CAP Health Check and Rising Food Prices

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Kelvin Hopkins: I agree very strongly with much of what was said from the Opposition Benches, in particular the powerful speech by the right hon. Member for Fylde. I have spoken many times in debates on the CAP in such Committees and I am grateful, as only an attending Member, rather than a Committee member, for the opportunity to speak again. I think that I might be the only Member here who represents a purely urban constituency—it contains not a single square inch of rural land. However, urban people need food, too, and I am sympathetic to farmers and the agricultural industry.
What has been said here confirms and reinforces a view that I have taken for a long time: the CAP is the problem and should be abolished and replaced by a system of agricultural policies at nation-state level within the European Union. We have seen the contrast between Romania and Britain—they are polar opposites. No one policy can accommodate all the differences and variations across the EU, let alone the world. The best policy would be to repatriate agricultural policy from the EU and to have perhaps bilateral agreements of some kind, but not a policy determined by the EU.
The CAP is perverse in so many ways and in some of the questions that I put to my right hon. Friend the Minister I tried to set out why. I really believe that, at national level, countries would be able to determine much more appropriate policies for themselves that would, collectively, be better for Europe and the world. We might wish to subsidise some things, but not others, and we could choose whether to import cheaper products from elsewhere rather than produce them ourselves. We could choose whether to expand our dairy industry, and we could be accountable to Parliament for that choice. We cannot do that at the moment.
The great lump in the middle of Europe that is the CAP takes up a third to 40 per cent. of the EU budget. It is complete nonsense and has been from the beginning. The fact that a rich country has to have a rebate to accommodate the fact that we are net losers from the policy is silly. It is also silly that most of the beneficiaries are among the richest countries in Europe and that we have special rules to prevent poorer countries from coming in and benefiting from the same generosity as France, Denmark and Ireland. The CAP is nonsense and I have called for it to be abolished on many occasions. At some time, we must challenge France on it once and for all, and decide for ourselves what our agricultural policy should be.
There are problems with distributing CAP income across the European Union. If we want to help the poorer countries in the EU, let us have an open policy in which we contribute to a budget that is distributed according to the relative living standards in different countries so that rich countries are net contributors and poor countries are net recipients. That is fine. Let us have it up front. Let us not have a machine that does the opposite in many cases, is perverse in the way it operates and does not help agriculture, food prices, the third world or anybody else except, perhaps, a small number of EU members who have relatively high levels of prosperity and relatively rich farmers.
I have made this speech on many occasions and I try to think of new words each time, but it is very difficult, because the CAP is nonsense. I have said before that the budget should be distributed according to relative prosperity in different member states; that point has been specifically answered in a European document, so I think that I have had some impact. I do not think that anyone else has suggested that—at least, I have not heard them—but it seems obvious, logical and fair to me. However, the idea was rejected in a European Union document that we have debated in the Chamber. It said something like, “It would be inappropriate,” but what does that mean? There was no good argument against it.
It is time for us to face up to the fact that the CAP is nonsense and that it should be abolished and replaced by sensible policies at national level. I wrote my first critique of the CAP in a 1980 policy paper, and I am sure that I am using now some of the words that I used in that paper, but the policy has been with us for all that time. Reform, reform, reform—we keep hearing that word, and every time we hear it, hats go in the air from the Front Bench. They say, “We’ve got the final reform, and it’s all going to work now,” but it does not. It is still nonsense, it should be abolished, and I hope that my right hon. Friend the Minister will be robust in her negotiations in the EU during her term of office as our representative.
6.33 pm
Jane Kennedy: I look forward to becoming an aficionado of and expert on the speeches of my hon. Friend the Member for Luton, North.
I am grateful to hon. Members who have contributed today for their courtesy in welcoming me to my new role and for their generosity regarding my occasional inability to answer questions directly. I know that that patience might wear thin if I do not rapidly become almost as steeped in the subject as many of those hon. Members who have participated in today’s debate.
