Written evidence submitted
by the Agriculture and Horticulture Development Board (AHDB)
The AHDB is the independent levy board with a pivotal
role improving industry efficiency and competitiveness. We are
funded by the agriculture and horticulture industries through
statutory levies. We represent about 75% of total UK agricultural
output. Our statutory functions encompass meat and livestock (cattle,
sheep and pigs) in England; horticulture, milk and potatoes in
Great Britain; cereals and oilseeds in the UK. AHDB's role is
providing the industry and government with objective analysis
on how forthcoming proposals might impact on farmers rather than
comment on the policy.
EXECUTIVE SUMMARY
1. It has been well documented that the EU/world
faces some significant challenges over the next few decades.
As described by UK Chief Scientist Professor John Beddington this
"perfect storm" of increasing population and climate
change will lead to an increased need for energy, water and food.
This will place significant demands on EU agriculture both to
use increasing precious resources efficiently whilst producing
food and other crops for a growing population, but also to mitigate
any contribution it is making to Climate Change. Therefore if
we wish to meet this challenge, as stated by many in the agricultural
industry, we should seek to take this opportunity of CAP reform
to design a CAP to assist the EU/UK agricultural sector become
as competitive and sustainable (economically and environmentally)
as possible, producing as much food as the market wants, in an
efficient and environmentally sustainable way.
HOW WILL THE COMMISSION'S PROPOSALS
AFFECT THE ABILITY OF UK AGRICULTURE TO BE COMPETITIVE IN A GLOBAL
MARKET?
2. A reformed CAP should ideally support all
of the activities listed below. Some of the proposals may help
if well designed, but without sufficient detail it is difficult
to undertake a full assessment. However, it appears possible that
some of the proposals could hamper the ability of the UK agricultural
sector to be competitive in both the EU and global market eg providing
additional support to farmers who have naturally less advantages
due to factors such as climate, size etc.
3. Key to continued/increased competitiveness
of UK agriculture are:
(a) An incentive to be competitive - ie adequate,
but not excessive, competitive pressure.
(b) Investment: in R&D, in capital projects
and in people and skills to improve productivity and sustainability.
(c) Clear market signals and confidence in those
signals to encourage adequate investment through the supply chain.
(d) Compensation for additional costs (or public
goods) imposed by regulation on UK farmers which are not imposed
on farmers from other countries who are able to compete with UK
farmers through trade.
(e) No distortion of competition through subsidies
for farm types that are naturally less efficient.
(f) Facilitation of effective risk/volatility
management.
DO THE PROPOSALS ENSURE FAIR COMPETITION
FOR BRITISH AGRICULTURAL PRODUCTS WITHIN THE EU?
4. It is crucial that a common market has common
rules if it is to operate efficiently. If nation states have
too much flexibility in implementation of the CAP, there is the
potential for distortion of competition. Any support for "small
farms", for "specific regions" or for "specific
natural constraints" should be designed in such a way as
to not be able to distort competition, or limited in size.
5. However, proposals for rural development to
have a more strategic approach, with quantified, outcome based
EU targets, with flexibility in how to achieve those targets could
be positive in supporting competitiveness, depending on the detail.
Will the proposals achieve the correct balance
between productivity and sustainability?
6. To answer this question we have to define
what the correct balance is. AHDB would propose that the correct
balance should be determined by the market place in terms of food
supply, and in terms of sustainability, various standard methodology
indicators/outcomes should be identified depending on the policy
aims. Much, if not all, the evidence we have is that in terms
of Green House Gas (GHG) emissions farms that are more efficient,
eg produce the most output from a given amount of input have both
a lower GHG impact and lower costs ie are the most competitive.
Therefore promoting competitive farms should often also improve
sustainability.
7. However, there may be potential tradeoffs
between reducing GHG emissions and biodiversity, eg taking high
quality agricultural land out of production as set aside may create
valuable wildlife habitat in that location, but if a greater amount
of less productive land elsewhere has to be used to produce the
same amount of food than would have otherwise been produced on
the set aside land, this is likely to increase total GHG emissions.
In addition, the UK is predicted to be less impacted on by climate
change than many other countries meaning that our contribution
to total food and crop production may potentially need to be greater
in the future than at present. This means creating the right balance
may be challenging.
8. It should be noted that on many areas of environmental
science/sustainability there is still some way to go to understand
the complex interactions in agriculture. Therefore it is possible
that any "greening" of the CAP with prescriptive regulations
may actually create perverse and unintended consequences. Again
the detail of the proposals are key in this area.
Do the proposals place the UK in a good position
to help meet future food supply challenges?
9. Generally speaking exposure to the market
place will lead to the greatest efficiency in terms of food production.
However, where there are externalities (or public goods) which
are not currently priced/valued by the market or through regulation/taxation
on a standard basis across the world, UK farmers need to be supported
to compete on an equal footing if we are not to merely export
food production to countries where welfare or environmental standards
are lower. Therefore farmers must be fully compensated for any
costs due to higher compliance standards brought in to "green"
the CAP if we are to have a competitive food supply.
WILL THE PROPOSALS REDRESS THE
IMBALANCE IN SUPPORT TO DIFFERENT SECTORS CREATED BY THE HISTORIC
BASIS OF PAYMENTS?
10. A more uniform basic income support payment
could reduce differences across the EU. However, if there is
significant flexibility for member states in many areas then this
could counteract those differences being reduced.
WHAT ASPECTS OF THE PROPOSALS SHOULD
BE MADE A COMMON POLICY AND WHICH IS BEST LEFT TO MEMBER STATES?
11. If the aim of CAP is to support the development
of a competitive and sustainable EU agricultural industry it is
important that food is produced in the EU where it can be done
so most efficiently. For this to happen as much as possible should
be common across the EU to avoid market distortions. There is
probably some scope for the second pillar to be more discretionary,
but the framework should be the same across the EU. If there
are common EU strategic outcome based targets it may be that the
most effective way of achieving those targets is best left to
member states.
CAN THE PROPOSALS BE IMPLEMENTED
SIMPLY AND COST-EFFECTIVELY, WITHIN A SHORT TIME-SCALE?
12. The key for simple cost effective implementation
in a short timescale is to have simple, consistent proposals.
Until the detail of the schemes is available it is difficult
to comment accurately, but it would appear greater complexity
is potentially being proposed.
December 2010
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