Written evidence submitted by the National
Farmers' Union
1. The NFU represents 55,000 farm businesses
in England and Wales involving an estimated 155,000 farmers, managers
and partners. Agriculture dominates the uplands. It has created
and continues to maintain characteristic cultural landscapes that
are highly valued not just for their food production, but also
for their high nature value and tourism. Given the critical role
played by farming and on the basis of members' views, we are well
placed to comment on the CRC report.
2. CRC's report recognises the unique challenges
and opportunities uplands areas face. No single policy measure
is going to provide the springboard to address the many challenges
faced by our uplands. The report, however, does point to the confusing
nature of current policies.
3. There is increasing recognition that
upland farming provides a number of valuable functions beyond
food production, be it biodiversity, carbon sequestration or water
management. However, farming is the critical activity from which
these other functions will flow. This submission briefly outlines
the key issues facing farmers in the uplands and the NFU response
to the recommendations outlined in the CRC report "High ground,
high potential".
KEY ISSUES
FOR FARMING
IN THE
UPLANDS
4. The key issue for many uplands farms
is economic survival. As Appendix 1 illustrates, the profitability
of grazing livestock farms in the uplands is significantly lower
than other farming types. Further analysis of uplands incomes
by cost centre identifies that hill farms are reliant on the single
payment, agri-environment schemes and the Hill Farm Allowance
to be profitable. Based on agriculture alone, many uplands farms
would have made a loss in recent years. Just 41% of upland farms
covered their costs in 2008-09 based on farming revenues, let
alone generated a return on the time and capital invested in their
businesses. Not only are hill farm incomes low compared to other
sectors, but also when measured against income levels in the wider
economy. Average Farm Business income for uplands grazing units
in 2008-09 was £17,137 compared to the average per capita
pay of £26,470 per annum.
5. That said the overall farm business income
of uplands farming has increased. Although still loss making in
2008-09, the agricultural contribution was significantly improved.
Detailed data for 2009-10 is not yet available but stronger sheep
and beef prices over the last two years will be reflected in agriculture's
improved contribution to farm incomes. Whilst fundamentals such
as tighter supplies have impacted prices, factors beyond the control
of farming have been key, none more so than exchange rates. Favourable
currency shifts have benefited agriculture whereas a stronger
pound would place downwards pressure on livestock incomes. Suffice
to say that volatility increasingly characterises the prices of
agricultural inputs and outputs.
6. Amidst this volatility, farmers must
be able to respond to market conditions. As such, agri-environment
agreements must be appropriate and flexible. They must facilitate
the responsiveness of farmers to market signals and complement
productive agriculture. HLS agreements in particular can restrict
farmers' ability to respond to the market.
7. The marginal viability of uplands farms
creates succession issues. Although 37% of upland farmers have
succession secured, it is questionable for the majority. 21% of
upland farms are not expected to continue beyond the next five
years. We believe that financial uncertainty is critical to determining
family members' decisions to take on and invest in hill farms.
This can be amplified by limits to on-farm diversification and
a shortage of appropriate accommodation. In addition to the affordability
of rural housing, proximity to the farm is key to facilitating
the transition of farm businesses to the next generation.
8. Loss of skills and knowledge is another
challenge facing the uplands, and is closely linked with succession.
It should also be noted that like others in upland communities,
access to services and their higher cost are increasingly impacting
upland farmers.
9. Despite the challenges, uplands farmers
can envisage a future, with comparative advantages when it comes
to food production. Consumers increasingly demand provenance from
their foods. Grass-fed, traditional livestock rearing systems
characterise the uplands. The challenge is to realise this added
value and ensure it flows back to farmers. In addition, climate
change may further enhance the geographic advantages of the uplands.
10. Combining a more profitable income from
farming with other revenue sources is key to farming's viability.
As yet, the markets for public goods are nascent; nonetheless
payments for ecosystem services represent an opportunity. Renewables
and carbon credits are other areas with the potential to improve
viability. However, viable mechanisms must first be developed
that are capable of gaining industry confidence and demonstrating
that benefits go to those who actively manage the land. In both
cases, these offer longer term potential rather than a short term
opportunity. In the foreseeable future, income from diversification
and agri-environment schemes will remain the critical revenue
sources for underpinning farm viability.
11. Beyond direct tourism activities, there
needs to be a way of generating income from public access to and
provision of some of our most valued landscapes. This challenge
cannot be underestimated. Access to mountain hill and moorland
made up just 2% of visits to the natural environment in England
between March 2009 and February 2010. Moreover, fewer than three
in 10 visits to the natural environment actually involved any
expenditure.[2]
Of course the benefits of increased tourism need to be considered
against the potential detrimental impact on the landscape (increased
traffic, wider footpaths, etc).
