Supplementary written evidence from the
Country Land and Business Association
1. You state in written evidence that income
foregone payments should be based on the best alternative occupation
away from hill farming. Realistically, how would you define the
best alternative occupation for a hill farmer?
There are two suggestions on offer for finding
the appropriate magnitude of opportunity cost or income forgone
for upland farmers looking at their best alternative of moving
off the hills.
— Base it on average earnings levels for
comparable (skilled labour) in nearby market towns. Or at the
very least some kind of national indicator like the minimum wage
times the average working week. There could even be discussion
that people living in the countryside take some satisfaction from
the tranquillity, open space, quieter life and so on and thus
apply some kind of discount to whatever comparable earnings in
tow indicator was used. The point is that the figure used would
be something akin to the sum of money required to keep a person
going and not a small top-up as current LFA payments are (strictly
in England, were).
— Base it on the full costs of being in farming
in the uplands, as CRC suggest—and not the income forgone
and direct costs of not intensifying production—which is
the basis of the current calculations.
2. Regarding carbon and water markets, you
said: "The question is: what is stopping those rolling out
further? There are some answers to that." Can you expand
on this point?
On carbon the key issue is that there are no
formal arrangements in the UK for "projects" for carbon
sequestration through land use, land use change or Forestry. The
only such projects which can formally become part of official
carbon reduction programmes (eg the EU Emission Trading Scheme,
are projects in developing countries (via the clean development
mechanism). There are however hopes that with soon-to-be requirements
(either mandatory or voluntary, this is not yet decided by government)
for the measurement and reporting of GHG emissions by certain
business sectors, this could then motivate an industry in providing
C sequestration projects which would be recognised as correctly
offsetting the emissions of these sectors. In anticipation that
there could be a business demand for such projects landowners
may even—once the framework is clearer—start to see
some economic return from new afforestation projects or conceivably,
(if the technical parameters could be agreed) peat management
projects which store carbon.
Thus what is stopping these developments is
the right institutional structure and framework. We understand
this is all within the realms of possibility as some other countries,
eg France, already have such arrangement in place—although
we do not understand the details. It is a matter of political
will and then getting the framework in place.
On water purification markets. People have been
pointing for many years now to the NW English United Utilities
example of how water utilities can find it cheaper to incentivise
different land management in water catchments than to pay for
water clean-up by technical treatment works. The question is why
has this example not been replicated for many other sites. We
do not fully know the answer to this question, but we believe
that it may be partly to do with the willingness of water regulators
to impose the costs of coming to and running such arrangement
onto water consumers.
3. The Pack Inquiry recently published its
suggestions for reform of the CAP in Scotland—would you
support implementation of these recommendations in Less Favoured
Areas in England as well?
No. Some of Pack's recommendations are motivated
by getting a larger share of UK CAP support funds for Scotland.
This is understandable, but not likely to get much support from
English or Welsh farmers or their organisations. But also Pack
seems to be recommending going back to coupled payments. The reasons
are understandable, but we would rather take the approach we suggested
of redefining the income forgone basis of the payments for LFA
farmers.
4. Do you have a views or concerns on the
European Commission's proposal for changes to LFA designations
that you would like to share with the Committee?
We said in our evidence and spell out at greater
length in our paper on the uplands (attached) that considerations
should be given to reversing the whole approach to the marginal
farming areas from the concept of Less Favoured Areas (LFAs) for
agriculture in which we compensate for specific natural handicaps,
to the concept of Environmentally Favoured Areas (EFAs) in which
farmers are paid for the collection of environmental (and perhaps
social) public goods which the market does not pay for.
If this was to be done it changes the kind of
criteria used to define or designate the LFAs. Unfortunately there
is no sign that the Commission is ready to do this.
Instead the Commission, driven by the non-comprehending
Court of Auditors, is engaged in what we regard as a fairly fruitless
statistical exercise in re-designating LFAs based on a set of
nine biophysical criteria (climate, soils, altitude, topography
etc). This is rendered even more unhelpful as they are reluctant
to recognise that conditions in the maritime climate and topography
of England and Wales produce quite different results from continental
Europe. There is therefore an unrewarding to-ing and fro-ing between
Defra and the Commission on how to tweak their nine biophysical
criteria so that it reproduces the current LFA borders! The exercise
is rendered even more fruitless in England as we do not even use
the LFA designation for its measures (it uses the boundaries between
Specially Disadvantaged Areas vs Disadvantaged Areas, and Moorland
Line)!