It has been helpful to consider CAP reform and global food prices together, and I am grateful to the Committee of my hon. Friend the Member for North Ayrshire and Arran for referring this matter for scrutiny. High food prices are a global problem and they require co-ordinated international action. To tackle the problem effectively, we need an open, global trading system and an end to the trade-distorting subsidies and export restrictions that the CAP maintains. As well as open markets, we need increased global investment, particularly in agricultural research—a point that the NFU raised with me last week—and in increasing the production capacity of developing countries.
Current high food prices add to the reasons to reform the CAP rather than return it to a production-based policy. Some of the measures proposed in the health check should lead directly to lower prices. Although I am grateful to the hon. Member for South-East Cambridgeshire for his guidance and suggestion that we approach the subject warily, permanent elimination of set-aside should reduce the EU price for cereals, for example, by up to 5 per cent, and removing milk quotas could lower the price by up to 11 per cent.
For more long-term results, the CAP reform needs to reduce the distortion of world markets, and dismantling trade barriers will help both consumers and producers in the longer term as farmers become better connected to the market and can respond to increasing demand, which will lead to lower food prices. Again, the NFU suggested that the majority of UK farmers would welcome that.
In response to something that the hon. Member for Westmorland and Lonsdale said, I shall give the example of the phasing out of dairy quotas. The removal of the quotas might be a good thing in itself, but success will depend on how we do it. We need to do it in a way that supports dairy farmers in the UK and enables them to accommodate the new environment, and the best way to do that is to provide certainty and what we might call a soft landing. Dairy farmers in the UK want gradual annual increases in the milk quota to help them achieve a soft landing with minimal disruption to their market. They want a clear path ahead to 2015, when milk quotas are due to end, so that they have the certainty they need for their own business planning. We are making that point strongly within the EU.
In July, we published a discussion paper that asked whether we are focusing on the right issues for ensuring our continued food security. For example, that means access for all at all times to sufficient, safe and nutritious food that is adequate for an active lifestyle and is produced sustainably. That document has successfully encouraged debate on the short-term risks and long-term challenges and on how best we can respond, and I will be interested to hear the eloquent enunciation of that debate even further this afternoon. In considering those issues, we will be supported by the new food policy advisory council. I am not yet in a position to announce the membership of that committee to the House, but it will not be long until we are able to do so.
I would like to turn to a couple of the points that have been made, as it is proper that I should respond to some of the detailed questioning and to some of the issues raised in the debate on which I was not able to give an answer earlier. On set-aside, it is important to get the Government’s view on the record as I might not have made it clear. The Commission proposes to strengthen aspects of cross-compliance that require that farm land be kept in good agricultural and environmental condition. Specifically, it proposes the introduction of the protection and management of water as an issue to be addressed, with additional specific landscape features such as hedges, ditches and trees and the establishment of buffer strips along watercourses as potential standards.
I do not believe that that is sufficient to capture the benefits that we have experienced from set-aside, and there should be more flexibility to allow for a greater variety of habitats and to offer more choice to farmers, so we are making the case for managing a small percentage of land primarily for environmental purposes. We are pressing in the health check negotiations for a common framework that is flexible across the EU, so that all member states would need to take appropriate measures to mitigate set-aside loss. I am mindful of the need to minimise the impact on the farming sector. Our approach offers flexibility for farmers and involves a much smaller amount of land than would be the case under set-aside, and on which some production could take place. That approach has been recommended to the Secretary of State by a broad group of stakeholders, including farming industry representatives, convened by Sir Don Curry.
Mr. Paice: I am grateful to the Minister for giving way and for coming back to the subject. I think that she is saying that when in answer to my question earlier she said yes, she meant no. In other words, cross-compliance will require some land to be taken out of production. We can call it set-aside or whatever she likes, but to maintain the environmental benefits and gains of set-aside, she proposes to replace it by forcing farmers, as part of cross-compliance, to take land out of production. I hope that she does not, but I think that she will confirm that that is what she has just said. Will there be any financial recompense for that?
