Examination of Witnesses (Questions 100-119)
DEPARTMENT FOR
THE ENVIRONMENT,
FOOD AND
RURAL AFFAIRS
(DEFRA)
13 OCTOBER 2004
Q100 Mrs Browning: There are other things
that small businesses need if they are going to diversify or add
value, particularly in food production, and things like technology
transfer and access to technology to test recipes, to test shelf
life and that sort of thing are very difficult for small businesses.
Do you have any regard or overview as to whether these small businesses
that are being encouraged to add value to an existing product
or to go from farm gate to producing value-added products genuinely
have access to the type of technology that they really need around
the country?
Mr Cleasby: I can help with that
to some extent. As usual, there is not a uniform pattern right
across the country, but using, quite often, the Small Business
Service Business Links as a gateway to this, small businesses
can find that a number of colleges, for example, around the country,
particularly some of the land-based colleges, the former agricultural
colleges, are developing what in Learning and Skills Council-speak
are called "Centres of Vocational Excellence" and there
are quite a number of colleges in the food technology sector which
are developing tools essentially for technology transfer, for
taking the science and the innovation and translating it into
terms that small businesses can make use of and go away and build
their business with. I would not want to claim that every small
business that wants to access this will find it on their doorstep—I
do not think they will—but the pattern is there, and again,
it comes back to the devolution arrangements, that it will be
very much for those who are planning these facilities, often at
regional level, increasingly at sub-regional level, to determine
where the best investment is for this sort of facility in terms
of helping small businesses.
Q101 Mr Davidson: You mentioned £3
billion in subsidies, and I think you used the phrase "from
European taxpayers" but would it be fair to say that since
Britain is a net contributor to the European Union, effectively,
that is all being paid by UK taxpayers?
Sir Brian Bender: You are asking
me to remember all the details of the Fontainebleau abatement
and other things. UK-wide it is £3 billion; in England it
is £1.7 billion. Clearly, a lot of it comes from the British
taxpayer.[6]
Q102 Mr Davidson: As we are a net contributor,
effectively it is all from us.
Sir Brian Bender: I may correct
that afterwards, Mr Davidson.
Q103 Mr Davidson: Fine. Can I just clarify
this question of subsidy to English farmers. It is going to be
done firstly on a historical basis, then on the basis of size.
Can I clarify to whom that is paid in the circumstances where
you have tenant farmers? Would it go to the owner or the tenant?
Sir Brian Bender: I will give
you a note. We have been in discussion with the Tenant Farmers'
Association about how they will fare under this. I will come back
to you. A tenant farmer will get payment; exactly what the circumstances
are I need to come back to you on.
Q104 Mr Davidson: They do not end up
getting payment for nothing at all?
Sir Brian Bender: That is what
we have been discussing with the TFA, to minimise the risk of
that happening, but with apologies, I will have to come back to
you on that.
Mr Nesbit: It is the person actively
farming who would receive the subsidy, but there is a separate
question, as with all these subsidy systems, about to what extent
it gets capitalised.
Sir Brian Bender: So the person
doing the farming would get the money, so it would be the tenant.
Q105 Mr Davidson: Am I right in thinking
therefore that farmers' incomes in future will be an element of
subsidy plus an element of sales from what they produce plus an
element from other diverse activities that they undertake, and
if the subsidy was sufficient in itself for a good living, there
is actually no reason why anybody should undertake anything else?
Sir Brian Bender: That is the
position now.
Q106 Mr Davidson: Surely not, because
if it is a production-based subsidy at the moment, if you do not
produce, you do not get any subsidy. If on the other hand it is
a land-based subsidy, and you do not produce anything, you still
get the subsidy.
Sir Brian Bender: The farmer will
have to meet certain conditions, as Mr Curry referred to earlier,
of cross-compliance. Subject to that, I think the answer is yes.
If they kept the land in the right sort of condition, they could
get the subsidy.
Q107 Mr Davidson: So it is possible to
keep the land entirely fallow, subject to various environmental
conditions, for you to have the money and do nothing for it. That
has the merit of clarity. Can you also tell me how many might
be receiving subsidy of £1 million and above?
Sir Brian Bender: I will need
to come back to you on that.[7]
Q108 Mr Davidson: It would be very helpful
if we could have a list. I am interested in seeing this scheme
work. It is the question of incentives. I cannot quite see how
a farmer who might have enough money coming from subsidy for doing
nothing except maintaining the land can actually be incentivised
to take up a scheme when he might very well have adequate income
coming in just from the subsidy.
Sir Brian Bender: These people
are business people, and therefore the question will be what they
actually wish to do. Some of them may wish to receive a subsidy
for converting their land into wetland or flood storage area and
not grow anything on it, and that might be one way forward. That
is sometimes patronisingly called farmers being paid to be park-keepers,
but given the land they look after, there is not necessarily anything
wrong with that. But if they are business people, and they want
to make money, surely they will look for opportunities and they
will be enabled to do this because of the market.
Q109 Mr Davidson: Undoubtedly there will
be some who will want to go down that road. Given that we are
presently having discussions about invalidity benefit, where the
idea is that in order to incentivise people to do something they
reduce their money, in order to incentivise farmers we increase
their money. It does not necessarily seem to me that that is joined-up
government. Could I clarify the point about average farm incomes
on page 10? £8,000 in 2000—I find these figures very
difficult to accept. It has always been my experience that you
can never trust figures coming from farmers. Can you clarify for
me how accurate you believe these to be?