5. Could you expand on your statement about
the need for small and medium sized abattoirs?
What we had in mind here was specifically the
suggestions to impose full cost recovery for Meat Hygiene Service
charges on all abattoirs. If this is done it risks putting small
and medium sized abattoirs out of business. Many of these abattoirs
are serving the uplands so their disappearance could have severe
impacts on the economics of upland farming which is already perilous
and on animal welfare as animals would have to travel further
to slaughter. It would also disrupt the ability to develop local
supply chains which many suggest are a part of the solution for
the uplands.
This is a long running issue and we are happy
to supply further more detailed briefing if required.
6. Do you believe that Home on the Farm is
sufficient to encourage the kind of generational overlap that
you refer to as being desirable in the oral evidence? Is a policy
change needed?
No, we do not believe that the Home on the Farm
policy will be sufficient to encourage new homes on upland farms
for retiring farmers.
The Home on the Farm policy proposal has been
promoted as a means of delivering affordable rural housing for
local people in remoter rural areas through the use of redundant
farm buildings. The policy proposal is very prescriptive in that
it proposes that the only planning permission that will be granted
for the conversion of redundant farm buildings is permission to
convert them to affordable rural housing units.
Whilst one can see the thinking behind the Home
on the Farm suggestion it is too simplistic to think that it will
produce new homes on farms for retiring farmers not least because
a one-size-fits-all solution is too simplistic and thrusting social
housing onto farms in remote locations may not be in the best
interests of the farmer concerned or the local people expected
to live in these homes.
The costs of conversion of redundant farm buildings
to affordable rural housing are very high, much higher than new
build housing, and the ability by the farmer to set an affordable
rent level that would finance the repayment of the money borrowed
for the scheme would take many years to pay back. The scheme costs
would be prohibitive and unviable in the long term for upland
farmers whose income from farming is barely a living wage now.
Indeed it is unlikely that banks would lend to upland farmers
for this time of conversion.
Secondly, the use of such a house by local people,
and their children, in a busy working farmyard where farm machinery
is in constant use, and close to livestock housing and slurry
pits, would be a health and safety issue.
Thirdly, both DEFRA and Communities and Local
Government policy since 2007 is to encourage farmers to find alternative
sources of income through diversification. This takes the form
of converting redundant farm buildings to offices or small workshops
where rents can be set at open market levels thus providing a
faster and more cost effective payback of borrowed money.
Notwithstanding the above, there will be some
farmers who may be able to afford to convert a redundant farm
building to a retirement home into which they can move, if such
a building exists to be so converted but most upland farmers would
not be able to afford to do so.
The more cost effective and incentivising route
would be to allow retiring farmers to build a purpose-built retirement
home on their farm provided there is a justified agricultural
need, and this requires a policy change in Planning policy statement
7:Sustainable development in rural areas, Annex A, paragraph 6
final sentence. The Welsh Assembly Government's recently published
Technical Advice Note 6: "Planning for Sustainable Rural
Communities" (July 2010) provides an off-the-shelf policy
solution in chapter 4 Sustainable Rural Housing para 4.5 Second
dwellings on established farms.
7. You mentioned that you had your own report
on the uplands— could you submit this to the Committee?
We are hoping to publish our report in the next
couple of weeks—meanwhile we will send as soon as possible
a near final version for the committee. The committee will see
that we go along with a great deal of what the CRC report on the
upland said. Theirs was a comprehensive inquiry conducted very
thoroughly and after very wide consultation.
Our report supports their general recommendations
but we wanted to fill out more detail especially on four areas:
(i) the CAP; (ii) bringing new sources of finance to rural areas
for water and carbon management; (iii) rural infrastructure especially
broadband, and (iv) in the area of planning, affordable housing
and heritage.
December 2010
| 
