Memorandum submitted by the
1. The CLA feel strongly that the food and
environmental challenges faced globally, by the EU and of course by the
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
The EU context of
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
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
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
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
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.
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
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.
availability. Even with the climate
change anticipated, the
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
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
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
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
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
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