Examination of Witnesses (Questions 167
- 177)
TUESDAY 4 JULY 2006
MR CARL
ATKIN, MR
STEVE COWLEY,
MR TONY
KEENE, MR
HUGO MARFLEET
AND MRS
CHRIS THOMAS
Q167 Chairman: Ladies and Gentlemen,
I am going to extend this session until 10 minutes past one, so
it will require discipline on behalf of all of us to recognise
that, including my colleagues and myself. Can I very quickly introduce
our final panel: Mr Carl Atkin, an agricultural business consultant
and Head of Land and Business Research for Bidwells in Cambridge;
Mr Steve Cowley, a family farmer from the Isle of Wight, with
active involvement in community and environmental enhancement
projects; Mr Tony Keene, who is the Chairman of two farming companies,
one of 1,500 acres in Leicestershire and the other with 1,400
acres in Norfolk. He is assisted by his family in the management
of that, and has been involved in being the Chairman of the Oxford
Farming Conference and the Governor of the Royal Agricultural
College; Mr Hugo Marfleet, who farms in Lincolnshire in arable
and free-range poultry. He was formerly in pigs and is looking
at diversification and has been farming for 13 years. Finally,
Mrs Chris Thomas, who is a beef farmer from Powys with 700 prime
beef cattle. She has recently diversified, opening a new luxury
caravan park and camping park. I hope you will accept that as
a free commercial for your activities. We will start very quickly
with Carl Atkin, please.
Mr Atkin: Thank you very much,
Chairman. My name is Carl Atkin. I am a Lincolnshire farmer's
son and an agriculture graduate of Newcastle University. For the
last six years I have worked at Bidwells as an agricultural business
consultant and also heading our research team. I am also here
as Chairman of the Agricultural and Rural Policy Committee of
the Institute of Agricultural Management. The Vision makes a useful
contribution to the debate about the future of the CAP and agricultural
and rural development policy in general, however it is naive in
a number of the assumptions and sweeping statements it makes.
First of all, it produces a long summary about the widely documented
failings of the CAP to date. Whilst academically interesting,
this is completely irrelevant and paints a distorted view of the
current and indeed future policy environment. We all know, and
probably all agree, the failings of the CAP of the 1960s onwards
which led to the intervention, lakes and mountains of the 1980s
and, indeed, probably even the CAP of the 1990s, which ended up
capitalising large production linked payments in production systems,
distorting both land and input markets and failing to return monies
directly to the farmers, as several respondents have already mentioned.
The CAP of 2006 is already very different. The decoupled Single
Payment is the most radical reform for agricultural support for
generations, yet the Vision makes little reference to this. It
extrapolates current data about the distorting effects of the
CAP and extends this to the new regime, which I believe is highly
misleading. What of the central component of the Vision? Effectively,
this is the elimination of Pillar 1 support. This maybe a "Vision"
to some but to others it would be a nightmare. Again, I doubt
many people in the room would claim that the current Pillar 1
support is good or, indeed, efficient since the Single Payment
has evolved out of a complex mixture of market instruments direct
to payments and is sort of being an income support, a compensation
payment and a land management payment all in one. It is probably
not achieving all of those things very well, yet it is what we
have got at the moment. How we develop this, and how we do indeed
eliminate it, if that is what we do, needs much more careful thought
than is offered by the Vision document. We need to focus support
far better on what we really want. If food security is a strategic
issue for us, then let us have a debate and specific policy on
it. If keeping small, inefficient family farms in business, particularly
in Southern and Eastern Europe, is a socially good thing to do,
then let us have a specific policy to do so. If paying for environmental
and public goods which the market will not provide for is what
society wants, then let us pay for them in a proper way through
a real Pillar 2 rather than relying on the current Pillar 2 as
a bit of an afterthought bolt-on to Pillar 1. Let us not pretend
that we can simply eliminate the current support mechanisms without
having these proper debates. The structure and mentality of the
current agricultural industry is entirely a result of the policy
instruments we have. Farmers on the whole have become commodity
producing machines, removed from their markets by intervention
and such like, and encouraged to pursue a one dimensional high
output, low cost business strategy. The industry needs to reconnect
with its marketplace, step away from the mainstream into a growing
plethora of need for specialist opportunities and focus on recapturing
value through a supply chain. What is of real concern is the current
shortage of Pillar 2 funds to provide support for business planning,
marketing and training, and the ability of the Regional Development
Agencies to deliver this support and advice to the industry going
forward. That may be a discussion for another day. Let us also
challenge the implementation set out in the Vision. The Vision
offers no real roadmap on how to get there, except saying that
gradual and carefully managed change is a good thing. I would
argue is that really a good thing? All it provides the industry
with is more uncertainty and a lack of ability to plan. What the
industry needs now is clear signals to make it react and adjust
accordingly. The gradual erosion of SPS over time, whilst appearing
kind from some angles, will simply cause many to have a slow and
painful exit from the industry, haemorrhaging cash over the medium
term rather than reorganising their businesses now in a planned
and structured way or exiting in a planned and dignified way.
