Memorandum submitted by the Country Land
and Business Association (SFS 01)
1. The CLA feel strongly that the food and
environmental challenges faced globally, by the EU and of course
by the UK too, have been underestimated by Defra. Consequently
we majored on these twin challenges and the sort of Food and Environmental
Security Policy needed to respond to the challenges in our Centenary
Conference in May 2007. The paper summarising these ideas, The
21st Century Land Use Challenge, was published through our
European association, the ELO, in June 2008 and was sent
to the Committee before the Christmas break.
2. We are therefore delighted the EFRA Committee
has decided to investigate these issues. We acknowledge that Defra
have come a very long way in acknowledging the importance of food
security issues in the last two years, but we feel there is still
a gross under estimation in Government about the scope and role
of policy, particularly the evolving CAP, to address this area.
3. Before we answer the specific questions
raised in the announcement of this inquiry, it is important to
put UK food and environmental security into their appropriate
EU context. Curiously, the Defra papers on food security make
practically no reference to this. We also offer our analysis of
the events of the last 18 months which precipitated the renewed
interest in Food Security and on which our own diagnosis of future
policy needs is founded.
THE EU CONTEXT
OF UK FOOD
AND ENVIRONMENTAL
SECURITY
4. We start from the observation that all
the major policy levers affecting food security in this country
are decided at EU level. We refer to the Common Agricultural Policy,
the EU Common External Tariff (i.e. trade policy) and the fact
that nearly all environmental policy affecting land use is based
on EU directives. In addition the, admirably named, budget heading
2 of the EU Budget, entitled the "Protection and Management
of Natural Resources", provides the principal public financial
support for the policies which shape our food and environmental
security.
5. We would raise two issues which we have not
seen aired in Defra discussions of food security which we think
the Committee might consider.
6. The first concerns the uninhibited conduct
of intra-EU trade in times of severe supply-stress. We ask, will
the single market operate smoothly in such circumstances? Our
presumption is that in the (somewhat unlikely) event of severe
shortages of basic food stuffs in the EU there would be no legal
way in which Member States could unilaterally decide to obstruct
intra-EU trade to benefit their own citizens. This observation
prompts two questions. What sanctions could the Commission or
another Member State apply to illegal trade interference by a
Member States in such circumstances? Would they be able to operate
fast enough to make any difference? Because the UK is an island,
with relatively few points of entry for bulk food supplies, there
is perhaps plenty of scope for direct action which obstructs roads
or ports, thus threatening UK supplies at times of stress. What
remedies are available in such circumstances? What is the correct
policy stance for the UK to take to guard against such eventualities?
Our instincts are that these matters should be considered. It
might be instructive to take liquid milk as a case study. It might
also be useful for the Committee to take evidence from other EU
Member States and from the EU Commission on this matter. If there
is complete faith in the Single European Market then food security
has to be considered primarily as an EU issue. If, as appears
from Government documents, there is not such faith, then contingency
plans for dealing with breakdown of the single market must be
openly discussed.
7. The second EU matter concerns the role
and scope of the EU budget. Our contention, spelled out in our
document The 21st Century Land Use Challenge, is that the
world faces an unprecedented double challenge of meeting a huge
growth in food demand whilst respecting far higher environmental
standards than in the 20th Century. We argue that the challenges
are interrelated and both intensified by climate change. Further
that the EU as a major economic and political bloc in the world
has responsibilities and self interest in demonstrating how to
rise to these challenges. The facts of EU competence for the relevant
policies to deal with these challenges and that climate and biodiversity
are trans-boundary matters justifies that these issues must be
grasped though a common EU approach and our suggestion is that
the CAP evolves to become Europe's Food and Environmental Security
Policy.
8. Such a policy, can steer Europe's land
management sector to achieve efficient, competitive, profitable
primary food production whilst at the same time showing how intensive,
precision, land management can deliver food security and higher
standards of biodiversity delivery and reduced pollution too.
Some of the principal elements of food security policy are to
encourage innovation and modernisation, much research, development
and extension, and to assist risk management. The measures for
environmental security are to encourage, where possible, the creation
of markets for environmental services from land managers and,
because this will not do the whole job, to provide the schemes
for public payment of private environmental service delivery.
