2 What forms of support to provide
and to whom
8. Farming in England comprises a mix of farm types,
ranging from large agri-businesses to small hobby farms. In the
middle of that range are the small and medium-sized farms, usually
family farms, which rely on farming for the bulk of their income.
Many of these 93,000 smaller and intermediate sized farms are
more likely to need advice and support. The rules of the new subsidy
scheme prevent the Department from directly redistributing subsidy
from large to smaller businesses, and the Department considered
that to do so would run counter to the spirit and economic logic
of the reform. The Department did, however, have discretion to
devise farm business support measures which focused on those farm
businesses which needed help most - the small and medium-sized
farms. New systems were now under development to target resources
towards advice and support for those farmers and disadvantaged
areas most in need.[9]
9. The Department will need to develop innovative
strategies to identify and assist the individuals and businesses
most in need. Web-based guidance may assist farmers with access
to the internet, but not all farmers have access to computer facilities.
There were relatively low levels of computer literacy, for example,
amongst some keepers and farmers on smaller hill farms. To
provide timely and pertinent information and guidance to these
farmers, strategies were needed to target those most in need.
In Ireland, for example, the Opportunities for Farm Families Programme
used cold calling for farms identified as needing assistance.
The Department perceived potential operational difficulties with
this approach, but it recognised the need to help farm businesses
think through their choices more effectively.[10]
10. Diversification and assisting farmers to broaden
their business base should be encouraged, but business planning
skills amongst those farming smaller and intermediate sized farms
may be limited. Farmers faced difficult decisions about the direction
in which to move their businesses, and needed to balance their
incomes from meeting market demand with that available through
grants for good land management. Encouraging sound business practices,
including the preparation of comprehensive business plans, would
be essential if farmers were to be aware of the potential impact
of their decisions on the continued viability of their businesses.
The Department had made some advice and training available to
combat this skill gap, but more emphasis on business viability
was needed to make best use of the available resources. The current
emphasis is on capital grants, but the provision of advice may
bring better overall benefits.[11]
11. Other countries have considerable experience
of providing advice and training to help tackle the problems faced
by farmers. In Sweden and Wales, for example, farmers interested
in government support for business opportunities can contact a
central point to access farm business advisors, who will then
help the farmer apply for support. In Germany, Ireland and Sweden,
programmes are available to provide training in business management
and to help set up farmers' networks. The Department should consider
whether similar schemes would be feasible and more effective than
current regimes in England.[12]
12. The former UK national advisory service, the
Agricultural Development and Advisory Service was privatised in
1997. Advisory services in England do not meet the needs of farmers,
with initiatives providing limited support and being poorly linked.
The Department supported the Farm Business Advisory Service and
some free environmental advice. Production orientated advice was
available from the private sector, and environmental advice on
specific local initiatives from a number of public sector sources.
To help farmers meet the cross-compliance requirements of the
Common Agricultural Policy, European Member States are required
to have a Farm Advisory Service in place by 1 January 2007. Proposals
for a Farm Advisory Service were still at the planning stage,
but the Department was considering how to improve collaboration
between advisors to provide a more joined-up service. It agreed
there was room for improvement, but considered that there was
no simple solution.[13]
13. Having identified an appropriate business opportunity,
a shortage of capital and an unwillingness to take on all the
risks associated with borrowing to finance a project may prevent
some farmers from developing their businesses. The Department
currently made some funding available through capital grants,
but acknowledged the need to explore the flexibility offered by
alternative forms of assistance. Use of loan guarantees, for example,
on similar terms to the Small Firms Loan Guarantee scheme provided
by the Department for Trade and Industry for small businesses,
could stimulate greater private investment. A loan guarantee scheme
would help promote a culture of entrepreneurship, and provide
assistance to more farmers than a conventional capital grants
scheme, and at a lower cost to the taxpayer, without perpetuating
a culture of dependency on subsidy or grants.[14]
14. Not all initiatives aim to assist individual
farms. In France and Denmark, for example, local farmers tended
to form partnerships and co-operatives to take advantage of economies
of scale, often with some form of public support. Historically,
in England there was much less of a tradition of co-operation
between local farming businesses. The Department agreed that co-operatives
and other local partnerships were one way forward. Schemes such
as the farming industry-led English Farming and Food Partnerships
encouraged farmers to work together to achieve profit and sustainability
through local co-operation and partnership. Co-operatives could
result in economies of scale, greater bargaining power, and an
opportunity for better connection with the rest of the supply
chain by linking production and processing units under shared
management. They could, therefore, play a significant part in
promoting farm businesses.[15]
9 Qq 11, 14-15, 71, 119; Ev 22 Back
10
Qq 41, 96; 27th Report from the Committee of Public
Accounts, Identifying and tracking livestock in England (HC
326, Session 2003-04) Back
11
Qq 2-3, 5, 44, 50-55, 67 Back
12
C&AG's Report, Appendix 1.2 Back
13
Q 4 Back
14
Q 43 Back
15
Qq 16, 25, 27-28, 70, 98 Back
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