Where do we go from here? If the status quo rumbles on we simply
have a cake that gets sliced into smaller and smaller pieces as
we become an EU 27 and an EU 30. We need to look at the issues
of funding the CAP. Should it be co-financed by Member States?
Do we need more Member State flexibility? Do we need a Common
Policy at all if we want our farmers to be entrepreneurs? Let
us have a grown-up debate about how Pillar 1 should go and how
we get there. It is nowhere near as straightforward and blunt
as recommending its abolition as the Vision would suggest.
Q168 Chairman: With the way you have
delivered that with such speed, I think you could well be an auctioneer
of the future! Thank you very much indeed. I am going to move
straight on to Mr Cowley and ask if he would make his presentation,
please.
Mr Cowley: Thank you for inviting
me to make a presentation to you. I was not expecting it from
my little note which I wrote.
Q169 Chairman: You do not have to
if you do not want to!
Mr Cowley: I am sure I want to.
I have been a farmer all my life, and my family have farmed in
and around the parish for over 200 years. My father, my grandfather
and I have all be county NFU chairmen as they have been chairmen
of the Local Parish Council. I have diversified from farming from
that time and as Deputy Leader of the Isle of Wight Council I
have made presentations to parliamentary committees in Europe
and also to ministers in the past. I had an interesting session
with David Miliband yesterday, and sadly that gave me no encouragement
as to how his tenure of the Ministry of Agriculture would be looked
after. Since the last CAP reform, which has been mooted for some
time, I have made significant changes in my business and I produce
very little, if any, food anymore as a farmer. We have 350 acres,
and we have put the whole farm into Countryside Stewardship which
has secured my portion of the Pillar 2, I believe, for the next
10 years. We have planted 40 acres to woodland under the Jigsaw
Scheme which encourages red squirrels and dormice. Particularly,
we planted 16,000 trees in that area and that has secured funding
for 15 years at least. Our most profitable crop under Countryside
Stewardship is over-wintered stubble and then summer fallow, £540
a hectare for running a cultivator through the land once. We keep
a few suckler cows to keep the grass down, and we grow linseed
on contract which is exported to France to make lino. We have
moved our capital out of food production into holiday houses,
four of which we have off the farm because that secures our capital
base away from the farming industry. Most of our modern buildings
house vintage buses and we have builders and a tree surgeon who
operate from our site as well. We have planning approval for 34
stables which we have not implemented yet, but will. We used to
produce one and a half million litres of milk, and I enjoyed milking
cows. I did not mind getting up at a quarter to five every morning
and doing that, but it becomes a hobby you cannot afford when
you are not getting enough to cover your costs. We have made this
decision to go the way that we have. We are asked the question
do we think the government is committed to UK food production,
I do not believe within the government of whatever complexion
that there is a commitment to UK food production. I think this
is very foolish with global warming, and other speakers have indicated
that food production worldwide will decline. Oil production will
decline to get it here and, therefore, our food security is going
to be compromised. We have heard a little bit about the FHDS Scheme,
paying us farmers to clear scrub to grow food. We have recently
put that land back to trees with a grant, and I suspect my son,
within his lifetime, will be paid to take the trees out so that
he can grow food. I think British farmers are disadvantaged, I
probably hinted at this in my initial writings to you. Defra seems
to gold-plate every EU directive and implement it with a fist
of iron very, very slowly. That is a matter of wrong thinking
within Defra. I believe Defra should be there to help and assist,
not to grind us down. Other countries' agricultural ministries
manage to encourage their farmers with the support of their populations.