9. The last step in our argument concerns
the EU's Budget and Policy review which was demanded by the European
Council (December 2005). If this is to be a meaningful exercise
to set the tone of EU food and environmental security policy for
several decades, it must thoroughly analyse the nature and scale
of the policy required to deliver Food and Environmental security
for this period. Our fear is that short run political decisions
about the deployment of the EU budget are being taken without
reference to an analysis of the scale of the task demanded of
EU policy, and thus the budget appropriate to dealing with this
task.
THE LESSONS
FROM THE
2007-08 COMMODITY PRICE
SPIKE
10. The events in commodity markets from
late summer 2007 until July 2008 were remarkable for
their speed and ferocity. Also remarkable was the speed with which
most observers seemed to adjust upwards their expectations of
future prices. There seems a broad consensus amongst private trading
organisations and public authorities (HMT, EU Commission, OECD,
FAO, World Bank) that commodity prices will remain during the
next few years 40%-60% above their average levels of the last
decade. In the meantime we can only observe that traded commodity
prices are in fact back to where they were before the meteoric
rise in 2007. Yet farm costs (e.g. fertilisers) and energy have
not fallen back to the same extent, and neither also have retail
food prices.
11. The CLA interpretation of these events is
we have experienced a price spike comparable in scale and duration
to that in the mid-1970s, and it is not yet clear that we are
seeing a reversal of the long run, static or declining real prices
of agricultural commodities experienced throughout the 20th Century.
12. The two main reasons we argue that the
21st Century will not be like the 20th Century are first the added
dimension of the desire to extract renewable energy from land,
and second the stronger environmental ambitions to reduce biodiversity
loss and pollution. Both of these new features are driven by concerns
about climate change.
13. It is clear to us that further intensification
of agricultural production will be needed in many parts of the
world because there is insufficient additional land which can
be brought into cultivation and there is a steady loss of existing
agricultural land to development and to sea level rise. This demands
significant effort to discover and apply a whole new greener revolution
which can maintain high levels of agricultural productivity but
where the added soil nutrients and water and plant protection
products are applied with such precision that the unwanted side
effects on the environment (biodiversity damage, soil erosion,
water pollution, GHG (greenhouse gas) emission) are all reduced.
All scientific knowledge, including chemistry, biotechnology and
ITC will be required to rise to this challenge. In addition, policy
measures will be required to assist farmers to deal with the unprecedented
volatility in market prices, input costs, exchange rates as well
as the more extreme weather events and influx of new pests and
diseases of plants and animals. A third major element of policy
to provide food and environmental security will be the schemes
to pay farmers and other land managers to supply the ecosystem
services for which markets cannot be arranged. The latter two
policy functions are interlinked; farming and environmental management
both require a degree of stability they are long term processes,
so the public payment for environmental services could well provide
an important, solid, dependable, income base for rural businesses
from which they can weather the erratic development of food markets.
14. Turning to the questions posed, our
answers are as follows.
HOW ROBUST
IS THE
CURRENT UK FOOD
SYSTEM? WHAT
ARE ITS
STRENGTHS AND
WEAKNESSES?
15. In international terms it is very robust.
We are blessed with good soils, a temperate climate, good farm
structures based on secure land ownership rights with flexible
and well-based land markets and tenurial systems; a long history
of innovation; highly developed and sophisticated, but also highly
concentrated, input supply, food processing and food retailing
systems; until the last decade or so, we have had a strong record
of research and development and extension; and we have stable
system of governance. Other strengths? The UK food system provides
incredible safety, reliability and consistency of food supply
to consumers to the extent that this is just taken for granted.
It provides an incredible variety of foods, and the food service
sector is highly dynamic providing a staggering choice of products
and service. In addition the UK farming system provides the beauty
of the English countryside which supports a large and renowned
rural leisure and tourism sector including country sports which
attract international participation.
16. All this said, some weaknesses at the primary
food production level have emerged. Productivity growth has slowed.
This is partly policy induced, and it is partly because of the
changes to the research and development and extension systems.
There are also concerns about the availability of seasonal labour.
UK farmers also appear to be less willing to work together in
strong producer controlled businesses than farmers in some other
countries. We are also concerned about the availability and price
of phosphate, and the investment which will be required in future
to maintain land drainage system.