Sir Brian Bender: There are separate
surveys that some private sector organisations do to get similar
data, and they are all producing roughly similar figures.
Q110 Mr Davidson: Is this self-declared
income?
Sir Brian Bender: I am not sure
whether any of my colleagues know. I need to come back to the
Committee on exactly how we gather the farm income data.[8]
Q111 Mr Davidson: Does it take account
of what could be described as "benefits in kind"?
Sir Brian Bender: There are three
ways in which a farming family can get income: one is from the
farm itself; one is from using the assets one way or another for
a different purpose, diversification; and clearly the third is
the individual members of the family doing something completely
different. Those three together add up to the whole income. The
data in the Report is simply total income from farming. There
is then, as I mentioned earlier, average earnings in 2002-03 from
diversified businesses of £1,800 per farm.
Q112 Mr Davidson: Given that in that
year income from farming is alleged to be £8,000, I cannot
quite understand why a substantial number of people remain in
farming at all.
Sir Brian Bender: For those who
have, as I was trying to explain earlier, where they have the
land as an asset and it is a way of life, they have kept going
through lean times, and now times have got better, and indeed,
ten years or so ago times were a lot better. So it is a question
of how long one keeps going in difficult times.
Q113 Mr Davidson: In our work, we always
hear complaints from farmers that they are poorly off, but I notice,
according to your own figures here—and as I have indicated
already, I do not entirely believe them—that between 2000
and 2003 they have had a 90% increase in their income from £8,000
to over £15,000. Can you tell me if any other section of
the economy, apart from possibly lawyers, where people have received
that sort of level of increase?
Sir Brian Bender: Sure. The flipside
of that is that they are still 50% below the peak in 1995. They
have had peaks and troughs. In the last three years they have
done very well. In the three or four years before that they did
very badly. That is the market they operate in.
Q114 Mr Davidson: Given that, if they
were as badly off as they complain, we would expect to see droves
of farmers leaving the land, is that what is happening?
Sir Brian Bender: Again, I do
not have the data with me, but there were significant numbers
of departures from the land. It also did force some productivity
gains. Partly as a result of currency movements but partly as
a result of response to this, productivity performance has actually
matched that of the better-performing member states in the last
few years, though overall, productivity in farming in this country
is still well below—a quarter below—the best-performing.
Q115 Mr Davidson: In terms of foot and
mouth, which we were told was a disaster and farming was so unpopular
that people would never go back, how many of those who were producing
livestock at that time actually went back, given as a percentage?
Sir Brian Bender: Again, I do
not have the figures with me.[9]
I think a large majority did, and when I appeared before this
Committee, one of the questions related to the amount of compensation
farmers received for slaughtered livestock. A lot of them did
go back into the market, though my recollection is with a generally
lower level of density of livestock.
Q116 Mr Davidson: They took the money
but went back in, so obviously it could not have been nearly as
bad as they were making out beforehand.
Sir Brian Bender: I think the
farmers who were most severely affected by foot and mouth were
not the ones who actually got the disease on their farm, with
all the tragedy of slaughter, who lost their animals, but those
who were under restrictions and could not get income but had to
keep their animals and feed them.
Q117 Mr Davidson: I remember that. Can
I ask you to look at paragraph 1.5 and the chart on page 11, the
indication here, where it actually mentions the word "dependence"
on subsidies. We have clearly got a dependency culture amongst
farmers on subsidies, and I am not sure that the way in which
you are approaching this is sufficient to motivate them to actually
transfer into other things. Would you accept that? Clearly, if
there is not sufficient financial pressure on people to change,
they will not change, which is exactly the issue that we face
elsewhere in relation to things like invalidity benefits. In those
circumstances, can you just clarify for us what incentives you
are applying to farmers to make them want to move, to take up
these other grants and so on that you are applying. It does not
seem to me that the financial pressure you are applying is sufficient,
because we have already heard from you that many of them will
get sufficient to live on from subsidies even if they do not take
up any of these grants.
Sir Brian Bender: I will not come
back on that point. One of the big incentives is this device referred
to earlier by Mr Curry called modulation, where we will actually
be taking 10% of a farmer's entitlement and moving it across to
something that is selective, that they would need to apply for.
Scotland and Wales will be moving at a similar pace, but we are
moving faster than other European countries on that.
Q118 Chairman: You are already doing
a note for us on the possible savings to taxpayers.
Sir Brian Bender: Yes. I should
say I have a small correction on that. The maximum discretion,
I am advised, to take off under modulation could be as high as
20%, but I will cover that in the note.[10]
Q119 Chairman: Following on Mr Davidson's
questions, could you also do us a note. I can well believe that
some farmers, hill farmers, are earning as little as £8,000
a year, but there is, of course, a vast discrepancy between them
and agri-businesses in the east of the country. Can you do us
a note on the discretion available to ministers to transfer resources
from large agri-businesses in terms of subsidy to small struggling
farmers in the west.
Sir Brian Bender: Yes, I will.[11]
6 Ev 21 Back
7
Ev 22 Back
8
Ev 22-35 Back
9
Ev 39 Back
10
Ev 21 Back
11
Ev 22 Back
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