Memorandum submitted by the National Farmers'
Introduction and summary
NFU represents over 55,000 farming businesses in
2. There is a high degree of academic consensus that the world will need to increase food production by 50% by 2030 and by 100% in 2050 to meet the needs of a world population that is set to rise to 9 billion and become steadily richer. This growth in demand for food will have to be met using a finite amount of agricultural land.
3. Climate change will invariably place further constraints on production in many parts of the world. A challenge for agriculture across the world is not only to increase food production but to do so sustainably.
The challenges faced by
has been a tendency on the part of Government to question whether
a. Production must be demand driven. Recent market signals have been ambiguous.
b. Increased production may come at an unacceptable environmental cost.
demand for food in the
The NFU believes that any increase in production must be demand
driven. However we do not accept the view that any increase in production need
come at an unacceptable environmental cost. Our vision is that the
6. An assessment of the UK's ability to increase production needs to take account of various factors including: land area, productivity, soil quality, water availability, farm infrastructure, routes to market, technical capability, exposure to external factors (e.g. farm inputs), and government policy. It is correct that the Committee seeks to examine what criteria might be used to judge the relative performance of the sector in achieving this goal and we offer views below on key performance indicators.
NFU believes that
8. Science, technology, research and development are absolutely crucial
to ensuring that growing demands can be met from limited land area. There has
been a substantial cut in publicly funded agricultural science, in the
9. Price volatility in respect of inputs and outputs is likely to be a persistent feature of farming in many sectors in the coming years. Volatility results from a very tight situation in respect of global demand and the difficulty in matching production cycles around the world to real changes in demand. It impedes the ability of businesses to plan and to make investments with a degree of certainty surrounding profitability and market returns.
10. Poor food chain relations. The best conditions for investment to increase production are long-term relations in the supply chain and relatively stable prices. Many sectors suffer from weak contractual relations, short-term attitudes, and price unpredictability leading to a lack of confidence and under-investment.
11. Imbalance in the supply chain. The growth of major multiple
retailers has had many positive effects for consumers but it comes at a cost to
producers where the power wielded by major retailers is abused. The Competition
Commission investigation into the grocery market in the
12. Inefficient supply chains. A report by the Food Chain Centre in 2007 demonstrated that the dairy supply chain, for example, was wasting £1.5 billion per annum in inefficient processes and supply chain practices. The lack of stable trading relationships is a causal factor in this as is a relative lack of investment in capital expenditure and R&D by some food manufacturers and fragmentation at producer level.
13. Labour availability. The
relatively large scale of production in
14. Skills and education. Farming is already a highly skilled occupation, but further development is highly desirable. The problem is that government training and skills policy is biased to qualification rather than skills, and many in the farming sector do not easily find the time or have the flexibility to acquire qualifications. Loss of critical mass is potentially a serious issue as lost skills may be difficult to re-introduce. With regards to education, the number of establishments offering courses tailored towards the farming sector has diminished although those that remain are well equipped in terms of the quality and range of courses offered.
15. Inappropriate European legislation. There are numerous examples of
legislation agreed at a European level that are now outdated, disproportionate
and not science-based. A good example is the Nitrates Directive. Despite
16. GMs. There are varieties potentially of great interest to
17. Input availability. Fertiliser
is an essential input in ensuring that the productivity of crops is maximised.
Phosphate and potash are both in finite supply and whilst nitrogen can be
manufactured, there is a reliance on natural gas which in turn exposes the
industry to fluctuations in supply and price. The farming sector has made a
tremendous effort to reduce its consumption of artificial fertiliser and make
best use of farmers' own nutrients. However further skills and technology such
as improved plant breeding and precision farming techniques which reduce usage
will be needed. Electricity supply is also a serious threat to some sectors,
particularly if the
18. Water availability. This is a threat for some sectors and in some
areas of the country. But the issue must be kept in perspective: less than 2%
of our available water is used in agriculture; world-wide the figure is 70%. In
2005, irrigation in
19. Availability of credit. All businesses have become exposed to higher costs and lower availability of credit as a result of the credit crunch. A recent NFU survey indicated that, at the moment, agriculture is less affected than most other sectors. This is not to say that this position will necessarily remain as working capital requirements rise in 2009. Other parts of the food chain may be more vulnerable, which could knock-on to primary producers.