17. The other weakness of the sector—in
common with the rest of EU agriculture—is the structural
dependence on public subsidy. Direct payments under the CAP account
for a significant share of net farming income. Without this assistance
a very large proportion of EU farming businesses will not survive.
Whilst in most of the rest of the EU this situation, including
the subsidies, is accepted, in the UK and a small number of other
NW European Member States, the overwhelming view outside the farm
sector is that these subsidies are an unwarranted market distortion
and should be eliminated. This is the declared view of the UK
Government yet no analysis is provided to show the structural
impacts, the effects on employment and output from agriculture,
from the pursuit of this policy across the EU. We have seen no
reference in Defra papers on Food Security to the implication
of their own CAP Vision on the security of UK and EU food supplies.
It is irresponsible of Government to advocate a policy without
such evidence.
WHAT ARE
THE SUPPLY
SIDE CHALLENGES?
18. We summarise the global farm-level challenge
as that of repeating in the next half Century what was achieved
in the second half of the 20th Century, namely more than doubling
the production of food, yet this Century we must do this whilst
reducing the environmental impacts.
19. The principal soil challenges we face
are: returning more organic material back to the soil, restoring
the levels of trace elements, reducing soil erosion and protecting
soil structure. In addition we must do more to protect the mostly
low-lying best arable lands from coastal erosion, riverine flooding
and from development. More attention is needed to investigate
low till or no-till farming techniques. RASE (Royal Agricultural
Society of England) recently pointed out the worrying dearth of
R&D (Research and Development) capacity on soils.
20. Water availability. Even with
the climate change anticipated, the UK, as a whole, is not expected
to be short of rain. The problems will be its distribution in
time and space. Farmers certainly could, and should, find it easier
than at present to construct reservoirs to catch water. They will
also have to be more precise in their use of irrigation water.
Compared to other EU countries and in other parts of the world
the UK is expected to be less badly affected by climate change.
21. CLA is concerned that there has been
an erosion of the science base for agriculture, as documented
recently by Prof Leaver for the Commercial Farmers Group. This
is especially so for the applied R&D and this is precisely
the area where new production techniques are required to discover
more sustainable farming systems with less water and atmospheric,
i.e. GHG, pollution, less soil erosion and better utilisation
of applied irrigation water and fertilisers, and plant protection.
22. Not only has the record on R&D deteriorated,
but there is every sign that EU policy decisions will make this
situation worse. We refer specifically to the current changes
in the Pesticides Directive which will significantly curtail the
availability of Plant Protection products which will reduce yields
on average, removing very important risk management tools from
farmers risking catastrophic crop failures when pests or diseases
strike. This can certainly be seen as a step diminishing food
security.
23. In addition EU stance to the use of
biotechnology in farming is progressively putting UK and EU farmers
at a competitive disadvantage as well as removing from them productivity
boosting and risk management tools, and reducing the opportunities
of deceasing their dependence on some plant protection products.
There is a very clear signal sent to the agro-chemical and biotechnology
companies from these EU policy stances, it is that there is no
point in investing in new technology for Europe, it will be rejected.
We consider this is another important dimension of EU policy on
food security which is not well positioned.
24. Training in the farming and land
management parts of the food chain has adjusted and consolidated
significantly in recent years. There is a good mix of practical
skills development via Lantra and Farm Colleges; vocational training
courses, degree and post graduate training. The provision at University
level has declined and restructured. Ad hoc professional development
takes place in a fantastic variety of formal and informal courses,
events, shows and conferences.
25. On Border measures, our principal
concern is the insufficient resource applied to the prevention
of import of disease which can threaten food security.
26. The way land is farmed and managed.
The UK has admirably flexible arrangements which allow farmers
to create businesses which can take advantage of the economies
of scale in input purchase, machinery operation and land management.
These include Farm Business Tenancies, farm contracting, share
farming, cropping under licence, farming companies, partnerships
and cooperatives. With some struggle, it has been possible to
preserve most of this flexibility despite the Single Payment System
which did not recognise this multiplicity of farming structures.
DEMAND SIDE
DEVELOPMENTS
27. Others will provide detailed analyses
of consumer demand developments. One of our major concerns is
that there will be no change in the major structural feature in
food markets that nearly all the market power rests with the highly
concentrated food processors and retailers. Successive reports
from the competition authorities have shown that this market power
is sometimes abused, but the remedies offered are extremely weak.