I think in the CAP Vision there might be short-term environmental
gains on the way to dereliction in the countryside. It seems to
be driven purely by financial concerns, it is jointly written
with the Treasury, and we can understand where that is coming
from. My real fear is that there is a perception, which I think
is politically unsustainable, that with the Single Farm Payment
farmers are being paid to own land and to keep it a bit tidy,
and I do not think that is sustainable. I do not believe that
EU farmers—others can probably speak better on this than
I can—want to be seen to be maintaining their lifestyles
by subsidies, they would like to get a fair portion from the market.
A small proportion of more affluent consumers, and I think those
are the ones we get in the press, the people we see, are beginning
to appreciate local foods with no air miles, but most consumers
still wish to minimise their weekly spend on food. I have thought
about one or two possible solutions which are probably totally
impractical. Farmers are not going to maintain any profitability
in food production unless there is one organisation which represents
an interface with government. It is so diverse at the moment.
You, as politicians, are only there until the next election, and
there is no focus on farmers and food producers by you and this
maybe is why we are here today. I am a firm believer, and in discussion
with other farmers, that farmers are moving towards, if they can,
contract pricing of food so that they know what they are going
to get when they start out production. We talked about co-operation
a bit. The Milk Marketing Board was the ultimate co-operative,
but it was deemed not fit-for-purpose any longer and is no longer
with us, and look at what has happened to the price of milk since
then. I think we should keep CAP payments to enhance and maintain
the environment but it needs to be specifically linked to specific
outputs, which is what I am looking for. We have done specific
things under Countryside Stewardship and have gained a matching
payment. I think Defra is a stumbling block and I do not think
a name change will make any difference. We need to change the
key managers in there to something more useful so that we have
managers who will understand what the job of farming is. They
have been given a packet of money by the EU to support farming,
not to erode it.
Q170 Chairman: Mr Cowley, I am going
to be very rude and cut you off. That was a very good point to
end on. I am going to ask Mr Keene if he would take up the baton.
Mr Keene: Chairman, since time
is of the essence, I will assume that you have all read my original
submission and say nothing other than the fact that I am not a
farmer's son, I am not from a farming background, and I am a first
generation farmer. I have to confess that I had not read A
Vision for the Common Agricultural Policy before writing my
submission. I have now read it and I must say it is a well presented
and well written document, if at times somewhat complicated. I
would like to make the following comments. The argument that the
cost of food will significantly decrease to the consumer may in
reality not decrease by as much as is envisaged in the document.
A lot of temperate food production has been on the world market
at below the cost of production for many producers. When support
is removed these prices may have to increase. It is stated that
36% of support given to farmers goes to a number of input suppliers,
such as machinery manufacturers, fertiliser suppliers, and spray
suppliers. To my knowledge, none of these suppliers is making
excess profits, so unless their raw material costs go down or
labour cheapens, which is very unlikely, I cannot see how they
can afford to supply these commodities at a reduced cost. I can
quite see that land costs would decrease as farming profitability
decreases, although this has not done so to date by as much as
it should have done. I would like to make one other comment under
the heading of "land costs". Farmers get agricultural
property relief, which means that on their death they can pass
their farms onto the next generation without having to pay inheritance
tax. This is absolutely essential because if inheritance tax had
to be paid farms would have to be sold, further fragmenting the
industry. I just pose two questions: is it a benefit to farmers
that wealthy outsiders can shelter their inheritance tax by buying
into land and farming it for two years? Is it reasonable that
those farmers who have got off their backsides and diversified
their businesses may now have to face inheritance tax on their
diversified assets? There is no mention in the Vision of renewable
energy, about which we have spoken quite a lot this morning, so
I will not go on, but this could have great benefit to British
agriculture, the environment and the population at large.
Q171 Chairman: Thank you very much
indeed for the succinctness of your comment. Mr Marfleet?