20. Animal Disease. The
21. Defra has given inconsistent messages about whether it is concerned for domestic production. The Secretary of State recently made a welcome statement about the importance of domestic production at the 2009 Oxford Farming Conference. Defra has also taken a firm line in support of the industry in respect of new proposed EU legislation covering pesticide approvals. However, Defra's inability to tackle bovine TB and its determination to replace set-aside with a similar measure, with little regard the impact on production or administrative burdens demonstrate that policy is frequently at odds with food production.
22. The CAP. The EU's Common Agricultural Policy has reformed massively
in recent years. The vast majority of support payments are decoupled from
production and a greater proportion of the total budget is being devoted to
environmental improvement and business support measures. However differential
implementation throughout the EU creates some competitive distortions which
Actions to be taken
23. The farming industry recognises that it must take ownership of many of the challenges it faces. It has already made big strides in responding to market signals, embracing new technology and enthusiastically adopting measures, such as the Environment Stewardship Scheme, that improve farming's environmental footprint. Further examples, from the creation of an agri-skills forum, to the ongoing work of the industry Climate Change Task-Force, demonstrate that in many cases, the industry can work to overcome challenges. However not all of the challenges are surmountable through industry effort alone.
24. In many sectors, the industry has benefitted from the provision of 'market failure' services by the agricultural levy bodies. The creation of the AHDB (Agricultural and Horticultural Development Board) leads not only to synergies in the delivery of important services but a chance to improve further the level of industry investment on cross-sectoral R&D and especially technology transfer.
farming sector can only go so far in terms of driving forward science and technology.
26. The withdrawal from managed markets and risks of volatility make it even more incumbent on the supply chain to provide clear, long-term signals and better, stable relationships. There is still a staggering lack of appreciation by food manufacturers and retailers of the role they must increasingly play in securing supply by ensuring long-term contractual relationships with farmer suppliers.
27. Furthermore, measures need to be taken to prevent abuses of power from further undermining the fragility of the supply base. A strengthened Code of Practice and an independent ombudsman have both been recommended by the Competition Commission as remedies.
28. Defra has, to its credit, expressed a keen interest in food security. Some good initiatives have been taken, most recently the creation of a unified science hub within Defra. However, we detect some confusion even within Defra about the various strands of work that are taking place within the department. Examples include Defra's July discussion paper on food security and workshops on indicators, the Farming for the Future Programme, the Sustainable Food and Farming Strategy together with regional delivery programmes, the recent creation of the Council of Food Policy Advisors and the outcome of the Prime Minister's Strategy Unit report on food security of July 2008. We believe that there is a need for some better co-ordination of this work.
has recently been given an enhanced role in co-ordinating food policy across
all government departments. It is important that Defra seizes this role to
champion the needs of the
30. There is inevitably a tension within Defra between being the department responsible for implementing environmental policy and being the sponsoring department for food and farming. At the heart of Defra's policy orientation is the Government Public Sector Agreement relating to resource protection (securing a healthy environment). This is undeniably important but should, in our view, be balanced by an objective relating to domestic food production. Until this happens, it will remain challenging for balanced policy decisions taking due account of food production to be reached
necessary precondition to identifying and agreeing indicators/ measures of
success in relation to food security is a balanced Public Service Agreement in
respect of food production. Leaving this aside, there are a number of valid
NFU agrees with the view that food security does not equate to food
independence. British consumers have diverse demands for foods that cannot
always be produced in the
2007, the NFU recommended an early warning system whereby production levels in
each key sector are monitored against those in the rest of the EU. If
production were to fall in a given sector we advocated that this should trigger
a joint investigation between industry and government into the reasons why. If
the reasons were a result of the inability of