RESPONSE TO
SPECIFIC CRC RECOMMENDATIONS
A new integrated strategy for the uplands
12. This is the second high profile report
on the uplands, following Natural England's 2060 vision. Neither
captures a vision for hill farming. The NFU believes that a sustainable
upland landscape is founded on farm businesses managing the bulk
of the uplands, that are profitable, increasingly productive and
able to deliver widespread environmental stewardship. Farming
in tandem with their natural and social environment, hill farmers
will be increasingly responsive to the signals of the market place.
At the same time, they will be able to balance their role as food
producers with the need to preserve our unique uplands for subsequent
generations. Hill farming will continue to provide opportunity
for local communities, visitors and farmers themselves to gain
from the multiple benefits that upland ecosystems can sustainably
provide.
13. The focus of any strategy needs to consider
the short term actions required to address immediate challenges
faced in the uplands. In the current climate, we would question
the government resources available for developing and implementing
a strategy. Inter-departmental conflicts can also be envisaged
when it comes to the uplands.
Strengthening leadership and momentum
14. In principle, a single uplands champion
has some initial attractions—a focus around a single voice
being significant. However, experience suggests that the diversity
of the English uplands and the range of communities present means
a single champion model is unlikely to be appropriate. Successful
advocates need an attentive audience amongst decision makers.
We believe that a more promising model may be that of an uplands
panel drawn from business and social communities across England
with a sponsoring Minister (the Hill Farming Advisory Committee
provided such a role before its abolition). Such a forum would
draw on a wider breadth of knowledge, indicate the seriousness
of uplands issues, and would be more adept at dealing with any
conflicts that arise given the multiple needs of uplands communities.
Empowering communities in the uplands
15. The emergence of local enterprise partnerships
(LEPs) could offer a solution for the uplands, based on some of
the policy weaknesses that the report has identified eg one size
fits all approach, non-participatory, etc. Empowering upland communities
for more direct input seems to fit within the localism agenda
of developing a bottom-up approach to management of our uplands.
However, few LEPs have highlighted agriculture as a priority to
date and there is significant uncertainty over their future role.
Specific issues to consider include:
— Will central government and especially
locally based regulators delegate the appropriate functions and
what is the safety net if local empowerment falls short?
— Does this facilitate fragmentation of
uplands policy into a myriad of local initiatives, conflicting
with calls for stronger leadership?
— Are the skills and knowledge in place,
particularly if devolved to the parish level as suggested by CRC
and especially amongst upland businesses, which must devote time
to manage local partnerships?
— In participatory budgeting, will the
expectations of residents be aligned with the needs of business
in a locality? Whilst residents may be inclined to adopt a "drawbridge
mentality", many businesses are reliant on national or international
supply chains for resources and markets.
16. A particular concern for agriculture
relates to community-led planning. Planning policies designed
to maintain the appearance of the uplands rather than develop
the productive infrastructure of agriculture in the uplands risk
undermining efforts to improve economic viability.
A new approach to funding (a better targeted CAP)
17. A detailed consideration of CAP reform
is perhaps better suited to subsequent EFRA inquiries. Suffice
to say that the NFU maintains the view that the case for a twin
pillar CAP is convincing (as opposed to a single pillar approach
which CRC appears to promote), with clear roles for both parts
of the CAP. Our vision is for Pillar 1 Single Payments to provide
income stability and ensure the productive and sustainable use
of the countryside. Pillar 2 provides complementary aids to promote
innovation, competitiveness and reward public good provision.
CAP is fundamentally an economic policy and until functioning
markets and volatility are eliminated, there is a compelling case
for ongoing income support. Indeed, the leaked CAP communication
from the European Commission indicates additional income support
for farmers facing specific natural handicaps in the form of direct
payments, and support for LFAs under the 2nd pillar coming to
an end.
18. While we disagree about CAP policy structures,
the CRC is correct to raise the issue of income foregone in the
context of calculating agri-environment payments. It is a crude
measure of public value. In many situations (not just the uplands)
farmers' agri-environment measures yield multiple benefits for
which payment is calculated only on the theoretical foregone production.
The complex methodology involved does not promote innovation in
environmental delivery and performance. A different approach is
required to enable agri-environmental payments to offer real and
consistent incentives to farmers and to take account of the benefits
delivered rather than the income foregone.
19. In relation to rural development, the
NFU has questioned the effectiveness of axes 3 & 4. It has
been suggested that such objectives could be better served under
DG Regio policies that are more suited to long-term, social and
community objectives.
20. In relation to agri-environment schemes,
upland land tenure patterns provide some unusual challenges. About
half the English uplands is rented (a higher proportion than the
lowlands) with much of this land on private shared grazing tenancies
(termed "gates" or "stints" of less than five
years duration) and a large area of commonland on which graziers
share their grazing rights. In such situations without consensus
of view (commonland) or agreement of the landlord (rented land)
the grazier can be excluded from agreements. In such situations,
it is the land owner rather than the active farmer who benefits
from the support mechanism. It is with this unique tenure in mind
that we call for a prompt and continuing review of the uptake
and beneficiaries of the Upland ELS scheme (see paragraph 23).