CLA have long argued that a proactive ombudsman could provide
some deterrent effect on the misuse of market power, but it will
not fundamentally change the relationship between fragmented suppliers
and concentrated buyers.
28. Of course the other side of the coin of highly
concentrated downstream food industry is that it offers the firms
great scope for efficient market servicing and the opportunity
to deploy sophisticated storage, distribution and logistics. This
in turn means that the major responsibility for ensuring the resilience
of the food chain to shocks or disruption arising from any causes,
natural, industrial action or terrorism, lies with these companies.
HOW WELL
JOINED UP
IS GOVERNMENT
POLICY?
29. The CLA offers three examples relevant
to Food and Environmental Security where policy is not well joined
up across Government departments.
30. The first is that Defra is completely hamstrung
by the Treasury stance on the EU budget—in particular that
a major part of the budget for the CAP should be eliminated. This
is essentially a political requirement that as the British Budget
rebate is eroded the total EU budget has to shrink to contain
the growth in UK contributions. The CLA argues that of course
the nature of the CAP has to continue to adapt and change, we
have outlined the directions above. The CAP has already undergone
a massive change since the early 1990s, the days of unsalealable
surpluses have long since gone, a significant part of the budget
is now paying farmers for delivering non-market environmental
and cultural landscape services. We contend that spending less
than 1% of total EU public expenditures, or less than 0.5% of
EU GDP on a policy whose fundamental purpose, we argue, is for
achieving food and environmental security is not self-evidently
barmy.
31. The second concerns the nature and survival
of farm businesses through economic diversification. It is already
the case that a very large number of farms have diversified their
income base beyond farming. Defra data from the Farm Business
Survey suggest that of the 60,000 largest farms in England which
occupy a farmer for at least half his time, and account for 96%
of total output, 50% have diversified activities which generated
an average of 19% of total income. This is a very important part
of farmer risk management. However the overwhelming experience
of CLA membership is that this rural business development and
diversification is not understood by the planning system but is
often obstructed by it. Affordable rural housing is a related
aspect of rural development where all is not as it should be and
where Government policy does not recognise the links to Food and
Environmental Security provided by viable rural businesses who
cannot find employees who can afford to live in rural settlements.
32. The problem is that Defra's rural affairs
policy and the rural aspects of the Department of Communities
and Local Government (CLG) are simply not joined-up. This was
illustrated in the simultaneous publication in 2004 of Defra's
2004 Rural Strategy and CLG's Planning Policy Statement
7 on Sustainable Development in Rural Areas which had
little reference to each other. Our observations on this gap in
communications were taken up in the Barker Review of the Land
Use Planning System which flagged how the planning system
was having a detrimental effect on economic development including
in rural areas. Also Matthew Taylor's report, A Living, Working
Countryside, pointed to important linkages between rural businesses,
the need for housing in rural settlements and hence sustainable
rural communities, which were not met by the current system.
33. The third example concerns renewable
energy. The prime reason for development of renewable energy is
to substitute non-fossil fuels for coal, oil and gas to reduce
GHG emissions. This is fundamentally to increase environmental
security—both in the sense of reducing climate change and
increasing energy security. The UK has the fifth lowest share
of energy coming from renewable sources in the EU. Unlike in other
EU member states, where Government policy has engaged the land
management sector in delivery of renewables from the outset, UK
Government has come late to the challenge. Waste policy and anaerobic
digestion remain in Defra, while Energy policy is made at DECC.
The latter is staffed mostly by the former DTI team who have consistently
made energy policy to suit large scale energy companies, rather
than engaging the rural SME sector. Only now with a new Secretary
of State at DECC do we see the signs of an emerging joined up
energy policy that can help deliver on food and environmental
security.
CRITERIA FOR
MONITORING FOOD
AND ENVIRONMENTAL
SECURITY
34. Defra have already launched serious
work on the appropriate indicators for Food Security and we have
commented in detail to them on their proposed measures. Our main
concerns on their approach are the complete lack of reference
to EU food and environmental security, and to the economic sustainability
of UK farming businesses. The fact is that UK farming as currently
structured is highly dependent on public payments.
January 2009
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