Jane Kennedy: I would need to study what I have said to be clear about what the hon. Gentleman is saying. We made the case within the EU for our preferred mitigation approach, which will require arable farmers to manage a small percentage of their land primarily for environmental purposes, complemented by voluntary top-up options for farmers in what we call agri-environment schemes. On what the hon. Gentleman says, to a degree, there will be a requirement on farmers to do that. However, it does not replicate set-aside because farmers can choose from a range of common land, for example winter stubble or environmental fallow. It does not preclude using the land for production. I believe that this is a more effective and better targeted way of helping biodiversity and using farmland birds, for example, as an indicator for wider biodiversity.
The hon. Gentleman raised the issue of article 68, as did other hon. Members. The Commission proposals restrict distorting payments to 2.5 per cent. of the direct payment budget. However, I agree that that is still too much. We are pushing for constraints such as time limits or sectoral funding limits.
The hon. Gentleman also pressed on the question of simplifying cross-compliance. We think that the Commission has made some good proposals for cross-compliance standards that should be deleted, but we believe that there is scope for further simplification in terms of the standards and the way in which they must be administered, inspected and enforced. While we want to achieve public benefit from the standards, we recognise that there is little additional return for the inclusion of some in cross-compliance. For example, we believe that the statutory management requirement for the protection of the environment when sewage sludge is used could be deleted as it requires little action on the part of farmers.
We had quite a discussion on the issue of self-sufficiency versus food security. I accept what was said and was not seeking to suggest that self-sufficiency is the entire response. We are a trading nation. Of the food that we import, the vast majority—70 per cent.—comes from the EU. That is why it is so important that we work for fair CAP reform.
On the question of de minimis payments, I was interested to hear the response from the Committee. I was very impressed with the hon. Gentleman’s briefing. The proposal on the table now is for variable rates for each member state, linked to the average farm size. We have relatively large farms and the 5 hectares figure has been supported by the NFU, but I will want to reflect on that given what has been said in this debate. Clearly this is something that we need to examine very closely. On his point on modulation increase, we too would support more ambition in increasing the rate, but he is right that there is strong resistance from others in the EU.
I will not be able to give the comments of the right hon. Member for Fylde the full response that they deserve. However, I am sure that we will get the opportunity on another occasion, perhaps next week, to have a more detailed discussion. I am grateful to him for recommending the report of the Environment, Food and Rural Affairs Committee, which he chairs, on the 2005 “Vision” document. I am collecting reading material and will also look at the Royal Society of Edinburgh’s report.
On milk quotas, half the Council wants a more than 1 per cent. increase and the other half wants less. The priority for the UK is predictable phasing out for the dairy sector, as I said in answer to the point raised by the hon. Member for Westmorland and Lonsdale. The right hon. Member for Fylde asked about the position of new member states with regard to CAP funding levels. New member states are pressing hard for a level playing field. They will reach parity with the old member states in 2012, but equally, they face strong resistance from those old member states. I will be happy to write about some of the more specific details that I have not had to hand this afternoon, particularly as the debate has been wide-ranging.
The hon. Member for Westmorland and Lonsdale raised the issue of maintaining a vibrant countryside through agriculture. We began that discussion on the future for hill farming and the impact on hill farmers of the changes that have taken place. We accept that some areas do not have a comparative advantage in any agricultural product. Those farms must think about diversifying their farm business into areas where they do, so as to provide environmental benefits, or, in some cases, making the decision to leave farming.
Issues such as land abandonment must be addressed with targeted rural development policies on jobs and services, particularly at national level and not via the poor proxy of a damaging and distorting common agricultural policy. There can be a link to the need to manage our landscapes and the environment. In so far as farming in those areas delivers public benefits, which we all acknowledge but the market does not reward, there may be a case for pillar 2 funding in those circumstances.
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