Mr Marfleet: Good afternoon. Does
the government remain committed to UK food production? Yes, but
we do have to change, and are changing, with positive approaches
like rural development. The UK is a small parkland island in proportion
to the world picture. It is a traditional farming estate, being
of arable, livestock and tourism enterprises. Globalisation means
that we are no longer a world player in terms of food production.
However, with the volume of people in the UK, we do need to remain
committed to food production. The UK is farmed throughout its
length and breadth, encompassing every town and city. We even
sing about it, "...this green and pleasant land...",
so we should not abandon it. We head through agriculture for the
countryside and the seaside in our quest for the enjoyment it
provides. We look to reform a market which is called "oversupplied",
yet thousands of humans are starving. The world is not settled
nor in harmony. There are so many different circumstances and
factors for each country across the world that it is impossible
to bring about total harmony. What we can do is put parameters
in place so that the environment, welfare of animals and health
of humans is not jeopardised. If countries fail to adhere to these
basic parameters their products should be vetoed. At the same
time, if poor countries need help, and are willing to be helped
to help themselves, then we should assist. The UK needs to protect
its own agricultural markets by standing up and fighting and not
gold-plating every EU directive putting us at a disadvantage.
Environmental issues and schemes are very expensive to run. We
have great regional and seasonal foods of good quality which can
be promoted within our country, helping with the nation's health.
Our schools, hospitals and other public sectors should eat British
produce. The supermarkets have used their powers to help the demise
of UK farming by bully tactics and importing inferior products.
The UK is well placed to go forward, but at these prices across
the board the industry is falling into a state of disrepair which
cannot continue. It is predominantly family-run farming practices
which will do more for the countryside, employment and diversity
in rural areas than large business organisations that only have
money signs in their eyes. We are British, we should be proud
of what we produce, and we should stand up for British produce
as most of us, one way or another, enjoy the British countryside.
Q172 Chairman: Thank you very much
indeed. Finally, Chris Thomas?
Mrs Thomas: Good afternoon, Chairman
and members of the panel. I am sorry I sound like a man, since
diversifying into a caravan park I spend all of my life talking,
so it is rather new! My name is Chris Thomas. I am 41 years old
as of last Saturday.
Q173 Chairman: Congratulations, well
done.
Mrs Thomas: Thank you very much.
I am a mother of five, ranging from 18 and a half down to one.
We own and farm 300 acres in the heart of the Brecon Beacons,
just literally outside the town of Brecon, and we rent another
300 acres, 200 in Hereford and 100 scattered around the other
parishes. We commute on John Deere tractors. We are known as completely
mad and insane. I often feel I need to take drugs just to stay
alive! However, we totally love what we do and are committed greatly
to what we do. I hope that you guys who are in charge of our commitment
will listen to what I have to say and that I will convince you
to follow this path with all of your hearts to realise that you
are in charge of us, our own destiny is not ours anymore, it is
in your hands. Farming is not a job, it is a way of life. I will
quote you paragraphs of my original submission for the benefit
of other members of the panel and of the audience. I quite liked
it, so I hope you did too. As I say, farming is not a job, it
is a way of life, how many times have we heard that and yet if
the current policy trends continue it will be a way of life for
very few in future years. I feel we will be the next rare breed.
Farming is not something which can be learnt from books, it is
bred into you. In as much as it can be bred in, it can be bred
out too. My main concern, especially being a mother of so many,
is who will be farming our countryside in 50 years' time, never
mind the Common Vision for 10 to 15 years, we are breeding generations
of young people. Although my son, Henry, is only four years old
and a hefty bloke, it is going to be some time before he can reach
the tractor pedals, With all the pure agricultural courses disappearing
from our agricultural colleges, and we are all encouraged to diversify,
my biggest worry of all is who will be left to farm our land.