21. For axis 1 measures, the barriers and
uptake issues are certainly not unique to the uplands. In fact,
the uplands can benefit from additional aid intensity. However,
from a match-funding perspective, it seems logical that upland
farms could face challenges in obtaining the private funding element,
given they tend to be amongst those that have the lowest incomes.
It would be sensible if the current mid-term review of RDPE takes
account of issues relating specifically to uptake in the uplands.
Developing markets for carbon and water
22. The NFU welcomes development of such
markets. However, the prospect of such markets providing a meaningful
income source for farmers remains distant, especially with a low
carbon price for stored and sequestered carbon and water companies
only recently permitted to enter into agreements to improve water
quality through land management measures. Government resources
and budget to develop and implement new policy areas must be questioned,
although public-private partnership offers a solution.
Securing the future for hill farmers
23. Initial uptake levels of UELS appear
encouraging. Defra will be regularly monitoring uptake but a formal
review sooner rather than later seems appropriate. However, it
is critical that this evaluates the extent to which former HFA
recipients are being captured by the new scheme, particularly
given the marginal viability of many hill farms. As noted previously,
land tenure can impact eligibility of payments. Given the higher
proportion of tenants in the uplands, use of common land and short
term grazing lets, specific research on who receives UELS payments
should be included in this review.
24. We would support greater reflection
of what is happening on the ground. Given differences in land
characteristics across regions, national guidance is a blunt instrument.
However, decisions must be taken for the longer term, evolving
rather than taking excessive, over-reactive measures. They must
also engage local farmers.
25. With succession a fundamental concern,
we welcome the opportunity to address this issue. Ultimately,
succession can only be guaranteed when financially viable farming
businesses and new entrants combine. Whilst the profitability
of uplands farms remains marginal, encouraging new entrants and
succession will remain a challenge. Planning policy can help,
supporting affordable developments on-farm and not in nearby towns
or villages.
26. To support skills development, a long-term
and collaborative plan for research and knowledge transfer is
vital. Including colleges and demonstration farms as part of this
collective resource is sensible. Given local differences across
the uplands, the involvement of more than one college would be
prudent and support provision of extension services.
Encouraging enterprise in new green growth areas
27. An audit of renewable energy opportunities
is a solid start, but needs to go beyond an audit to look at effective
policy measures to promote it (including advice that is tailored
to rural and uplands businesses). On the surface, this appears
an area for potential conflict at government department and community
levels. Leadership and central guidance is necessary to ensure
this is effective. The availability of new resources within government
to support green growth should also be questioned.
Raising aspirations: supporting the development
of communities
28. Similar to the above, is it realistic
that BIS will be able to provide additional, more specialised
support at a time when government services are set to be trimmed?
It is more likely that this is conducted on a voluntary basis,
or perhaps this is an area where public-private partnerships could
fill the gap likely to result from the spending review. As both
the big society and localism agendas develop, differences between
uplands/rural needs and urban areas cannot be ignored. For example,
the Regional Growth Fund already looks likely to have a minimum
threshold of £1 million for applications, and could exclude
upland communities from the fund. Similarly, lower population
densities could prove a deterrent to communities fulfilling localism
opportunities.
Improving broadband and mobile telephone communications
29. This needs collaboration with BT to
identify areas that are likely to get left behind as the telecoms
infrastructure is improved. This is undoubtedly an area with potential
for public-private partnership given that spending restraints
may limit government involvement.
Planning to enable sustainable upland communities
30. Planning is a key issue, facilitating
continued development of on-farm infrastructure and succession.
As noted previously, proximity to the farm of low-cost housing
is critical to facilitating the effective transition to the next
generation. Although details relating to the Coalition Government's
Home on the Farm[3]
initiative have yet to emerge, we are encouraged that this approach
has the potential to support farm succession.
31. The challenge is to ensure a joined
up approach to planning that allows for local tailoring, but without
becoming a means for local residents to block any undesired development
regardless of its wider benefits. In terms of the wider uplands
challenges, provision of low cost housing solves one of the challenges.
There must be economic opportunity as well. People will only remain
in the area if there is employment too, so development must be
integrated. The situation is further complicated given that National
Parks cover a proportion of our uplands. Whilst they seek to conserve
our National Parks, they are also statutory planning authorities,
creating potential tensions. Uplands landscapes and rural communities
must be recognised as dynamic, and planning regulation needs to
reflect this. Perhaps a national planning strategy could reflect
the needs of the uplands.
APPENDIX 1
FARM BUSINESS INCOME DATA FOR FARMS IN LESS
FAVOURED AREAS
October 2010
2 Monitor of Engagement with the Natural Environment:
The national survey on people and the natural environment Back
3
http://www.cabinetoffice.gov.uk/media/409088/pfg_coalition.pdf Back
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