likely to be enhanced by the historic basis rather than the regional? Sir Ben Gill: No, decoupling. Q45 Mr Lepper: I just wanted to get to what it is. Decoupling, or the way in which it is implemented? Sir Ben Gill: It is decoupling per se that delivers this benefit, but, of course, because of the reasons I have given you of the potential frictional costs of what is a very significant change in the procedures and the need to get through those frictional periods, reducing to a minimum all the dynamics that you can, we would argue for the historic. I think there is a further dimension that perhaps I should have referred to before, which is another factor there. I have already highlighted the sector that would probably derive most redistribution, but one of the sectors is the beef sector. There will be additional friction payments in the beef sector, probably starting at or around the time of the implementation of the reform, with the unwinding of the over 30 months' scheme, hence the release of redundant cows younger than those born on 1st August 1996 coming on the market place, and we will need to integrate that into our systems as well. So that is another period of potential change and friction that is adding to the two, which brings us back to the point, notwithstanding the problems in the unsupported sector, which are real, notwithstanding all the other issues that we have talked about, the least worst option of them all is to go down the historic recognising that it will be reviewed in due course. Q46 Mr Lepper: Could I perhaps finally ask Sir Ben if we could have his choice and a prediction. Again, you have looked forward to 17th March, I think. Sir Ben Gill: 17th February. Q47 Mr Lepper: February, and an announcement is expected then? Sir Ben Gill: Before then. Q48 Mr Lepper: Before then. I notice the Parliamentary Private Secretary left the room shortly after that stage! I think the NFU has said that it does not envisage this reform of the CAP as the last word. Perfection has not yet been reached. Could you hazard a guess at when we will be looking at the next major reform of the CAP, particularly the new freedom that you will have as you move on to other things and just in very brief outline what that might involve? Sir Ben Gill: Well, I think it is important to recognise that, while we have the essential ingredients of the CAP reform agreed, there is still significant work to do in some of the sectors. The ones that do not pertain to Britain, of course, are cotton, olive all and tobacco, but of major significance is a reform of the sugar industry, which has yet to be even faced with firm proposals. We anticipate they will come out in April of this year, but because of the vagaries of the European election, the appointment of a new commission, we do not see any progress in that until well into 2005, with a possibility that the changes could be implemented in 2006. That is a separate issue in itself, which should not be ignored. I do not see that there will be a significant change of the order of magnitude that we are about to experience for the foreseeable future, but I do see that there will be reviews. There will be reviews based on the sort of criteria we have talked about, about the balance between pillar one and pillar two, and the individual sizes of the payments that we will have to look at and defend appropriately. There is, I must point out, a degree of nonsense talked about by certain groups of people who really should know better. The suggestion that the absolute level of payment is something that should be decried fails to recognise the fact that we have a larger farming structure in Britain and that those larger farms in themselves support a number of farming families as employees on them. It would be folly, therefore, to send a wrong measure in that reform that sought to encourage very small people at the expense of the more effective and efficient operations. There seems to be some misconception that you can help people increase their status in society, their individual income, by making sure they are encouraged to become smaller, which of itself means they are going to be likely to reduce their ability to increase their individual wealth. What farmers need is real wealth, the ability to generate it and the business environment in which to do it. Do you have a vision for the future? I have a very real vision for the future, which I have explored in bits over time with this Committee. I believe that we are at the start of a major change in many of the dynamics within the UK, European and world agriculture. There is not just the pattern of prices that we have seen in recent times, particularly in the cereal sector, which has evolved principally from the changed dynamics in the Chinese market but on the back of the fact that for the last few years we have been consuming, year after year, more cereals than we have been producing. World wheat stocks at the end of last year were probably as low as 60 days. I think we are going to see, Chairman, much as many politicians would not like to recognise, the re-emergence of food security as a major issue. I recognise that in some countries in Europe this is already being acted upon by some of the major food processors, who are seeking to establish more long-term, secure lines of supply. The change in dynamics of the world population in China will exacerbate that, with their wealth giving them the ability, their free foreign exchanges giving them the strength, to go and buy on world markets. The dynamics in Africa will be somewhat different. You may well be aware that I have worked in Africa and revisited it last year and am horrified by some of the simplistic analysis and requirements that have been carried out by world bodies, such as the World Bank, to try and impose on developing countries the rigors of economic criteria more appropriate to a developed country with quite disastrous effects. That has caused me some degree of concern and anger, particularly with some of the NGOs ostensibly having world development in their sights who seemed to have a dramatic lack of understanding of what is in the best interests of the actual working peasant farmer in those countries. I have discussed that with working farmers on a par in a number of countries in Africa. I think, if I may be chosen to finish, Chairman, with another dynamic, which I do not believe anybody is tackling sufficiently well, either here or in the world, which is one that should worry us all, and that is the changed dynamics from climate change, which are very, very real. The first estimates, Chairman, of lost food production in Europe last year have been put at 13.1 billion Euros. That does not take into account the cost of the destruction to the river traffic on the Danube, the major artery of commerce for large parts of central Europe, which in itself is a figure that I cannot begin to quantify. It is my memory, speaking as an older person, that it was an unusual event on the weather forecast to have an inch of rain. We now regularly see two inches of rain, and the prediction is that we will move to a climate with rain increasingly concentrated into the winter periods, with water availability in the summer periods becoming a critical issue. The need to address these problems, which essentially derive from the increasing uses of mineral resources to fuel the demands of society either through liquid fuels or, indeed, through increasing energy use, are decisions and issues that governments around the would are going to have to address sooner or later. It cannot be had both ways. For example, if the energy needs are to be met, the only other alternative not to do so would be to start saying you cannot use the power the way you have done, and we would have to have rationing of electricity; both equally unpopular decisions; but farming has a major role to play in this because farming can resort to what it is used to be, a major provider of raw materials for industry in a sustainable closed cycle that is environmentally sustainable in more senses of the word than is normally used and which would then derive a proper business income for the farming industry and ensure that they were not all dependent, and have all their eggs in one basket, the basket of food production, and would deliver a balanced and sustainable income. By 2020, Chairman, I have predicted on a number of occasions, a quarter of our land mass could be engaged in that production. That will be a changed dynamic we need to exploit, and the Government would do well to encourage and promote, by appropriate measures rather than to ignore. Mr Lepper: Can I just say how glad I am asked that question. Q49 Chairman: As stimulating at the end, as you always have been as far as the Committee is concerned. The Committee has to focus in the next few days on its future inquiries. I think you have marked our card on a couple of those in a very emphatic and interesting way. Can I thank you once again, not only for your evidence today, but for your contribution to our proceedings on previous occasions and re-emphasise, I am sure, the very warm wishes of colleagues, both today and those who have been on committees before, in wishing you well as you move from being the President of the National Farmers Union to no doubt other interesting, challenging and, indeed, significant contributions to agriculture overall. Sir Ben Gill: Thank you very much, Chairman. |