Farming these days is being pummelled and moulded into an ideal
formula by this Government, and this cannot be done without any
future thought. For far too long we have had ministers put in
charge of this most specialist of subjects, ministers who have
no practical knowledge, practical experience or even qualifications
to understand the physical, emotional and mental needs of agriculture
and its workforce. One of my all-time favourite lecturers in agricultural
college, himself a keen Yorkshireman farmer, used to say to me,
"Chris, common sense is a sense not common to everyone",
and I genuinely feel this is quite right regarding the people
who implement these policies and write the damn things. We now
are at a stage where the Single Farm Payment has taken over our
lives. I feel this whole fiasco has turned into nothing more than
an enormous white elephant. Its purpose was two-fold. Originally
it was to remove production payments and encourage the older generation
to retire, paving the way for a new and younger workforce but,
unfortunately, the reality could be no more different. The older
farmer now has the best government-funded pension policy of his
entire life, for he can now sell his entire stock, rent out his
land, and in the majority of cases still pick up quite a hefty
cheque. There are others who have been unsuccessful in their bid
for entitlements from the National Reserve who are farming with
no financial help whatsoever, whilst still, at the same time,
producing a commodity. This ridiculous situation does two very
detrimental things to farmers and farming alike. First of all,
the older boy's desire to keep the entitlement payments have shot
the price of rental land and grass this year by £50 an acre
alone from what we were paying last year. Secondly, the new system
does nothing to help the public's perception of us guys. Since
going into this diversification project ourselves several articles
went into our Welsh national newspaper, The Western
Mail. I genuinely do feel that whereas perhaps before our
lives ended at our farm gate our life begins because we have to
be nice to people and that is something farmers are generally
not very good at. They are quite rude, arrogant and anti-social
as a breed and it is bred into us. Now we have to try and woo
these people. We have to be nice to these campers and they are
fantastic. We have never met so many people and we have only been
open four weeks. We are full every weekend with over 400 people
and, as you can imagine, it causes a bit of a hoo-ha. It is a
wonderful way to learn how to be nice to people by getting them
on your farm. How sad it was to see that the uptake for the farm
walk was so minimum. We could not have them on our place because
we still had diggers digging out things. It was a very, very sad
thing that more participants could not go into this. However,
agriculture is Britain's last industry, boys and girls, we are
now a consumer nation and not a producing nation anymore. God
forbid, if there was a world war we would be in trouble for sure.
Do not forget, government men, Britain is an island, and with
the threat of terrorism they would not have to bomb our stations
and our buildings, they would only have to put bombs in the Bristol
Channel and they could starve us to death. It is an incredible
thought that we only produce enough food in this country to survive
from January to April and the rest is all imported. It is a frightening
thought and, without scaremongering, if our country and the EU
were all settled why on earth would Mr Brown make a note that
he wanted to spend an extra £25 billion on the Trident Missile.
They cannot feel that there is a great deal of world peace for
him to go down that road. For our nation I feel food security
is a very, very important issue. Should our agricultural industry
be sold down the swannie as has our manufacturing, coal, steel,
construction and shipping industries? They have all vanished now
and all been taken over by imports. Agricultural policy should
be completely separate from government policy as they can change
the goalposts in one afternoon. It is a continuity of good, sound
and reasoned policy that is required for the future. This policy
should be worked over a 20 or 30 year period, not even a 10 or
15, it is a much longer period we need. I could honestly go on
and on. Let the farmers who are getting their hands dirty be the
ones who are going to receive the payments and not pay people
to sit in the house. If the government wants to remove the link
between payment and overproduction, although that myth has long
since been dispelled or why would they import meat from foot and
mouth endemic countries and why would you guys be voting on whether
we should have American hormone beef in this country when it has
been banned here for years, however, why can we now not look at
arable payments. If you want to reduce greenhouse emissions, why
do you not put arable payments into creating biofuel plants to
do the cultivations. There is a huge amount of diesel used. When
I plough 250 acres with my John Deere tractor every spring we
go through a full tank of 80 gallons in a day with a four furrow
plough on it and we have no stones, so God help the ones who have
got stones. Not every farm can afford this. Our farm could not
afford to have £26,000 plant but what we could do is put
one in Brecon farm and we could all buy our fuel to do all the
rotational cultivations in this country using biofuel and that
would keep everybody happy. Stock payments: the Single Farm Payment
does not want poaching, and that is a very interesting thing because
they are telling us to keep our stock in, but that is the worst
thing unless you have got really good sheds, so bring back the
50% shed grants. Do not just dish out these payments to people
who are not worth it. Listen boys, stop Britain becoming the national
park of Europe. Let us do what our prime land was intended to
do and produce the finest quality foods to feed our fine nation
of people. We went to ball a fortnight ago at the officers' mess
in Brecon and we had Argentinean beef and New Zealand lamb. There
were only four of us on the table with our own teeth and I wanted
to offer to chew it for them, it was appalling.
Chairman: Fantastic. Thank you very much
indeed. Judging by the splendid photograph of your family that
you sent I can see the next labour force there being bred very,
very well. Two of my colleagues have caught my eye, so David Taylor
and Lynne Jones in the remaining four minutes that we have.
Q174 David Taylor: You are not going
to ask how many MPs here have their own teeth, are you! This one
is to Mr Atkin, Chairman. He was concerned about the separation
of farmers from their markets and the distance it has gone down
the path of high output and low cost, and he referred to there
being an unmet plethora of specialist opportunities I wonder whether
he can highlight that briefly. Mr Cowley, on dairy, with one and
half million litres he might have been losing about £30,000
a year with his tuppence a litre loss, which was typical. Does
he think—a question I put to an earlier contributor—that
farming could have done a lot more to move away from milk as a
commodity to a rather more specialist and segmented market?
Mr Cowley: On that specific question,
by government regulation the MMB and its daughter organisations
were not permitted by the DTI to go into the downmarket production
of food. Look at yourselves in the past in the round as to why
you stopped farmers doing that.
Q175 Chairman: That is a succinct
answer to a good question.
Mr Atkin: The key point is because
the old support system penalised people who effectively stepped
away from the mainstream, whether they be mainstream crop or mainstream
livestock, we have built up uneasiness within the industry of
stepping away from the known because the environment has been
very certain. We have had instruments in place that have guaranteed
certainty for output. As soon as you step into whether it be an
alternative enterprise or a non-agricultural enterprise, what
we see are issues of risk coming into play, issues of marketing,
issues of negotiating supply relationships and contracts. Some
of these enterprises are new and un-tested and by default will
not work. When we advise farmers on these enterprises you cannot
say, "We will guarantee this will work", that is not
the way of the business world. Because the industry has not had
to address medium-term business planning issues, market research
and the like, it has not been historically used to operating in
that kind of environment, it has operated in a very safe, protected
environment.
Q176 Lynne Jones: My question is
also for Carl Atkin. You said that there was a need for clear
signals, not a gradual erosion, and a real Pillar 2. Can you expand
on that? What clear signals would you like to see being given?
Mr Atkin: There are obviously
lots of options and I probably have not got time to talk about
them all. One of the things in the agricultural economics literature
is about whether you have a capitalisation of payments to allow
people to leave the industry rather than the slow annuity which
other people referred to as the "pension haemorrhage".
That is one option. The other thing I think about the Pillar 2
is a lot of the Pillar 2 schemes, particularly the agri-environment
schemes, only work because they are a bolt-on to Pillar 1 and
businesses also have their Single Farm Payment, they could not
survive on the agri-environment income alone. If we want a real
Pillar 2, that is fine, let us do that, but we have got to pay
people for the real environmental outputs they are going to deliver
and not just have this half-measured income foregone measure we
have now, which is a little bit of a fudge, in my view.
Q177 Lynne Jones: Mr Cowley, were
you disagreeing?
Mr Cowley: No.
Chairman: Ladies and gentlemen, I think
that brings our series of panel presentations to a conclusion.
May I thank not just the panel who are in front of us but the
two who went before for some of the most committed and genuinely
passionate presentations about farming and its future that I,
and I think my colleagues, have heard for some very considerable
time. It is a genuine benefit for us to hear from people who are
not, if you like, in the traditional role of representatives of
any of the bodies who have come before us to date but are, as
I think everyone of you has said, farmers who are there doing
it from five o'clock in the morning until goodness knows what
hour late at night, whether it be growing crops, growing people
in caravans or growing energy fuels to keep us all going, it has
been a truly superb contribution to our inquiry. On behalf of
our Committee and my colleagues, I would like to thank you all
very, very much indeed. Thanks again to our stenographer for taking
it all down, to the gentleman who has done the sound system, to
those who organised this and made it possible, and to those in
the audience who stuck there resolutely listening to what was
being said. It has been one of the best attended sessions we have
had for some considerable time. Thank you all very much indeed.
|
